‘PCC review of telco deal to delay improvements’
The multibillion-peso acquisition of an incipient telco by the dominant service providers in the country should prove a litmus test for the equally incipient competition council.
According to Internet Society Philippines Chairman Winthrop Yu, the outcome of the review by the Philippine Competition Commission (PCC) on the P70-billion transaction has far-ranging significance for the telecommunications industry in the Philippines as it helps define how things work out in the sector in the years forward.
“Any case would be a test for the newly formed PCC. This one happens to be crucial, as it will determine the telecoms competition landscape for the years to come,” he told the BusinessMirror on Monday.
Just weeks past the adoption of the implementing rules for the Philippine Competition Act, Globe Telecom Inc. and PLDT Inc. acquired for P70 billion the telecommunications business of San Miguel Corp.
Timing is key, according to observers, as the pair each rushed to acquire the nascent telco even before the PCC could exercise its regulatory prerogatives.
“For far too long the telcos have defined not only the legalities attendant to specific situations, but the entire telecoms legal framework. The PCC is to be lauded for diligently attending to its duties in the public interest. Other government agencies should, likewise, closely review and examine this so-called done deal,” Yu said.
In regulatory filings, the rival telcos—who each claim leadership in market and revenue share—said they have yet to receive letters from the commission mandating a review.
According to the files available at the bourse, the mega transaction was ostensibly “not approved” by the competition watchdog and had yet to be reviewed by the commission.
The dominant telcos claimed there was no need for an evaluation on the ground that the deal was perfectly legal.
While the telcos acknowledged recognizing the jurisdiction of the competition bureau, the pair warned that delaying approval should prove a step back and away from improved telco services.
“Memorandum Circular 16-001 provides that before the implementing rules and regulations for the Philippine Competition Act come into full force and effect, upon filing with the PCC of a notice in which the salient terms and conditions of an acquisition are set forth, the transaction is deemed approved by the PCC and as such, it may no longer be challenged,” Globe told market regulators.
PCC Chairman Arsenio M. Balisacan insisted the transaction has to undergo review, as the documents the duopoly submitted were “deficient and defective in form and substance.”
“The notice is adequate, complete, and sufficient and compliant with the requirements under the circulars, and does not contain any false material information,” PLDT insisted separately.
Given this, the companies enjoy the full force of Section 23 of the competition law, which states that “merger or acquisition agreements that have received a favorable ruling from the commission, except when such ruling was obtained on the basis of fraud or false material information, may not be challenged under this Act.”
“Therefore, the transaction is deemed approved and cannot be subjected to retroactive review by the commission. Moreover, the parties have taken all necessary steps to ensure that the transaction will not substantially prevent, restrict, or lessen completion and will not violate the Act,” PLDT said.
(With a report by Catherine N. Pillas)
Source: www.businessmirror.com.ph
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