CA stops antitrust agency review of telco-SMC deal
The Court of Appeals has stopped the government’s anti-trust agency from reviewing the P70-billion buyout deal of the telecommunication assets of San Miguel Corporation (SMC).
In a seven-page resolution, the appeals court 12th division issued a writ of preliminary injunction against the review being conducted by the Philippine Competition Commission (PCC).
The appeals court required petitioner Philippine Long Distance Telephone Company (PLDT) to pay P1-million bond “to answer for whatever damages the respondent PCC will suffer should this Court decide that PLDT is not entitled [to a writ].”
Last May 2016, PLDT and Globe Telecom Inc. (Globe) entered into sale and purchase agreement for all the issued and outstanding shares and assets of Vega Telecom Inc. (VTI), a subsidiary of SMC.
The parties then submitted details of the transaction as well as supporting documents to PCC pursuant to its rules.
Under PCC circular, acquisition agreement that exceeds P1-billion which are to be executed and implemented after the effectivity of the memorandum circular but before the effectivity of the implementing rules and regulations shall notify the PCC and submit necessary documents.
READ: PLDT, Globe bring antitrust agency to court
PLDT said under PCC Memorandum Circular, upon the filing of the required notice, the acquisition of VTI shares are considered “deemed approved” and they can immediately utilize the 700MHz spectrum to improve mobile internet speeds.
PLDT said since the acquisition of VTI shares is considered “deemed approve,” it benefits from Section 23 of the Anti-Competition Act and may not be challenged.
It added that the acquisition has a prior approval by the National Telecommunications Commission (NTC) “and a review by PCC would be an illegal encroachment upon the jurisdiction and mandate of the NTC.”
PLDT added that its credit standing is also at risk and its ability to raise and borrow funds to fully roll out the 700 MHz spectrum may be jeopardized violating the conditions imposed by the NTC under the co-sue arrangements between Smart and BellTel and Globe and BellTel.
But PCC said PLDT’s argument is baseless. It insisted that PLDT does not have a “clear and unmistakable legal right” that would be violated by reviewing the acquisition agreement.
The appeals court, in its resolution made public Tuesday said it is only proper that an injunction be issued to “preserve the rights of the parties during the pendency of the instant petition and not to render ineffectual whatever judgment that may be rendered by this Court.”
“We agree with PLDT that due to the ‘deemed approved’ status extended to the subject acquisition by virtue of the Transitory Rules, at the very least, PLDT has a clear right to be protected from the pre-acquisition review conducted by respondent PCC.”
“Unless restrained or enjoined, PLDT will suffer grave and irreparable injury not subject to mathematical computation for it will adversely affect its stock traded in the market and its ability to raise money to pay its maturing obligation under the Purchase and Sale agreement and to finance the necessary infrastructure badly needed to improve the internet speed and connection nationwide,” the appeals court added.
The resolution is written by Associate Justice Ramon M. Bato Jr. and concurred in by Associate Justices Manuel M. Barrios and Maria Elisa Sempio-Diy. CDG
