In February 2019 the Supreme Court of Justice declared, for the first time, that a legal provision was unconstitutional. The legal provision at issue – Article 298(B)(IV) of the Federal Telecommunications and Broadcasting Law – had provided that the minimum fine for any violation of the law not otherwise expressly penalised in another law, regulation, administrative provision, fundamental technical plan, concession or authorisation or other applicable provision issued by the Federal Institute of Telecommunications was 1% of the offender's annual income.
During the last quarter of 2017, the Second Chamber of the Supreme Court unanimously resolved five amparo (ie, constitutional) challenges initiated by individual telecoms and broadcasting concessionaires (ie, TV Azteca, Telefonica, Mega Cable, Bestcable and Television Internacional). In five consecutive decisions, the court upheld the argument that the minimum fine percentage (1%) was excessive and contravened Article 22 of the Federal Constitution, as the same percentage applied in all cases, regardless of the particular conduct and its effects.
The Supreme Court instructed Congress to amend Article 298(B)(IV) of the Federal Telecommunications and Broadcasting Law within 90 days. However, as Congress failed to pass any amendments, the Plenary of the Supreme Court of Justice (by way of the minimum qualified majority of eight out of 11 votes) declared the article to be unconstitutional.
In light of the above, when determining the fine to be imposed on concessionaires or authorised entities that violate any applicable provision not otherwise penalised, the Federal Institute of Telecommunications will need to properly assess the conduct at issue and its effects. Thus, the minimum fine could be any percentage of the offender's annual revenue up to 3%, depending on the conduct and its effects.
This is the first time that the Supreme Court of Justice has declared a legal provision to be unconstitutional based on its general effects (as opposed to the particular effects for the complainant). The power to issue such a declaration was bestowed on the court in 2011 by way of the Amparo Law.
This declaration may signal that the Supreme Court of Justice intends to participate more regularly in shaping Mexico's legal framework in order to rectify deficiencies created by Congress when it drafts laws.
Further, the declaration will provide greater certainty to telecoms and broadcasting licensees (including preponderant agents) that:
- a failure to comply with an applicable legal provision must be duly assessed; and
- any fine must be proportionate and not excessive.
Such provisions may eventually include obligations which arise during the functional separation of Telmex (for further details please see "Functional separation of Telmex leaves some skeptical").
For further information on this topic please contact Federico Hernández Arroyo at Hogan Lovells BSTL by telephone (+52 55 5091 0000) or email ([email protected]). The Hogan Lovells website can be accessed at www.hoganlovells.com.