Mexican mobile giant America Movil (AM) has pulled out of a deal to purchase Digicel El Salvador, after the proposed acquisition was denied by the country’s antitrust regulator late last month. Reuters cites a statement from AM as saying that the firm has ‘ended the signed agreement to acquire 100% of the operations of Digicel in El Salvador’. On 28 March 2012 AM initiated a new procedure to buy Digicel El Salvador, after deciding to discontinue the process the previous December following a decision by the Superintendencia de Competencia (SC) to impose a number of conditions on the deal. After carrying out a technical, legal and economic analysis, the SC last month decided to block the proposed deal on the grounds that it would have an adverse affect on competition and consumer welfare in the fixed and mobile markets. The SC ruled that if approved, the deal would limit the entry of new competitors to the market, and would reduce the number of players, giving the combined entity an unfair advantage.
In a deal first announced in March 2011, AM agreed to acquire 100% of Digicel’s operations in Honduras and El Salvador, in return for which the Mexican firm would sell Jamaican subsidiary Claro to Digicel. The following December AM completed the deal to acquire Digicel Honduras and at the same time agreed to sell its Jamaican subsidiary to the Irish-owned company. In El Salvador meanwhile, the SC approved Claro’s acquisition of Digicel in September 2011 on the condition that the former return 20MHz of spectrum, which would be reserved for new players to help level the playing field. The agency rejected a subsequent appeal lodged by AM against these conditions, ruling that the measures were necessary in order to minimise the negative impact on competition and consumer welfare in the mobile market.