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UPDATE 2-Mexico's top court gives Slim's America Movil victory in telecom battle

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MEXICO CITY, Aug 16 (Reuters) - The Mexican Supreme Court on Wednesday found unanimously that billionaire Carlos Slim's telecommunications company America Movil should not be barred by law from charging its rivals interconnection fees, a setback to a sweeping reform intended to curb the firm's dominance.

The 2014 telecom industry reform, one of Mexican President Enrique Pena Nieto's signature accomplishments, prohibited America Movil from charging other carriers for calls made to customers on its network, even though those firms are allowed to bill America Movil for using their networks.

The Supreme Court ruling said such interconnection rates should be set by Mexico's telecom regulator IFT, siding with America Movil - Latin America's largest telecom firm by number of subscribers and the crown jewel of Slim's empire. The tariffs set by the IFT will go into effect from January 2018, the court said.

The court also said, however, that the ruling would not have "retroactive effects," suggesting that competitors such as AT&T Inc and Telefonica would not have to reimburse America Movil for the time they did not pay.

Industry experts believe the decision weakens the reform, which significantly lowered prices for consumers.

"It opens up Pandora's box and creates a terrible uncertainty," said Luis Rubio, a partner specializing in telecommunications at the law firm Jones Day.

America Movil fought hard against the reform, arguing to the court that legislators did not have the right to create "asymmetrical" rules meant to handcuff Slim's firm and help smaller industry players.

A spokesman for America Movil did not immediately respond to a request for comment.

Shares of America Movil gained only slightly following the news of the decision. (Reporting by Noe Torres, Julia Love and Sheky Espejo; editing by Richard Chang and G Crosse)