Digicel merger faces legal action in Jamaica

Mon, Jan 16, 2012, 00:00

THE FAIR Trade Commission in Jamaica is taking legal action to try and reverse a government decision late last year to allow Denis O’Brien’s Digicel mobile phone company to acquire rival operator Claro.

The commission believes the deal is anti-competitive and is seeking to have it overturned and a large fine imposed on Digicel.

It filed its action with the supreme court in Jamaica last month and the case is due to be heard on January 31st.

It has argued that the deal would likely result in higher prices for consumers and a slowdown in technological advancements.

Digicel has dismissed the commission’s claims and has questioned its jurisdiction in the matter.

“The Jamaica transaction completed on November 30th, so we’re a bit surprised by this action,” Digicel’s chief executive Colm Delves told The Irish Times.

“We got the appropriate approvals under the Telecommunications Act from the minister, who consulted with the various statutory bodies and gave it his approval.”

Claro is owned by wealthy Mexican businessman Carlos Slim. The Jamaica deal was part of a wider transaction agreed last year that involved Digicel selling its interests in Honduras and El Salvador to Mr Slim.

The Honduras deal has been completed but the El Salvador transaction has run into difficulties gaining regulatory approval.

“We’re still confident that it will close in the current year,” Mr Delves said.

Mr Delves said there was “nothing anti-competitive” in its agreement with Claro.

“There is nothing to stop them [Claro] coming back into Jamaica and similarly nothing to stop us going back into Honduras if we should choose to do so,” he added.

“Therefore, we are very confident that it [Fair Trade Commission in Jamaica legal action] is not going to gain any traction whatsoever. We think they’ve overstepped their jurisdiction.”

Digicel had 2.1 million subscribers before the deal with Claro was approved by Jamaica’s prime minister Bruce Golding last year.

Jamaica has a population of about 2.8 million. Digicel’s biggest rival there is Lime, which is owned by Cable Wireless.

Lime has also sought, without success, to block the merger through legal action.