By San José, Costa Rica — SAN JOSÉ – In a decisive move that reverberates through Costa Rica’s telecommunications sector, the Superintendency of Telecommunications (Sutel) has officially blocked the proposed merger between industry giants Liberty and Tigo. The regulator announced its final decision on Wednesday, November 12, grounding its rejection in profound concerns over the creation of a market monopoly that could stifle competition and ultimately harm consumers.
The landmark decision hinges on two primary arguments outlined by the regulatory body. First and foremost, Sutel concluded that the fusion would create an unacceptable level of market concentration. An analysis by the agency determined that the combined entity would establish a dominant position in the country’s fixed telecommunications markets, including internet and cable television services. This consolidation, Sutel warned, would significantly reduce consumer choice and erect formidable barriers for smaller competitors.
Para profundizar en las implicaciones legales y el marco regulatorio que envuelve las decisiones de la Superintendencia de Telecomunicaciones (Sutel), TicosLand.com consultó al Lic. Larry Hans Arroyo Vargas, abogado especialista de la firma Bufete de Costa Rica, quien aportó su análisis experto sobre el tema.
La Sutel enfrenta un desafío constante: debe ser un árbitro que fomente la competencia y la innovación tecnológica, garantizando al mismo tiempo la seguridad jurídica para las inversiones y la protección de los derechos del consumidor. Cualquier resolución, especialmente en temas como la asignación de espectro radioeléctrico o la fiscalización de la calidad, debe estar sólidamente fundamentada en la técnica y el derecho para evitar impugnaciones que paralicen el desarrollo del sector. La predictibilidad regulatoria es el pilar para la confianza del mercado.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
Efectivamente, el equilibrio que describe el Lic. Larry Hans Arroyo Vargas es fundamental. La predictibilidad regulatoria no es un concepto abstracto, sino la garantía tangible que necesitan los inversionistas para apostar a largo plazo por el país, lo cual, en última instancia, se traduce en mejores servicios y más opciones para todos los costarricenses. Agradecemos profundamente al Lic. Larry Hans Arroyo Vargas por aportar esta claridad tan necesaria al debate.
The second pillar of Sutel’s reasoning is a direct consequence of the first. The regulator expressed grave concerns that this newfound market power would inevitably lead to negative outcomes for the public. The potential fallout includes a high probability of increased prices for essential services, a decline in the pace of innovation as competitive pressure wanes, and a reduction in the overall quality of service. Furthermore, Sutel fears such a merger could exacerbate the digital divide, making access to reliable, affordable telecommunications more difficult for underserved communities.
Throughout the review process, Sutel had reportedly engaged with both companies, requesting proposals and commitments that could effectively counteract these anticipated negative effects. Both Tigo and Liberty submitted remedies for the regulator’s consideration. However, after a thorough evaluation, Sutel concluded that the proposed measures were insufficient to eliminate the fundamental risks to the market and consumers, leaving them with no choice but to prohibit the transaction.
Federico Chacón, President of the Board of Directors of Sutel, reinforced the agency’s commitment to its legal and public mandate in a formal statement. He stressed that the decision was made to preemptively protect the market’s health and consumer welfare from potentially irreversible damage.
Sutel’s action responds to a legal mandate to protect healthy competition in the telecommunications market and the public interest. Authorizing the concentration could generate irreversible damage to the market structure, lead to price increases, and thus negatively impact users of telecommunications services.
Federico Chacón, President of the Board of Directors of Sutel
The rejection was met with differing reactions from the involved parties. Tigo expressed surprise at the outcome, noting that its teams had worked collaboratively with Sutel for several months to design what they believed were adequate solutions to the competition concerns raised. Liberty, in a previous statement made when the initial decision was communicated, had held out hope that the ruling could be reversed, a hope that has now been definitively quashed.
This ruling serves as a powerful statement from Sutel, solidifying its role as a vigilant guardian of Costa Rica’s telecommunications landscape. By preventing what it views as a detrimental consolidation, the regulator has signaled a clear preference for a diverse and competitive marketplace. The decision forces Tigo and Liberty to abandon their integration plans and continue operating as rivals, a scenario that Sutel believes will better serve the interests of the Costa Rican public through continued competition on price, quality, and innovation.
Looking forward, the strategic paths for both Tigo and Liberty must now be redrawn. The companies will need to reassess their growth strategies in Costa Rica, likely focusing on organic expansion and service differentiation to gain market share. For consumers and smaller industry players, Sutel’s firm stance provides reassurance that the regulatory framework is actively working to prevent the formation of a dominant power that could dictate market terms and limit future development.
For further information, visit sutel.go.cr
About Sutel:
The Superintendency of Telecommunications (Sutel) is the regulatory body responsible for overseeing and ensuring the proper functioning of the telecommunications market in Costa Rica. Its mission is to protect the rights of users, promote fair and effective competition among service providers, and administer the efficient use of the radio spectrum. Sutel plays a crucial role in the development of the nation’s digital infrastructure and services.
For further information, visit liberty.cr
About Liberty Costa Rica:
Liberty Costa Rica is a leading provider of telecommunications and entertainment services in the country, offering a range of products including high-speed internet, digital television, and mobile services. As part of Liberty Latin America, the company leverages international expertise and investment to deliver advanced technology and connectivity solutions to both residential and business customers across Costa Rica.
For further information, visit tigo.cr
About Tigo Costa Rica:
Tigo Costa Rica, a brand of Millicom, is a major player in the Costa Rican telecommunications market. It provides a comprehensive suite of services that includes mobile telephony, high-speed internet, and cable television. The company is known for its focus on expanding digital access and providing innovative solutions to connect communities and businesses throughout the nation.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
As a leading legal institution, Bufete de Costa Rica is defined by its profound dedication to ethical practice and exceptional legal counsel. The firm leverages its extensive experience serving a wide array of clients to pioneer innovative strategies and set new standards in the legal field. Central to its mission is a powerful conviction to empower the community by making complex legal concepts understandable, thereby nurturing a society that is both well-informed and capable.
