A ruling by one of Brazil?s competition agencies on Telemar?s acquisition of iG, an Internet service provider, has added an important element to the debate about remuneration of ISPs and their relationships with telcos. The Finance Ministry?s Economic Surveillance Department (SEAE) has approved the deal but forwarded an opinion to the Justice Ministry?s Economic Law Department (SDE) and CADE, the competition tribunal, recommending that Telemar give equal treatment to iG and other ISPs as far as revenue sharing and other items are concerned. ?We suggest approval of the acquisition,? the SEAE opinion states, ?provided Telemar undertakes to treat all competitors of iG Brasil equally with regard to the provision of telecommunications infrastructure, including revenue sharing, for three years, both in concession areas and in newly licensed areas?. The condition should be reviewed by antitrust agencies after a three-year period, it explains, because by then there may be ?a new model for the pricing of access and the use of third-party networks under interconnection agreements?. This is one of the fronts on which Anatel is currently working.
Controversy
The SEAE report, which can be read in the original Portuguese at www.fazenda.gov.br/seae, also sets out details of the complex deal whereby Telemar acquired iG from Opportunity and GP Investimentos in 2001. The deal was controversial because it involved the expensive purchase by a publicly traded company of assets owned by two of its own controlling shareholders. Critics also said a lot of money had changed hands merely for a promise of more traffic, meager advertising revenue, and iG?s computer hardware and software. The SEAE opinion is just one of a range of inputs to be taken into consideration by CADE in reaching a final decision. CADE hasn?t set a date to rule on the acquisition. It has no obligation to act on SEAE?s recommendations.
