Mexico watchdog focused on telcos; banks eyed too

MEXICO CITY (Reuters) - Mexico's competition watchdog is focused on investigating the telecommunications sector for the moment but is also keeping an eye on the banking and beer industries too.

Federal Competition Commission chief Eduardo Perez Motta told the Reuters Latin America Investment Summit in Mexico City that the ongoing probe into market dominance of the telecoms sector will come up with first rulings around mid-year.

Most of the investigations are thinly veiled probes into companies owned by billionaire Carlos Slim, especially Telmex TMX.N(TELMEXL.MX), which has about 90 percent of Mexico's fixed lines.

One other ongoing investigation is into interconnection fees in the mobile phone market where Slim's America Movil (AMXL.MX)(AMX.N), the largest cell phone company in Latin America, has seven out of every 10 mobiles in Mexico.

Telmex was declared dominant several years ago by antitrust regulators but Slim was able to have that ruling overturned in Mexican courts.

Perez Motta said the probes would return rulings by mid-year. "These investigations are one of the main thrusts of the commission at the moment."

He said if one or more players were found dominant then the Federal Communications Commission, the telecoms regulator, would have to regulate those companies more strictly.

"It is more about regulation than (financial) sanctions," he said when asked if dominant companies could be fined.

The probes come after promises by President Felipe Calderon to boost economic growth by improving competition in key sectors such as telecommunications. Economists say Mexican growth is hampered by high costs for phone and Internet services.

Competitors have complained to the anti-monopoly commission that Telmex and America Movil wield too much power in their markets.

Slim's companies were not immediately available for comment, but in the past have defended their market share by saying they invest more than rivals and also provide services in non-profitable rural areas.

WORRIES

Perez Motta also said Mexico's financial sector had made strides into improving its competition levels -- especially in areas with broad competition like mortgages and car loans -- but other areas like credit cards raised eyebrows.

"We are more worried about this subject," Perez Motta said, adding that they were working with the central bank on financial sector competition issues. "If we do not see that things are going as they should then clearly we can investigate this topic and others too."

Mexico's banks, which are largely in the hands of foreign banking giants, have long been criticized for charging high commissions and fees. Their sky-high profits have also come under fire from central bank chief Guillermo Ortiz.

The beer industry is also in the commission's sights despite a recent investigation that failed to uncover wrongdoings.

"We did a probe some time ago but we had to close it because we did not find elements to sanction them," he said. "This does not mean that it is not a market that does not worry us, that it is a market that we are going to continue to check carefully."

Industry leader Modelo (GMODELOC.MX) and Femsa (FMX.N) FEMSAUBD.MX have a cozy duopoly in Mexico's beer market. There are only a few microbreweries and imports are a trickle.

(Editing by Braden Reddall)