By Lorenz S. Marasigan and Elijah Felice Rosales
The Philippine Competition Commission (PCC) has asked the Supreme Court (SC) to bar PLDT Inc. from completing its acquisition of San Miguel Corp.’s telco asset until the anti-trust body’s bid to review the P69.1-billion deal has been given closure.
PCC Chairman Arsenio M. Balisacan said this is included in their petition for certiorari filed before the High Court, which primarily seeks to lift the injunction issued by the 12th Division of the Court of Appeals (CA) with respect to the review of the transaction among PLDT Inc., Globe Telecom Inc. and San Miguel.
Aside from dissolving the writ of preliminary injunction issued by the appellate court, the anti-trust body’s petition before the High Court also aims to bar PLDT Inc. from completing the last tranche of payment to San Miguel.
“We sought to stop PLDT from further proceeding with the final payment or performing any action for the consummation or implementation of the terms of the acquisition while the case is ongoing,” Balisacan said. Johannes Benjamin R. Bernabe, a commissioner at the competition body, explained that the consummation of the transaction covers a number of activities.
“It includes final payment, the rollout of further operations, which avail of the frequencies acquired under this transaction,” he said. The last tranche of the transaction, amounting to P6.6 billion, is expected to be paid by the end of May.
“By this petition, we elevate the matter to the highest court of the land to finally allow us to fulfill our legal mandate in the interest of promoting competition in the telco market,” he said in a briefing on Wednesday morning.
The competition commission had sought for the review of the deal involving the coacquisition of San Miguel’s telco assets by the two largest telco players in the country.
Citing provisions of the transitory rules of the competition law, the two telcos sought legal remedies to stop the regulator from reviewing the deal for alleged anticompetitive practice. Globe’s petition was not granted by the Sixth Division of the CA, while that of PLDT was approved.
“We must not lose sight of our main goal in pursuing the review of the acquisition. That is to ensure the preservation of a level playing field for incumbent and prospective players in the telco industry,” Balisacan said.
The spokesman of the two telcos refused to comment until they get a copy of the petition.
“The PCC stands by its position to prioritize the public interest in evaluating the competition concerns in every merger or acquisition deal that falls within its jurisdiction,” Balisacan said.
It is worthy to note, however, that the review is just the first stage of this legal tussle. Actually, deciding on how to move forward with the evaluation is a much bigger task.
There are three possible scenarios should the competition body be successful in completing the review —the transaction could either be approved, disapproved or conditionally approved.
Each has a largely different implication from the other, and unraveling the whole transaction would be a huge and costly mess for the parities involved. The deal under question allowed San Miguel to take home P69.1 billion and the two telcos a swathe of frequencies, which are seen to improve the quality of telecommunications services in the Philippines.
According to the initial findings of the Mergers and Acquisitions Office of the PCC, the multibillion-peso transaction “will weaken any potential competitors to PLDT and Globe, such that they will impose less competitive constraints than they would have done in the counterfactual.”
The Office of the Solicitor General filed the petition on behalf of the PCC.
The PCC claimed that since the beginning, both PLDT and Globe “have resisted scrutiny of the telecommunications deal”. The agency added it will continue to prioritize public interest in evaluating the competition concerns in every merger and acquisitions that fall within its mandate.
According to Balisacan, the petition submitted by the Office of the Solicitor General seeks to achieve three objectives: To dissolve the writ of preliminary injunction issued by the CA Twelfth Division; to halt PLDT from further proceeding with the final payment or performing any action for the consummation or implementation of the terms of the acquisition while the case is ongoing; and to finally allow PCC to fulfill its legal mandate, that is, to pursue its review of the deal.
Balisacan said this situation is a familiar scenario faced by competition agencies in other countries. However, “companies all over the world have learned to faithfully comply with competition regulations and merger and acquisitions review procedures. If our local companies want to be global players, they will need to abide by these rules. PLDT and Globe should be no exception.”