AYALA-LED Globe Telecom has decried the Philippine Competition Commission’s (PCC) inconsistencies in implementing its rules and regulations in connection with the co-purchase by Globe and PLDT Inc. of the telco assets of San Miguel Corp. (SMC).
“We are not against PCC to do its mandate but what we are opposing is the inconsistent policy in implementing its rules and regulations,” said Globe general counsel Froilan Castelo.
Castelo accused PCC of treating the P70 billion deal Globe entered with PLDT and San Miguel differently from others when the said transaction was clearly within the “safe harbor period” of the PCC.
Needed only a notice
Under the then transitory rules of the PCC, the official said that the transaction, which happened on May 30, needed only a notice to the PCC and should be “deemed approved” and not subject to review.
PLDT and Globe’s notification to the PCC came in on May 30, a day before the approval of the final IRR on May 31.
“Stating that this transaction should still be subject to review despite its own rules, the PCC has changed the rules suddenly in the middle of the game and acted on it whimsically,” he added.
Globe has invited the PCC to investigate the conduct and behavior of the companies in the transaction as part of the PCC’s plenary powers, but maintains that the transaction should be “deemed approved.”
In a statement on Thursday, however, the PCC addressed three common questions asked by the media, including whether the PCC had treated the P69.1-billion transaction between the PLDT, Globe and San Miguel Corp. (SMC) differently from other mergers and acquisitions (M&A) valued P1 billion and above.
The PCC answered negatively, saying that there are 15 more firms facing the same situation with “not deemed approved” status, but that these eventually complied with the commission’s request for more transaction details.
“No. We adopted uniform procedures in determining sufficiency of requirements under the memorandum circular (MC). We have received 61 notifications under the MC, and about a quarter (about 15) of these were determined to be insufficient and not deemed approved. All other parties complied with the PCC’s request for additional information. Only Globe and PLDT refused to comply,” the PCC said.
“The PCC requested for additional information on the key terms of the transaction, which they refused to provide, thereby preventing the PCC from granting it a deemed-approved status,” it added.
The commission said the two telcos have “erroneously interpreted the rules” when Globe claimed in one of its press statements that the deal “should be deemed approved” and “not subjected to review.”
“Globe and PLDT erroneously interpreted the rules as vesting in them the sole prerogative to determine sufficiency of their submission and automatic approval of their own transaction,” the PCC said.
Public comment questioned
Castelo also questioned why the PCC invited the public to comment on this case, considering that this is one involving the adjudication of the rights of parties.
“This is highly irregular as government agencies like the PCC can only validly conduct public consultations in the exercise of their rulemaking powers. Certainly, the transaction we have is adjudicatory in nature involving the rights of private parties, and the PCC is in no way performing as if to issue new guidelines and implementing rules for the benefit of the public,” he added.
The PCC for its part said the invitation to solicit comments from the public was imperative since the two acquiring parties refused to cooperate with the PCC in its comprehensive review and even filed cases—petition for Certiorari and Prohibition with an application for a TRO—to the Court of Appeals in an attempt to halt the PCC review.
“In light of the parties’ refusal to cooperate with the PCC in this comprehensive review, it became imperative to solicit comments from the public. This is also consistent with global best practice. If there is nothing irregular in this transaction, the parties should welcome inputs from various stakeholders,” the commission said.
The PCC was clarifying the two telcos’ sentiments that the invitation to comment was a deed of trial by publicity of the said transaction to acquire SMC’s telecoms business through Vega Telecom Inc.
It earlier said the public comments will be a part of the comprehensive review of the transaction, seeking whether “the merger will (1) substantially prevent, restrict, or lessen competition in the relevant market, or (2) adversely impact consumer welfare.”
Globe insisted it has strictly followed the provisions of Sections 4 and 5 of the PCC Memorandum Circular 16002 before the deal was closed last May.
Under the MC, the deal is deemed approved if they are “consummated after the effectivity of the memorandum circular but before the effectivity of the implementing rules and regulations.”
The PCC, however, chose to disregard this and took the position that it is not bound by its own rules, Globe said.
Lawyer Ray Espinosa, PLDT head of regulatory affairs, said that PLDT, Globe and SMC fully and diligently complied with the notice requirements of the Commission’s transitory circulars.
“The notices were filed on time and contained the essential terms of the transaction,” he said, adding that the tran-saction has been deemed approved by operation of the provisions of the Commission’s transitory circulars.
He argues that the Commission has no power or authority to interpret its rules as it deems fit.
“The terms of the Commission’s transitory circulars were clear and left no room for interpretation. It behooves the Commission to follow its own rules,” he added.
He reiterated that to reverse or undo the transaction would result in irreparable and incalculable injury to the public service.