The Board of Directors (BD) of the Competition Superintendence (CS) imposed fines to the telephone companies TELEMOVIL, TELEFONICA, DIGICEL, and INTELFON totaling US$1,215,497.94 for fixing the tariff of US$0.21 per minute plus VAT for every call originating in land telephony network and terminating in their mobile networks.

1. Press Release C. 03-12
El Salvador, January 19th, 2012.
CS Imposes Fines to Four Telephone Companies for
Price Fixing
The Board of Directors (BD) of the Competition Superintendence (CS) imposed fines to the telephone
companies TELEMOVIL, TELEFONICA, DIGICEL, and INTELFON totaling US$1,215,497.94 for fixing
the tariff of US$0.21 per minute plus VAT for every call originating in land telephony network and
terminating in their mobile networks.
The CS proved the existence of an agreement amongst the telephone companies
“This is a very serious TELEMOVIL, EL SALVADOR, S. A. (using its TIGO trademark); TELEFONICA
anticompetitive practice MOVILES EL SALVADOR, S. A. DE C. V. (using its MOVISTAR trademark);
which affected a public
DIGICEL, S. A. DE C. V. (using its DIGICEL trademark); and, INTELFON, S. A.
service with few
DE C. V. by means of its RED trademark), to fix the tariff of US$0.21 per minute
substitution options for
the consumer, agreed by
plus VAT for every call originating in land telephony network and
dominant economic terminating in their mobile networks.
agents in the termination
The aforementioned agreement amongst these four competitors in the mobile
of calls in their mobile
telephony market infringes Article 25 letter a) of the Salvadoran Competition Law
networks with the
(CL) which prohibits agreements amongst competitors:
intention to enforce it Art. 25.- Anticompetitive practices among competitors are prohibited, these
nationwide”, asserted practices include the following, amongst others:
Francisco Diaz Rodriguez, a) Establishment of agreements to fix prices or other purchase or sales
Chairman of the BD of conditions under any form whatsoever;
the CS.
The CS imposed TELEMOVIL a fine of US$658,050.00; TELEFÓNICA a fine of
US$260,672.03; DIGICEL a fine of US$233,909.76; and, INTELFON a fine of US$62,866.15. When imposing
these differentiated fines, the BD of the CS considered rationality and proportionality criteria, the economic
capacity of the sanctioned companies, as well as the criteria set forth in Article 37 of the CL.
In addition to the economic sanction, in the final resolution the BD also ordered the infringing telephone
companies to stop committing practices that harm, affect, or restrict competition.
Said decision can be consulted in the CS´ website: www.sc.gob.sv.
About the agreement
On April 23rd, 2010 the sanctioned economic agents published in newspapers nationwide, informing their
networks´ costumers that “beginning today [April 23rd, 2010] that the applicable tariff for a call made from ay
national land telephony line to any mobile line would be US$0.21 plus VAT per minute”.

2. The aforementioned tariff fixing appeared after the Legislative Decree 2951, which amended Article 8 of the
Telecommunications Law, came into force in 2010. Said Decree had a transitory provision by which the
maximum tariff (not the only one or a fixed one) of a call from a land telephony line to a mobile one would be
US$0.21 plus VAT per minute.
This publicity appeared in a newspaper nationwide on April 23rd, 2010.
In order to analyze the practice, the CS assessed the existence of certain factors that the Economic Theory has
pointed out as facilitators for the commission and stability of agreements amongst competitors. In this case such
factors were: the limited number of participating agents; high levels of market concentration; existence of entry
barriers; homogeneity of the rendered service; and, the mobile telephony market´s growth.
Another facilitating factor which was considered was the dominance of the participating economic agents in the
termination of calls in their own network, due to the fact that when a customer subscribed to a land telephony
network makes a call to a customer whose phone number belongs to a specific mobile operator, the first has no
choice but to establish communication between his/hers/its network and the network of the mobile operator that
owns the requested phone number.
The CS included as evidence in addition to the two joint publications of the sanctioned economic agents, which
were by themselves conclusive, a total of 38 CPP contracts2 signed from 1999 to 2007 by sanctioned mobile
1 Legislative Decree number 295 dated March 4th, 2010, published in the Official Gazette number 67, volume 387
dated April 14th, 2010.
2 Calling Party Pays: Tariff formula under which the party originating a call pays the entire end – to - end cost of
the communication.

