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Philippine telcos insist competition watchdog has no legal basis to investigate 1 billion acquisition.
Globe Telecom and PLDT have filed a lawsuit in a bid to stop the Philippine Competition Commission (PCC) reviewing their joint acquisition of San Miguel Corp’s (SMC’s) telco assets.
The two operators insist they have complied with the regulator’s rules and that the deal is exempt from being investigated. Despite their claims, the PCC is in the process of carrying out a review.
"Under the own rules of the PCC, the transaction is already ‘deemed approved’, and the PCC cannot by whim or caprice state that it wants a review without any legal basis. The PCC cannot withhold and block the transaction out of a process not found in their own rules," said Globe, in a statement on Tuesday.
"To reverse or undo the transaction will result in irreparable and incalculable injury to the public service," added PLDT, in a separate statement.
The companies have petitioned the Court of Appeals for a temporary restraining order and a preliminary injunction against the PCC.
"We are disappointed that they have decided to resort to a lawsuit against the PCC to prevent a comprehensive review of this deal," said the PCC. "We are confident that our courts will recognise the significance of protecting consumers and promoting competition in the market, and the authority of the PCC to independently exercise its mandate."
Globe and incumbent PLDT agreed to acquire 50% each of SMC’s telecoms businesses in late May for 52.85 billion pesos (€1.02 billion). The agreement includes spectrum held by SMC’s various subsidiaries, including valuable 700-MHz frequencies. The transaction closed straight away, and both Globe and PLDT have already begun putting their newly-acquired 700-MHz spectrum to use.
However, despite the operators’ claims to the contrary, the PCC said it has the right to investigate the deal, and to block it if such action is deemed necessary to protect competition and consumers.
The Philippine government is in the process of implementing the Philippine Competition Act (PCA), which was agreed upon in August 2015. Until implemented, mergers and acquisitions are subject to the PCC’s interim rules, called Memorandum Circulars.
Under these rules, companies undertaking transactions worth more than 1 billion pesos (€19 million) must notify the PCC of the parties involved and the nature of their business, and must provide information about the deal, including when it is expected to close.
Transactions are deemed approved unless the information supplied is false.
Globe and PLDT argue they have complied with these rules; however, the PCC is insistent that it has the final say on whether to approve any deal and that it has the power to investigate a deal’s potential impact on competition.
