Mexican tycoon Carlos Slim's America Movil seems set to dodge a record billion-dollar fine for alleged anti-competitive behavior -- at least for now.

One of Mexico's biggest antitrust cases is bogged down in court appeals, infighting and legal machinations which threaten to reduce the massive sanction to a mere twinkle in the regulator's eye.

Competition watchdog Cofeco was due to decide by the end of September whether to ratify the fine, but the body has been mired in disagreement and observers say the case is unlikely to be finalized.

The way I see it is that this will take a very long time to resolve, said Mariano Calderon, a partner with law firm Santamarina y Steta who specializes in constitutional, fiscal and administrative litigation.

I think it will take at least a year, or maybe even two, to solve the core of the problem.

A reprieve on the fine would be good news for Slim at a time when his telecommunications empire in Mexico is under heavy scrutiny from regulators and market turmoil has knocked about $21 billion, or 13 percent, off the market value of his public companies since the start of the year.

Competitors have also become more vocal about what they see as Slim's misuse of his stranglehold on the telecom infrastructure, following his purchase of the country's former phone monopoly two decades ago.

Cable, Internet and phone rival Megacable has intervened with gusto in the convoluted workings around the billion-dollar fine, trying to tip the balance toward Cofeco ratifying the sanction.

The regulatory knot is not easy to untangle.

Cofeco slapped America Movil's Telcel with the fine in April after determining the company charged higher prices to wireless and wireline competitors to connect to its network.

The decision to sanction Telcel split the five-member Cofeco board. Two commissioners voted against it, another one disqualified himself from voting due to a conflict of interest, leaving just one commissioner backing a fine.

Eduardo Perez Motta, president of Cofeco, used his casting vote, which counts for two, to push the decision toward a sanction.

Flushed with success, Perez Motta talked profusely about the agency's crackdown in local media, prompting Telcel to complain of unfair treatment and move against him.

Telcel filed a motion to bar Perez Motta from a second vote where regulators must decide whether to ratify the fine. Perez Motta tried to bring himself back to the fight but was thwarted by a local judge.

EVERYTHING IS HALTED

In a further twist, competitor Megacable won an appeal challenging the exclusion of Perez Motta from the vote, meaning the case cannot proceed unless his status is solved first.

In summary: everything is halted, said Actinver analyst Martin Lara.

An additional hurdle is brewing for regulators and the government: the commissioner who disqualified himself from the first vote, Jose Navarro, leaves his post in mid-September.

That means Cofeco's board could potentially have just three active members at the expected time of the vote.

Under that scenario, the decision on the Telcel fine could be in the hands of the two commissioners who voted against the fine originally and the one who voted for it; assuming none of them changes their position, Slim would get off.

But Navarro's successor is a wild card. He or she has to be appointed by President Felipe Calderon. His government is moving into election mode ahead of a federal poll in July 2012, which opinion polls show it is likely to lose to the main opposition party.

Some watchers think Mexican regulators took too long to address competition issues in the telecom market, allowing tensions between players to snowball.

The fine comes five years after the original claims (from competitors against Telcel that led to the sanction) were filed, said Ramiro Tovar, a telecom consultant. The fine doesn't solve a thing ... this is about regulation.

(Additional reporting by Tomas Sarmiento; Editing by Phil Berlowitz)

(cyntia.barrera@thomsonreuters.com, Mexico City newsroom 5255 52827161)

Mexico