The Market Monitor Minding the Nation's Business
By Luis Leoncio
The antitrust body Philippine Competition Commission (PCC) received crucial backing from the influential Joint Foreign Chambers of the Philippines (JFC) in exercising its mandate to probe the P70-billion telecommunications deal among giants San Miguel Corp. (SMC), Philippine Long Distance Telephone Co. (PLDT) and Globe Telecom.
The PCC has asked the Court of Appeals (CA) to reconsider its injunction on the review.
In a statement, JFC expressed concern over the appellate court’s order that halted the PCC’s review of the deal in which Globe and PLDT acquired SMC’s telecommunication assets, mainly the 700-megahertz spectrum.
“With the injunction stopping the PCC from conducting further review of the transaction and allowing the deal to proceed, the hope for any new players has been frustrated, if not completely shattered,” JFC’s statement said.
“We are asking for the PCC to be allowed to exercise its legal mandate and ensure that this business deal does not foreclose competition,” it added.
JFC said the CA’s decision to stop the PCC review of the telco deal only involves the rights of Globe and PLDT, including their falling stock prices, but overlooks the transaction’s effects on wider public interest.
“Since the announcement of the acquisition by PLDT and Globe of the telecommunications assets of what could have been a third player in the industry, the JFC has raised the issue of possible anti-competitiveness of the deal,” it said.
Last month, the PCC released a preliminary statement of concerns on the joint acquisition deal of the two telco giants.
The transaction will also result in a “substantial prevention, restriction, or lessening of competition” in the retail of supply of mobile services, fixed broadband services, fixed voice services, wholesale supply of mobile services, and wholesale supply of fixed broadband services, according to JFC.
JFC added that independent technical studies had indicated that SMC’s telco assets could be open for niche players in high data wire-line services needed by industries, particularly business process management and knowledge process outsourcing.
“Given these preliminary findings, the JFC believes that a review by the PCC of the acquisition is necessary in order to ensure that the market remains open for new entrants, whether direct competitors of PLDT and Globe, or niche players,” the group said.
“If the review ultimately results in a finding that it is not anti-competitive, then all concerned should be satisfied that the review process was completed. On the other hand, if it is anti-competitive, then PCC should be allowed to identify remedies to foster fair competition and protect consumer welfare,” JFC pointed out.
Philippine Competition Commission (PCC) Chairman Arsenio Balisacan said institutions must ease the way of doing competitive business to seize economic growth opportunities.
The Philippines can maximize economic-growth opportunities through strengthening institutions that promote competition, infrastructure development, and quality human capital, Balisacan said.
Balisacan acknowledged that the country still faces some challenges in sustaining economic growth, saying, “the principal challenge for us and the most binding constraint in sustainable growth is infrastructure, especially transport, energy, and telecommunications.”
Balisacan said that while the Philippines had been experiencing economic growth in recent years, ensuring that its benefits would trickle down to the majority was a challenge since there had been unequal distribution of opportunities as most businesses were concentrated in some urban centers.
“There had been highly unequal distribution of opportunities, perpetuating a condition of widespread poverty co-existing with growing affluence and prosperity in certain enclaves of Philippine society,” he said.
“Small and medium enterprises have found it extremely difficult to thrive and prosper in an economic environment where level playing field is more of an exception than the norm, hindering the growth of employment opportunities,” Balisacan said in a video message for the Philippine Update Conference 2016 held in Canberra, Australia last week.
He added that the Philippine Competition Act (PCA) serves as “a game-changer for the economy” as it is meant to address the restrictive economic policies and anti-competitive business practices that have been costly to the economy and public welfare.
“This legislation seeks to deepen efficiency-enhancing competitive practices so that economic growth becomes more enduring and more inclusive, thereby fostering public welfare both in the short and long run,” Balisacan, former socio-economic planning secretary and National Economic and Development director-general, said.