Court stops review of SMC telco buyout

The Court of Appeals has indefinitely stopped the country’s competition watchdog from pursuing its comprehensive review of the two telco giants’ P69.1-billion purchase of San Miguel Corp.’s telecommunication assets.

The CA 12th Division issued on Aug. 26 a writ of preliminary injunction for the Philippine Competition Commission (PCC) to “cease and desist from conducting further proceedings for the pre-acquisition review and/or investigation of the subject acquisition … during the effectivity hereof and until further orders from this Court.”

In a seven-page resolution written by Associate Justice Ramon M. Bato Jr., the appellate court said it had to grant the request by PLDT Inc. in order to avoid impairing the rights of the parties while the case was going on.

The injunction was conditioned upon PLDT’s posting of a P1-million bond to answer for damages the PCC might possibly suffer.

Associate Justices Manuel M. Barrios and Maria Elisa Sempio Diy concurred with the resolution.

The issue involves the conflict surrounding the transitory circulars issued by the PCC prior to the release of the implementing rules and regulations of Republic Act No. 10667, or the Philippine Competition Act.

PLDT and Globe Telecom Inc. cited the transitory rules in contesting the review of its purchase of SMC’s telecommunication assets, but the PCC claimed the telco giants rushed to seal the transaction on May 30 knowing that the deal was subject to regulation under the IRR issued on June 4. PCC argued the transitory rules did not dilute its authority over the transactions.

But in issuing the injunction, the court “agreed” with PLDT’s contention that its acquisition of SMC’s telecommunication assets was “deemed approved” under PCC’s transitory rules.

“At the very least, PLDT has a clear right to be protected from the pre-acquisition review and/or investigation conducted by respondent PCC,” the resolution read.

The court added that the PCC’s review would violate PLDT’s right to be accorded “safe harbor” or protection from challenge as guaranteed under the transitory rules.

Should the review be allowed to push through, the court said that PLDT would suffer grave and irreparable injury as its stock prices would be affected.

The review would also impair PLDT’s ability to raise money to pay maturing obligations and finance the “necessary infrastructure badly needed to improve the internet speed and connection nationwide,” the court said.

The court also pointed out that the National Telecommunications Commission (NTC) already approved a co-use agreement permitting PLDT and Globe Telecom to use certain radio frequencies in the coveted 700-megahertz spectrum held by SMC. Delaying the implementation of the co-use agreement might result in sanctions from the NTC, the resolution read.

Allowing the review to continue would nullify PLDT’s right for the merits of the case to be threshed out as the telco giant would be “compelled to comply therewith even as the propriety thereof is the main issue in the instant petition.”

The injunction was addressed only to PLDT as it was the first to file a petition on July 11 to contest the PCC’s review of the purchase of the shares and assets of SMC subsidiary Vega Telecom Inc.

Globe’s separate July 12 petition was only consolidated with PLDT’s case on July 28 despite the PCC’s criticism that it was only engaging in forum-shopping after an earlier failed attempt to secure a temporary restraining order.

PCC Chair Arsenio Balisacan told the Inquirer the fight was not over and that the antitrust body was now “examining the appropriate legal options” following the resolution issued by the Appellate Court.

“The PCC remains committed to promoting competition in the telecommunications industry so that the consumers can benefit from more reliable mobile services, faster internet and lower prices,” Balisacan said. With a report from Miguel R. Camus