The government agency formed to fight business monopoly on Monday threatened to impose fines on Philippine Long Distance Telephone Co. and Globe Telecom for allegedly not complying with the rules, when they acquired the telecommunication assets of San Miguel Corp. for P70 billion.
“The PCC cannot further comment on the transaction because we have returned the parties’ submissions for non-compliance. As of this time therefore, there is no notice for the PCC to review. We emphasize that the transactions have not been deemed approved,” PCC said in a statement.
PCC said it denied the initial filing of PLDT and Globe, which was found to be defective and deficient. It said while the two companies made new submissions consisting of new materials not previously produced in their initial notice to the PCC, the two parties continued to deny that these constituted a refiling.
PCC said PLDT and Globe should be guided by Section 17 of Philippine Competition Act 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 one percent to five percent of the value of the transaction.”
“They are also reminded that the PCA is in effect since August 2015. The law is not only about mergers and acquisitions; it also makes illegal, anti-competitive agreements and acts that can be considered abuse of dominant market position, which are separately penalized by the PCA,” the commission said.
Both PLDT and Globe claimed PCC had no power to block the transaction. The two companies said the P70-billion transactions with San Miguel Corp. were deemed approved.
PLDT first vice president and head of investors relations Melissa Vergel De Dios said in a disclosure to the stock exchange the transactions were “deemed approved” and “not subject to retroactive review” by PCC.
“We have a gesture of good faith an in the spirit of cooperation, voluntarily submitted to the commission certain agreements pertaining to the transactions, for their information and reference, subject to confidentiality,” De Dios said.
She said PLDT submitted on June 10 its response to the PCC that the Vega Telecom Inc. notice is “adequate, complete, sufficient and compliant with the requirements under the circulars and does not contain any false material information.”
Vega owns an 87-percent stake in Liberty Telecom Holdings Inc., the unit formed by San Miguel. Vega also owns direct and indirect stakes in companies including Bell Telecommunication Philippines Inc., Eastern Telecom Philippines Inc., Express Telecom and Tori Spectrum.
Globe assistant corporate secretary and vice president for law and compliance Marisalve Ciocson-Co said the notice sent to PCC was filed pursuant to and in accordance with the agency’s Memorandum Circular No. 16-002.
The circular provides that before the implementing rules and regulations for the Philippine Competition Act come into full force and effect upon filing with the PCC of a notice in which the salient terms and conditions of an acquisition are set forth, the transaction is deemed approved by the PCC and it may no longer be challenged.
The deal between PLDT, Globe and San Miguel was sealed on May 30, while the PCC rules were published on June 3 and would take effect after 15 days.
Co said the supposed “deficiency in form and substance” of the notice was not a ground to prevent the transaction from being deemed approved.
“The only exception to the rule that a transaction is deemed approved is when a note contains false material information. In this regard, the company stated that the notice does not contain any false information,” she said.
PLDT and Globe also said the transaction was reviewed by the parties and their respective advisers to ensure compliance with all relevant laws, including provisions of the Philippine Competition Act.
They also said the transaction unlocked the benefits of underutilized frequencies to enable PLDT and Globe to provide the public with better experience on mobile data and home broadband services.
PLDT and Globe also addressed anti-completion and spectrum issues with the National Telecommunications Commission that may be raised in connection with the 700-megahertz frequency co-use arrangement entered into by the two companies.