BOTH PLDT and Globe Telecom Inc. are facing the danger of paying a huge penalty for not complying with the rules of the Philippine Competition Act. The penalty, according to The Manila Times’ calculation, could range from P691 million to P3.455 billion.
The Philippine Competition Commission (PCC) is firm in its stance that the P69.1-billion buyout of San Miguel Corp.’s (SMC) telecommunications business by PLDT and Globe is “not deemed approved.”
PLDT and Globe had signed separate share purchase agreements (SPA) with SMC Group on May 30 to acquire the SMC telco assets, and have since laid plans to develop the necessary infrastructure to utilize the assets, key among them SMC’s share of the valuable 700MHz broadcast band. They claim that they have notified the PCC on May 30, a day before the approval of the final IRR on May 31.
They also say that they assumed the P69.1-billion transaction was “deemed approved” as the date of their notification letter to the commission appeared to be covered by the terms of PCC’s second memorandum circular—MC 16-002 —which, they claim, stated that covered transactions are “deemed approved” if they are “consummated after the effectivity of this Memorandum Circular but before the effectivity of the implementing rules and regulations [IRR].”
The PCC which is mandated to review and evaluate mergers and acquisitions (M&As) worth P1 billion and above for anti-trust practices and abuse of market dominance, met separately with PLDT Inc. and Globe Telecom Inc. to discuss and attempt to arrive at an understanding regarding the review of the 50-50 acquisition of SMC’s telecom business under Vega Telecom Inc.
It had earlier warned PLDT and Globe that consummating the deal before the PCC concluded its review could make the two companies subject to penalties.
“The PCC stands by its position that the acquisition is not deemed approved and has to be reviewed under the Philippine Competition Act and its implementing rules and regulations [IRR],” the commission said.
“As conveyed to the parties, they are in the meantime directed to, and should be guided by, Section 17 of the PCA which provides that ‘an agreement consummated in violation of this requirement to notify the Commission shall be considered void and subject the parties to an administrative fine of 1 percent to 5 percent of the value of the transaction,’” the PCC said.
PLDT spokesperson Ramon Isberto said the company is “deferring comment on this matter,” while Globe representatives were not available for comment as of press time.
If approved, the P69.1-billion buyout is expected to improve internet data services in the country, and at the same time solidify the duopoly’s control of the country’s telecommunications sector.