The Competition Tribunal dismissed the lawsuits by Netland Chile S.A. and Marcom Ltda. against Ministerio de Transportes y Telecomunicaciones, regarding the contest “Digital Infrastructure For Competitiveness and Innovation”, that assigned a subsidy for the development of internet access services in rural areas, financed by de Telacommunications Development Fund.
The decision analyzes the competitive conditions of the contest for the assignation of the subsidy, and the effects of assigning the subsidy to one supplier of internet access services, in 1447 rural areas across the country.
Regarding the first matter, even though the Tribunal concludes that the contest Bases included conditions that restricted participation of local providers, there was not enough information in the process to credit that the restrictions were unjustified, taking into consideration the authority’s national coverage objective and the existing budgetary constraint.
On the other hand, the ruling established that the assigned subsidy generates barriers to entry to potential competitors that currently provide internet access in some of the areas to be covered by the contest winner. This constitutes an arbitrary discrimination with anticompetitive effects, according to the Tribunal. However, since the design of the subsidy is established in the Ley General de Telecomunicaciones (General Telecommunications Law), the Tribunal will not sanction the Ministry.
With the objective of reducing the risks to free competition that the current subsidy system and its assignment system generate, the Tribunal recommended the President, through the Minister of Transports and Telecommunications, to significantly change the discussed subsidy assignation mechanisms.