The Market Monitor Minding the Nation's Business
Telecommunications giant Globe Telecom has denied allegations it was blocking the Philippine Competition Commission (PCC) from exercising its mandate by seeking a court order to prevent the antitrust body from reviewing the P70-billion sale of San Miguel Corp. (SMC) unit Vega Telecom to Globe and Philippine Long Distance Telephone (PLDT) Inc.
Globe also took exception to the statement of the Internet Society-Philippines (Isoc) that the petition for a temporary restraining order (TRO) with the Court of Appeals (CA) sought to stop the PCC from assuring fair market competition. The multibillion joint buy-out deal gave Globe access to half of SMC’s telecommunication assets. Globe General Counsel Froilan Castelo said the company supports the PCC’s mandate of ensuring fair and healthy market competition and of promoting economic efficiency.
In a statement, the PCC said the petition sought to prevent the agency from exercising its mandate to review the mega transaction.
“We are disappointed that they have decided to resort to a lawsuit against the PCC to prevent a comprehensive review of this deal,” PCC Chairman Arsenio M. Balisacan said.
“While the PCC is working on an expedited basis to complete the review as quickly as possible, the action has now sought to delay resolution of an issue which is of great importance to public interest and welfare,” he added.
“We are confident that our courts will recognize the significance of protecting consumers and promoting competition in the market, and the authority of the PCC to independently exercise its mandate,” Balisacan said.
In its petition, Globe emphasized that when the acquisition was made in late May, the parties had already strictly followed the provisions of Sections 4 and 5 of PCC Memorandum Circular 16-002.
Under the memorandum, the deal is deemed approved if they are “consummated after the effectivity of the memorandum circular, but before the effectivity of the implementing rules and regulations.” The PCC, however, chose to disregard this and took the position that it was not bound by its own rules.
Under those rules, 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 Globe petition said.
The PCC cannot withhold and block the transaction out of a process not found in its own rules, and not disclosed to the public, the petition also said.
“We are not, in any way, blocking the PCC from performing its mandate. In fact, we repeatedly invited the PCC to exercise its plenary powers under Section 12 of the Competition Act to investigate the conduct and behavior of the companies on this transaction for possible violations of the Act,” Castelo said.
“Globe has consistently relayed to the PCC its willingness to submit to this investigation, and Globe is confident that all its actions pertaining to this transaction are all legal and above-board as certified by its legal counsels,” he added.
“With respect to the transaction itself, however, Memorandum Circular 2016-02 of the PCC is very clear —the transaction is no longer reviewable as the same was ‘deemed approved’ under its provisions,” Castelo said.
The same memorandum circular states that the P70-billion deal shall enjoy the benefit of Section 23 of the Philippine Competition Act, and, therefore, cannot be challenged under that law. The parties should abide by this provision, including the PCC, which is expected to uphold its own rules and the Philippine Competition Act.
Globe said it has followed to the letter the rules of the PCC, and the same should be appreciated by the PCC. Castelo advised the ISOC to read and understand the law first before making such statement.
He said Globe would continue to roll out using the spectrum assets it gained access to following the deal with SMC, as this is necessary to improve the internet situation in the country.
Earlier, the Duterte administration called for a faster, reliable and cheaper internet service to be done in one year. With this, the company is currently in the process of activating the 700 MHz frequency spectrum in about 500 stations in various parts of the country, expected for completion within by the end of the year.
Globe is also making use of its additional allocation in the 2600 MHz band to provide additional layer for its LTE network for faster data connectivity.
Globe further emphasized that this sale will not restrict competition in the market, as both PLDT and Globe have surrendered a substantial block of frequency of San Miguel to the National Telecommunications Commission (NTC).
With these surrendered frequency plus those in reserve with the NTC, a substantial block will still be available for a potential third player. Moreover, the current stiff competition between Globe and PLDT is enough evidence that this will not result in an anti-competitive scenario.
“In fact, this will benefit more the consumers, as these new frequencies will unlock a lot of service potentials that would lead to an efficient and better service,” Castelo said.