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Digicel’s challenge of FTC’s legal standing set for February 28

07:33am | Fri, February 03, 2012

THE suit filed by Digicel challenging the legal standing of the Fair Trading Commission (FTC) to oppose its merger with telecoms provider Claro will be heard in the Supreme Court on February 28.

The merger between Digicel and Claro is slated to comes into effect on March 1 when Claro will cease operating in Jamaica

In the  lawsuit filed with the Supreme Court to prevent the deal from being finalised, the FTC argued that the transaction would likely result in higher prices and a slowdown in technological advancements. 

According to figures from the Mobile World analysts, the combined market share of the two companies ( Digicel& Claro) in Jamaica comes to 80%, leaving Cable & Wireless (now rebranded as Lime) with the remaining 20%.

This finding matches the concerns of the FTC, who stated that its own assessment of the market before Claro's entrance revealed that Digicel enjoyed a larger market share at the time than its primary competitor, Cable and Wireless Jamaica (now trading as LIME), despite having prices that were a fraction higher.

According to the FTC, Claro's arrival in the market led to Digicel's promotions and value offerings to consumers increasing significantly and transaction prices falling dramatically.

the FTC  is also arguing that the transaction should not be completed and that, should Claro exit the market anyway,  then its licence, spectrum and customers should be returned to the market to allow existing players and new entrants the opportunity to compete for them.

If the Digicel application is successful the FTC's opposition to the merger  will be thrown out.