CA order vs PCC on telco deal worrisome – JFC

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THE Joint Foreign Chambers in the Philippines (JFC) on Thursday said it is worried by the preliminary injunction issued by the Court of Appeals against the Philippine Competition Commission (PCC) for reviewing the SMC-PLDT-Globe co-acquisition deal in May 2016.

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Since the announcement of the acquisition by PLDT and Globe of the telecom assets San Miguel Corp. (SMC), the JFC has red-flagged the possible antitrust issues surrounding the transaction.

“The telecommunications industry in the Philippines has become dominated by PLDT and Globe, leaving consumers with no alternative service providers despite complaints of high costs and poor service,” the JFC noted.

The prospect of a third player gave consumers hope for a better and more cost-friendly service, either by the new player or as a result of the potential competition by additional industry players.

Stopping the antitrust commission from reviewing the transaction and allowing the deal to proceed frustrates the hope for any new players, the JFC noted.

“It is unfortunate that the CA decision talks only of the rights of PLDT and Globe and their falling stock prices, but misses how the transaction affects the wider public interest,” the JFC said.

The CA has ordered PLDT to post a P1-million bond to answer for damages that the PCC might suffer in case PLDT is not entitled to the injunctive relief.

Although the party to the case is the PCC, it is not so much the PCC that stands to lose but the consumers, according to foreign business group.

Earlier, the PCC published a Preliminary Statement of Concerns on the Joint Acquisition by Philippine Long Distance Telephone Co. (PLDT) and Globe Telecom Inc. of Vega Telecom Inc., Bow Arken Holding Co. Inc. and Brightshare Holdings Corp.

The PCC found several horizontal and vertical overlaps in the markets of PLDT, Globe, and the SMC telco assets and identified multiple theories of harm.

The preliminary findings show that, indeed, the deal potentially forecloses the entry of a new player and eliminates competition in the industry. Independent technical studies further indicate that if not for the acquisition by PLDT and Globe of all of

SMC’s telco assets, the market could be open for niche players in high data wire-line services needed by businesses such as BPOs/KPOs. Such players could carve out a market that requires higher capacity and data rates, which is a trend of the future.

Given these preliminary findings, the JFC believes that a review by the PCC of the acquisition is necessary in order to ensure that the market remains open for new players, whether direct competitors of PLDT and Globe, or niche players.

The JFC views the transaction as a test case, not just for the PCC but for the Philippine business community at large on their willingness to abide by the precepts of fair competition.

“We are asking for the PCC to be allowed to exercise its legal mandate and ensure that this business deal does not foreclose competition. If the review ultimately results in a finding that it is not anti-competitive, then all concerned should be satisfied that the review process was completed,” the JFC said.

On the other hand, if it is anti-competitive, then the commission must be allowed to identify remedies to foster fair competition and protect consumer welfare, it said.

The JFC noted that if the parties to the deal maintain that the transaction does not violate the provisions on anti-competitive agreements, mergers and acquisitions, and abuse of dominant market position, and would result in improved service for the consumers, then there should be no reason to block or delay the  PCC’s review.

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