SMC deal with PLDT, Globe still hangs

The Philippine Competition Commission (PCC) is awaiting documents related to the P70-billion sale of San Miguel Corp.’s telecommunication assets to PLDT and Globe before it could take any action, PCC Chair Arsenio Balisacan said Tuesday.

Balisacan, speaking to members of the Management Association of the Philippines, said the parties to the deal were required to submit pertinent papers detailing the transaction—based on a memorandum that the PCC issued as soon as it was formed last February.

PCC’s Memorandum Circular No. 16-002 requires entities involved in mergers and acquisitions effected through the Philippine Stock Exchange, especially those that were consummated from last March 8—when the memo took effect—and until the implementing rules and regulations (IRR) of the Philippine Competition Act takes effect.

The memo covers M&A transactions valued at more than P1 billion.

“We have just finished consultations on the draft IRR and we expect to come out with a final version in the second half of June,” Balisacan said.

The PCC chair explained that, if the submission of documents were in order, the anti-trust body has 30 days to issue a decision—on whether the concerned transaction is against the competition law—or up to 90 days if there were some issues with the papers submitted.

However, the clock does not start until the IRR has been finalized since the rules themselves would spell out how the PCC would operate.

In a statement issued May 30, the PCC said the provisions of the law were fully in effect “and do not require the final issuance of IRR to trigger effectivity.”

Meanwhile, Sen. Bam Aquino said the PCC needed to look into the transactions between SMC and Globe/PLDT “carefully and responsibly.”

“A lot of Filipinos like myself were looking forward to a third player to shake up the telco market and improve competition. Knowing that this third player is far from reality again is unfortunate,” he said.

Aquino added that the Philippine Competition Act provided the commission with wide-ranging powers and the mandate to protect the public interest and that “this is their first test and definitely a defining moment for them.”

Tuesday, when pressed further how the PCC was acting on the SMC-PLDT/Globe deal, Balisacan declined to give any more comment on the matter, saying the anti-trust body has not been provided details of the transactions.

“What we know now so far about the deal is what has been reported in the papers,” Balisacan said. “The PCC has the power to investigate cases that are presumed to be anti-competitive.”

He reiterated that because of the strong public clamor for faster, cheaper and better quality Internet and mobile services—and that these could be stymied by a lack of competition in the telecommunication industry—the PCC “has a keen interest in this proposed transaction.”

When asked whether the parties to the deal needed to meet a deadline to submit their notice related to the transaction, Balisacan said there was none.

“Let me clarify, the law does not prohibit mergers and acquisitions nor a monopoly or duopoly,” he said. “What it is guarding against is the abuse of a dominant position [in an industry].”

“Bigness does not always imply inefficiency or high costs [for the consumer],” he added.

Even then, Balisacan said looking into the telecom asset deal “will be an important case for the Commission.”

Last Monday, PLDT and Globe officials said they bought SMC’s Vega Telecom Inc. for P69.1 billion. They also jointly bought out New Century Telecoms and eTelco Inc., which have links to SMC, bringing the total deal size to about P70 billion.

Both PLDT and Globe promised to return some of the acquired frequencies to the government. Parts of these were in the 700 MHz, 850 MHz, 2500 MHz, 3500 MHz bands, which the two firms said were enough for a third player to enter.