President Javier Milei’s government has confirmed it will take preventive action to suspend the sale of the local branch of Spain’s Telefónica to Telecom.
In a March 21 statement, it said the move would lead to concentration of over 60 percent of the telephone and Internet market.
Argentina’s government has made "the decision to take preventive measures to suspend the effects of the purchase of Telefónica by Telecom," read a Milei administration communiqué published on the X social network.
The preventive measures take the form of a recommendation by the CNDC (Comisión Nacional de Defensa de la Competencia) anti-monopoly watchdog seeking to defend the consumers and "competition from any market distortion."
Last month, the government of Milei – an outspoken free-market economist who has slashed state spending in a bid to tame inflation – had announced that it would investigate the possible formation of a monopoly.
"The result of the operation would imply a concentration of 61 percent in the mobile telephone market, 69 percent for landlines while for residential Internet services in some parts of the country the concentration could reach 80 percent," assured the Milei presidency on X.
It said preventive measures will be maintained "until the analysis of the notified operation has been deepened."
Telefónica last month announced the sale of its Argentine branch to Telecom, belonging to the Grupo Clarín media conglomerate for US$1.245 billion. The Presidency responded by issuing a communiqué explaining that it would evaluate whether "this operation does not constitute the formation of a monopoly."
"This merger," the government then explained, "could leave approximately 70 percent of telecommunication services in the hands of a single economic group, which would generate a monopoly."
"In that event, the state will take the pertinent measures to avoid it," the Presidency had said.
The government measure is "only a statement" because the operation cannot be suspended without prior intervention by the ENACOM (Ente Nacional de Comunicaciones) watchdog, a source close to the sector explained to the AFP news agency.
ENACOM must request documentation from the parties involved in the operation prior to a possible intervention but the watchdog’s participation is not mentioned in the communiqué.
On Tuesday, Cabinet Chief Guillermo Francos granted interviews stating that the government’s objections were based on competition and concentration of the broadcast market.
According to the Noticias Argentinas news agency, Francos explained that the merger between the two companies would exceed the limits established by law on the amount of broadcast spectrum that can be held by a single concessionaire, which could consolidate an oligopoly in the cellular and fibre optic market.
“A single company would have approximately… I won't tell you the precise number because there are different versions… but close to 70 percent of the total activity,’ Francos said, adding that allowing such a concentration would go against the logic of competition that the state should guarantee.
The cabinet chief backed the action of the National Commission for the Defence of Competition, which rejected the operation, and remarked that the process will continue through the corresponding legal channels.
– TIMES/AFP/NA
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