CA affirms sale of SMC telecom business to Globe, PLDT

The Court of Appeals (CA) has affirmed the legality of the P69.1-billion co-acquisition deal by PLDT Inc. and Globe Telecom Inc. involving the telecommunications business of San Miguel Corp.

In a decision dated October 18, the CA Former 12th Division granted the consolidated petitions of PLDT and Globe that sought to nullify the Philippine Competition Commission’s (PCC) move to conduct a pre-acquisition review and investigation of the deal.

The appellate court issued a writ of mandamus compelling the PCC to recognize the acquisition as “deemed approved by operation of law.”

The sale was compliant with the requirements of PCC’s memorandum circulars, particularly MC 16-002, which mandates parties to mergers or acquisition agreements amounting to more than P1 billion to notify the PCC of the transaction, according to the CA.

In a separate interview with reporters, PLDT president and CEO Manuel Pangilinan said this development will allow telecommunications companies to commence implementing the relevant plans.

"Good. Then we can proceed. Both Globe and ourselves are implementing the agreement with San Miguel on the use of the frequencies. So we will proceed with the work of dealing with the relevant issues," he said.

Should the PCC elevate the issue with the Supreme Court, Pangilinan said PLDT will continue to do business as usual.

"I've no idea what they would decide at this stage. Basta kami B-A-U, business as usual, so we will proceed to expand in the build-out of our 3G, 4G as we are today," he said.

The PCC declined to make a more comprehensive comment to this development.

"The PCC has not as yet received a copy of the CA decision and would thus not be in a position to comment," PCC chairman Arsenio Balisacan said in a text message.

"The commission will pursue the appropriate legal option once we have formally received the decision," he added.

The antitrust commission said, however, it will be proceed with necessary legal action.

"Rest assured, however, that we will take the appropriate legal steps to move this multi-billion acquisition case forward," the PCC said in a separate statement.

"We are firm in our resolve to perform our mandate under the law. We note that a year after the sale, the public continues to complain of slow, expensive and poor quality internet and mobile services. If anything, this has further fueled our determination to safeguard the market and promote the interests of consumers," it added.

The court said MC 16-002 did not require the submission of transaction documents, “or any document for that matter,” as a condition for the validity of the notice.

“By providing that the submission of the required information in the transitory rules will already render a transaction with a ‘deemed approved’ status, it is clear that mere submission of sufficient information within the period thereof already brings forth the mandatory duty upon PCC to recognize the status of a transaction deemed approved,” the CA said through Associate Justice Ramon Bato Jr.

“With the Subject Notice being compliant with the requirements of MC 16-002 and there being no false material statement therein, the subject acquisition is deemed approved by operation of law and may no longer be challenged under the Philippine Competition Act. It follows that PCC is duty-bound to recognize that status and give effect thereto,” it added.

It is the National Telecommunications Commission (NTC) which has power and technical expertise to allocate radio frequencies and the PCC has no authority to review, reverse or modify the NTC’s decision, the CA noted.

“In other words, the NTC’s radio frequency allocation stands independent of the PCC’s determination of the competition-related aspects of such allocation,” the ruling stated.

“Where there is incongruence between the decisions of the PCC and the NTC, both government agencies should then consult each other, guided by the overarching goals of promoting market efficiency and protecting the consumer’s welfare, with a keen awareness that overzealous or due intervention by regulatory agencies may deter and hamper the very goals they seek to achieve,” it said.

The appellate court emphasized that the PCC has the power to conduct post-acquisition review of the multi-billion peso deal to ensure that no anti-competitive conduct is committed by the parties.

“If the parties misuse the subject acquisition to engage in anti-competitive behavior, then PCC may very well exercise its powers to prevent and punish anti-competitive behavior under Republic Act 10667 (Philippine Competition Act),” the ruling stated.

Associate Justices Manuel Barrios and Maria Elisa Sempio Diy concurred with the decision.

The deal involved San Miguel subsidiary Vega Telecom Inc., and the reassignment of the 700 megahertz band in favor of Globe and PLDT. 

Globe and PLDT bought the issued and outstanding shares of stock of VTI and all its telecom assets.

The companies had emphasized that the transaction was above board and did not violate any provision of the Philippine Competition Act.

The PCC, however, claimed the transaction notice submitted by the telcos did not include material information and that a review was warranted in order to protect consumers and promote market competition.

The antitrust body earlier asked the Supreme Court to nullify the injunction order issued by the CA, which the appellate court made permanent in its decision. — With JOn Viktor Cabuenas/Virgil Lopez/VDS, GMA News