3. operators with different land telephony operators, and 28 tariff notice letters sent by the sanctioned parties to land
telephony operators, dated April 23rd, 2010, communicating that tariff to be charged for calls originated in a land
telephony network and terminated in their mobile networks would be US$0.21 plus VAT per minute.
The aforementioned CPP contracts had terms and conditions establishing the CCP billing method from land
telephony network customers to mobile telephony network customers. Furthermore, said contracts stipulated that
in the CPP calls the land telephony network operator acted as a collecting agent for the mobile operator,
emphasizing that the ownership of the land-mobile calls tariff belonged to the mobile operator. Moreover, these
contracts determine that the land telephony operator is not responsible to the customers, the sector´s regulator (the
Electricity and Telecommunications General Superintendence, “SIGET”), or to any consumer protection organism,
for the tariffs charged by the mobile operator to the customers of said services pursuant to the above cited
contracts.
With the tariff notice letters, dated April 23rd, 2010 sent by the sanctioned mobile operators, the CS proved that
said letters had identical content; writing skills; and, information regarding background, tariffs and charges
relations, and instructions with respect to billing method; coincidences that allowed the CS to corroborate the joint
behavior and conclude that the intent of the investigated mobile operators was to continue their coordinated tariff
fixing pursuant to the respective contracts.
Necessary is to clarify that even though the above cited Decree 295 established a maximum tariff of US$0.21 plus
VAT per minute for calls from land telephone networks to mobile ones, said Decree allowed operators to compete
with prices below that tariff precisely because the Decree established a “maximum tariff” not a unique or fixed
one.
Ergo and as stated in the CS´ resolution “the only reasonable explanation for the joint newspaper publication is that
the agents had previously agreed to charge the maximum tariff and, consequently, not to compete. Hence, it is
less likely that two, three o more companies coincide in all these factors and even less probable to have
determined the tariff independently after the publication of the aforementioned Decree. Therefore, the uniform
tariff fixing amongst competitors and its joint publication is not reasonable”.
Other agreements amongst competitors sanctioned by the CS
The Administrative Contentious Tribunal of the Supreme Court of Justice has ruled in favor of the CS, ratifying the
criteria applied by it when sanctioning agreements amongst competitors, having asserted the following: “Just with
the fact of having been published and, hence, made of public knowledge, an agreement amongst competitors may
harm competition and consumers since these practices are susceptible of increasing the market power of economic
agents, with negative consequences in prices of goods and services, affecting competition, and third parties.
Therefore, this practice must be sanctioned ‘per se’ by the legislator”. (Decision issued on June 14th, 2011 by the
Administrative Contentious Tribunal, case 447-2007).
The CS has investigated and sanctioned the following agreements amongst competitors:
2007. Four agricultural and livestock brokerage firms: GRACONSA, SBS, LATIN TRADE, NEAGRO, LAFISE, and
INTERPRODUCTOS, that operated at BOLPROES, (the Salvadoran Products Exchange Place) agreed to fixed
minimum commissions for rendering the intermediation service.
2008. The wheat flour manufacturers MOL, S. A. de C. V. y HARISA, S. A. de C. V. agreed the wheat flour market
allocation by volumes of sales.
2009. Four travel agencies: AMATE TRAVEL, U-TRAVEL, INTER-TOURS, and AGENCIA DE VIAJES ESCAMILLA
bid rigged in a public tender by fixing a sole and identical commission of US$56.50.