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FTC opposes Digicel/Claro merger PDF Print E-mail
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Wednesday, 28 December 2011

The Fair Trading Commission (FTC) has become the second entity to take legal action in the Supreme Court in an effort to prevent the approved merger of telecoms providers Digicel and Claro.

The regulatory body, in a lawsuit filed with the High Court this month, is seeking several declarations that, if granted, would result in the scuttling of the merger and fines of $5 million against Digicel Jamaica Limited and Oceanic Digital Jamaica Limited for each detected breach of the Fair Competition Act.

In the interim, the FTC will be asking the court for an injunction to block the merger, which it claimed would result in a lessening of competition in the telecoms market. In the suit filed by attorney Dr Delroy Beckford, the FTC is contending that customers can only adversely affected by any merger between the two entities.

According to the suit, over the period April 2007 (when Claro entered the market) to March 2011 (when the intended merger was announced) "it is estimated that customers' benefits from competition" among the Digicel, Claro and LIME "exceeded $16 billion". The FTC is contending that this monetary benefit to customers would be lessened should the merger go through.

This aspect of the deal that will see Claro taking over Digicel's Honduras operation is also being challenged by the FTC.

A date is yet to be set for a hearing.

The FTC suit follows a failed attempt in the Supreme Court by telecoms provider LIME to have then Prime Minister Bruce Golding's approval of the merger in August overturned. In a ruling against LIME, Justice Bryan Sykes, ruled that Golding's approval was done in accordance with the respective regulation.

LIME had said that it would appeal Justice Sykes' ruling, but it is not clear how the filing of the FTC lawsuit would affect that decision.

LIME had contended that the prime minister's decision to approve the merger "is unlawful/and or was affected by an improper exercise of his power".

The intended merger between the two telecoms companies was announced in a news release on March 11 and was approved by the prime minister in his capacity as the minister with responsibility for telecommunications.

LIME has been against the merger, arguing that it would damage competition and turn Digicel into a monopoly.

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