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Philippines’ competition watchdog rules PLDT-Globe deal anti-competitive

2 Sep 2016

The Philippine Competition Commission (PCC) has announced, via its Mergers and Acquisition Office (MAO), that it considers the proposed PHP69.1 billion (USD1.48 billion) joint takeover of the telecoms assets of local conglomerate San Miguel Corp (SMC) by the country’s two telecoms giants – PLDT Inc. and Globe Telecom – as anti-competitive, and only likely to further strengthen their duopoly. The MAO posted a 16-page preliminary statement of its concerns on the PCC website on 25 August, just 24 hours before the Court of Appeals (CA) ruled to stop the PCC from reviewing the deal.

As reported by CommsUpdate earlier this week, in its resolution the CA adjudged: ‘After a painstaking evaluation of the parties’ arguments … in order to maintain the status quo ante while the case is being judiciously studied and to preserve the rights of the parties during the pendency of the instant petition and not to render ineffectual whatever judgement that may be rendered by this court, it would be more prudent for this court to grant petitioner’s prayer for a preliminary injunction.’ Further, the court decision confirmed: ‘We agree with PLDT that, due to the ‘deemed approved’ status extended to the subject acquisition by virtue of the transitory rules, at the very least, PLDT has a clear right to be protected from the pre-acquisition review and/or investigation conducted by respondent PCC,’ concluding: ‘[Let] a writ of preliminary injunction be issued, enjoining and directing the respondent PCC … to cease and desist from conducting further proceedings for the pre-acquisition review and/or investigation of the subject acquisition … until further orders from this court.’

The MAO, however, has called for a more detailed review of the deal, considering that it has effectively barred any third party ‘from actively competing in the industry with the limited frequencies left from the spectrum buyout’. It noted that ‘given the current technical constraints, there will be no usable 2G bands available to provide basic mobile telecommunications services such as SMS and voice. Without access to 2G frequencies, it would be extremely difficult, if not impossible, for a new player to enter and challenge the incumbents. Further, the M&A office concludes that ‘expanding a network with a limited frequency spectrum requires considerably more investment, as more cell sites are needed to create the same capacity. This means that a new player will need a long time to build and expand its network and will incur considerable expense.’

Philippines, Globe Telecom (incl. Innove), PLDT Inc. (incl. Smart Communications)

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