PLDT, Globe hit antitrust agency for violating gag order on Vega acquisition

Industry giants PLDT Inc. and Globe Telecom hit back at the government’s antitrust body for publicly warning them against moving forward with the closing of a massive deal to buy San Miguel Corp.’s telco assets earlier this week, saying this violated a gag order issued on all parties.

Lawyers from PLDT and Globe said they were studying legal action against the Philippine Competition Commission (PCC) for the latter’s stinging comments on the telco duopoly’s decision to proceed with the final payment to SMC on May 30, 2017.

“The several statements made by the PCC with respect to the final payment to SMC were covered by, and prohibited under, the gag order issued by the Court of Appeals. So yes, the PCC clearly violated the gag order,” Ray C. Espinosa, chief corporate services officer of PLDT and Smart, said in a text message.

“Given the pending cases in the courts, this press statement of the PCC is in violation of the gag order issued by the Court of Appeals. This is contemptuous and PCC should be held liable for this,” Froilan Castelo, Globe general counsel, said in a separate statement.

PLDT and Globe made a last payment tranche of P13 billion, marking the close their almost P70 billion joint acquisition of SMC’s Vega Telecom, which was launched a year ago.

On at least two occasions last month, PCC publicly told PLDT and Globe not to proceed.

PLDT and Globe specifically took issue with the PCC’s statement that touched on matters related to cases now pending at the Court of Appeals and the Supreme Court.

This included the PCC’s view that PLDT and Globe did not comply with the regulator’s deal notification requirement, which was alluded to in one statement.

This is an issue that remains at the heart of the legal row. Should the courts decide that the telcos failed to meet the notification requirement, the PCC could declare the entire SMC transaction void.

“Globe insists that it is in compliance of all regulatory requirements in completing the contractual obligation in the acquisition of the telco assets of San Miguel; and that Globe did not violate any rule or prevailing law at the time the transaction was signed,” Globe said in a statement.

The legal row was triggered after the PCC decided it would pursue a comprehensive review of the acquisition, which targeted SMC’s coveted but underutilized telco frequencies, including those in the 700 megahertz band. The 700 MHz was coveted for its ability to efficiently cover wide areas and penetrate building walls with high-speed mobile internet.

The telcos filed separate cases with the Court of Appeals to block the review, and a temporary restraining order was issued on the PCC probe.

PLDT and Globe, meanwhile, were allowed to proceed with the transaction, and they continued pouring big investments to roll out SMC’s frequencies, including the 700 MHz, across their networks.

More recently, on Feb. 17, 2017, a gag order was issued on the request of PLDT, which worried the PCC’s views would turn the tide of public opinion against the telcos. The gag order meant all parities to the deal were barred from issuing public comments “that would violate the sub judice rule and subject them to indirect contempt of court.”

As part of the gag order, the PCC was told to remove from its website a preliminary report on the transaction showing how the acquisition of SMC’s telco unit likely violated antirust regulations.

The PLDT-Globe acquisition of SMC’s telco unit materialized on May 30, 2016 after SMC’s plan to launch a rival telco service with Australia’s Telstra Corp. Ltd. faltered after their negotiations failed. SMC said at the time talks with Telstra collapsed due to the threat of legal action from PLDT and Globe.

PLDT and Globe argued the deal would benefit consumers since it freed up valuable frequencies that could be rolled out to improve mobile internet quality and speed. There has been clamour for these services as smartphones become cheaper and as subscribers increase their consumption of social media and video streaming platforms.

On the other hand, the PCC worried that the deal concentrated too much power in the hands of the two telco players, as the SMC deal gave PLDT and Globe control over about 80 percent of all available telco frequencies, making it more difficult for new players to enter the market. /atm