TELCO giants PLDT and Globe Telecom scored an initial victory in connection with a legal battle over their acquisition of the telecommunications business of San Miguel Corp., with the Court of Appeals halting competition regulators from reviewing the mega-deal.
In a seven-page resolution obtained by The Manila Times, the 12th Division of the appellate court issued a writ of preliminary injunction barring the Philippine Competition Commission (PCC) and its agents from conducting the review.
The injunction was issued, the court said, so as not to impair the rights of PLDT, Globe and San Miguel as it hears the telco giants’ petition questioning the PCC’s decision to investigate the P69.1-billion deal.
PLDT first brought the PCC to court. Globe filed its own petition later, and the two petitions were consolidated under the appellate court’s 12th Division.
The August 26 injunction, penned by Associate Justice Ramon Bato with Associate Justices Manuel Barrios and Maria Elisa Sempio-Diy concurring, was addressed to PLDT.
“Let a Writ of Preliminary Injunction be issued, enjoining and directing the respondent PCC, their officials and agents, or persons acting for and on their behalf to Cease and Desist from conducting further proceedings for the pre-acquisition review and/or investigation of the subject acquisition based on its Letters dated 7 June 2016 and 17 June 2016 during the effectivity hereof and until further orders from this Court,” the resolution stated.
PLDT was asked to post a P1-million bond “to answer for whatever damages the respondent PCC will suffer should this Court decide that PLDT is not entitled thereto.”
“The pre-acquisition review, if not enjoined during the pendency of the instant case, will violate the right of PLDT to be accorded safe harbor or protection from challenge,” the appeals court added.
Moreover, PLDT could suffer “grave and irreparable injury not subject to mathematical computation,” as the review could affect its stock price and ability to raise financing for the San Miguel acquisition as well as infrastructure needed to improve internet speed, it said.
The court also pointed out that the National Telecommunications Commission (NTC) had approved a co-use agreement in which PLDT and Globe will share San Miguel’s high-speed frequencies. Delaying the co-use agreement may result in sanctions from the NTC, the ruling stated.
In June, newly appointed competition regulators ordered the pre-acquisition review and investigation of the P69.1-billion, 50-50 acquisition by PLDT and Globe of Vega Telecom, Inc., a subsidiary of San Miguel.
PLDT and Globe argue that the deal, signed May 30, was covered by a PCC memorandum circular in which all mergers and acquisitions were supposedly “deemed approved” before the approval of the implementing rules and regulations of the new Philippine Competition Act (PCA), or Republic Act 10667.
The competition law was signed by President Benigno Aquino 3rd on July 21, 2015, but the implementing rules were approved only on May 31, the day after the telco deal was signed.
The PCC has said that its first memorandum circulars were “transitory in nature and do not dilute the authority of the PCC to conduct substantive review under PCA, especially where national interest and public policy require it.”