The Board of Directors (BD) of the Competition Superintendence (CS) concluded the investigation of alleged anticompetitive practices by PERSONAL, TELEFONICA, TELEMOVIL, and DIGICEL, with important public policy recommendations in the telecommunications sector.

1. Press Release C. 17-09
El Salvador, April 22nd, 2009
Abuse de dominance
CS Recommends Regulator to Adjust Telecommunications Interconnection
The Board of Directors (BD) of the Competition Superintendence (CS) concluded the
investigation of alleged anticompetitive practices by PERSONAL, TELEFONICA,
TELEMOVIL, and DIGICEL, with important public policy recommendations in the
telecommunications sector.
“The BD has been legally The BD of the CS concluded the investigation of alleged abuse of dominance
empowered to inform the by PERSONAL, TELEFONICA, TELEMOVIL, and DIGICEL, recommending
improvements in the interconnection regulations.
regulators when, as a result
of an anticompetitive The procedure was initiated by virtue of a complaint filed by GCA and
practice investigation, a SALNETWORK against PERSONAL, TELEFONICA, TELEMOVIL, and
problem is detected due to DIGICEL, for an alleged abuse of dominance of said economic agents, by
creating entry obstacles, hindrances for competitor expansion, as well as
the existing regulations, in impeding, limiting, and displacing competition within the market by requesting
order for them to take the the subscription of CPP contracts to GCA and SALNET, as a requirement to
necessary measures in interconnect with them.
favor of competition and for
Notwithstanding the aforementioned, with the collected information and
the consumers welfare”, documentation and the dominance of the investigated economic agents, the
said Celina Escolan Suay, BD, to this day, was no able to determine that the investigated economic
President of the BD of the agents were abusing of said dominance. Nevertheless, such information
served the BD to analyze other aspects related with the telecommunications
CS.
sector and to issue recommendations to improve its performance, precisely
taking into account the dominance of the mobile operators in the relevant
markets.
The BD deems important the regulations of the technical and economic conditions that derive from
interconnection contracts and, mainly, the regulations of the charged wholesale costs amongst operators,
procuring, amongst other aspects, the convergence of the different call termination costs in mobile
telecommunications networks. And the fact is that currently, it is more expensive to call from a fixed line to a
mobile one than to call from mobile to mobile o from abroad to a mobile.
Interconnection and equal accesses are key elements that determine the competition level in the
telecommunications market.
Each mobile operator has at least three types of contracts: the interconnection contract, which is the only one
known by the Electricity and Telecommunications General Superintendence, the regulator, (abbreviated in
Spanish as “SIGET2); the liquidation amongst mobile networks; and the CPP contract (these last two are not
known by the regulator, notwithstanding the fact that both are related to interconnection).
The following are amongst the most important recommendations:
1. Issue an interconnection regulation that establishes the principles and the specific regulation and
supervision legal framework regarding all interconnection aspects;
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2. 2. Register any interconnection or trade agreement between or amongst operators that include all the
changes in charges and tariffs related to said agreements in SIGET´s Electricity and
Telecommunications Registry;
3. Evaluate the elimination of the air time charge, due the fact that the reason for its creation was to
develop mobile telecommunications, which has been achieved.
1. Investigated Anticompetitive Practice:
The alleged abuse of dominance by PERSONAL, TELEFONICA, TELEMOVIL, and DIGICEL by creating entry
obstacles, hindrances for competitor expansion, in order to impede, limit, and displace competition within the
market by requesting the subscription of CPP contracts to GCA TELECOM and SALNET, as a requirement to
interconnect with them.
2. Relevant Markets:
a) Product:
Considering that the investigated economic agents carry out activities in the mobile telecommunications market
and that the objective of this investigation was the contracts subscribed between the operators, the relevant
product market is defined as the wholesale service of termination calls, where each mobile operator finalizes in
its network the calls originated in other operators networks.
b) Relevant Geographic Market: mobile networks coverage at a national level.
3. Dominance:
PERSONAL, TELEFONICA, TELEMOVIL, and DIGICEL have a dominant position, respectively, within the
defined relevant markets.
Each one of the economic agents has an absolute participation in the defined relevant markets, has capacity to
determine termination prices in each one´s network, and to restrict the supply to other operators. Furthermore,
absolute entry barriers exist.
4. Analysis of the elements to determine the alleged abuse of dominance:
a) Interconnection contracts;
b) Crossed correspondence between the complainants and the defendants that evidences a prior negotiation
between the parties; and,
c) Resolutions issued by the SIGET with respect to the CPP performance and the costs charged by the mobile
operators to the fixed-line operators.
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3. 5. Related Legal Framework:
Competition Law
Art. 14 (h): “Inform the regulators, when as a result of an investigation of anticompetitive practice, it is determined
that the root of the problem originates in the regulations of these agencies, in order to take the necessary measures”.
Telecommunications Law
Art. 19.- “For the purpose of this Law, the following shall be considered essential resources:
“a) Interconnection at all levels or centers in any part of the network…”
Art. 20. “All commercial telecommunications network operators shall provide access to essential resources to
any operator who requests it, making the correspondent payment and without any discrimination…”
Telecommunications Law Regulations
Art. 44. “The specific technical and commercial conditions of the interconnection service shall be freely agreed
by the parties to an interconnection contract…”
Background
December 12th, 2007 GCA and SALNET filed with the CS a complaint.
July 11th, 2008 The CS initiated the administrative sanctioning procedure against PERSONAL,
TELEFONICA, TELEMOVIL, and DIGICEL.
July 14th, 2008 The CS notified the involved economic agents the initiation of the aforementioned
procedure.
September 17th, 2008 CS opened the probatory period in the case against PERSONAL, TELEFONICA,
TELEMOVIL, and DIGICEL and requested information for the first time to said
companies, other agents and the sector regulator, SIGET.
October 21st. 2008 The BD of the CS extended the period in order to reiterate the executed information
request.
December 1st, 2008 The CS requested for a second time information and documentation which was
requested on September 17th, 2008.
December 12th, 2008 The period granted to the economic agents to whom information was requested,
expired.
February 3rd, 2009 The CS granted a hearing with respect to the declaration of confidentiality of
gathered documentation and information.
February 9th, 2009 The period to answer the hearing expired.
February 10th, 2009 The CS declared confidential certain gathered documentation and information.
February 23rd, 2009 The Competition Superintendent integrated the file, concluded the investigation, and
sent the file to the BD of the CS in order to issue a final ruling.
April 21st, 2009 The CS issued the final resolution and recommendations to the SIGET with respect
to the telecommunications sector´s legal framework.
On August 2006, the CS and the SIGET subscribed a cooperation and coordination agreement, establishing the
general guidelines for the permanent analysis of the competition conditions existing in the electricity and
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4. telecommunications markets of El Salvador. The telecommunications sector in El Salvador has become a key
sector for the country´s economic development.
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