The controversial PHP69.1 billion (USD1.48 billion) buyout by PLDT Inc and Globe Telecom of San Miguel Corp’s (SMC’s) telecoms assets faces further regulatory obstacles, after the Philippine Competition Commission (PCC) called on the Court of Appeals (CA) to nullify it entirely. Commenting on the recent petition filed by Globe before the CA’s Sixth Division, the Commission challenged the multi-billion-dollar takeover – and in particular the pair’s land grab for valuable 700MHz mobile spectrum assets – as in contravention of requirements contained within the new Philippine Competition Act (PCA) enacted in 2015. In its response, the PCC argues that the telcos’ notification of the transaction, which the parties filed with the agency, ‘lacked material information, making such notification ineffective and, thus, rendering the transaction as not among those that can be considered as “deemed approved.”’ Further, the PCC contends that the buyout – which was carried out prior to implementation of new rules and regulations under the PCA – nonetheless took place ‘during the effectivity of the PCC’s Memorandum Circular (MC) 16-002, which prescribes guidelines on how parties in mergers and acquisitions should notify the PCC regarding their transactions, which are worth PHP1 billion and above’.
The PCC lambasted Globe and PLDT for supplying only ‘sparse’ details of the transaction which, in its opinion, failed to disclose the ‘key terms’ of the proposed transaction as required under the MC. ‘Clearly, in the notice, [Globe] did not even disclose any actual information on the key terms of the transaction required under paragraph 1[f] of MC 16-002. Said notice merely stated that the parties shall execute a SPA, which contains the terms and conditions of the transaction,’ the PCC’s statement read, going on to conclude that: ‘Therefore, aside from denying the instant petition for lack of merit, the Honorable Court should issue an order consistent with the legal consequences of the transaction being declared void, that is, an order directing petitioner to, among others: [i] cease and desist from further implementing the subject acquisition; [ii] undo all acts consummated pursuant to the subject acquisition; and [iii] pay the appropriate administrative penalties that may be imposed by respondent under the PCA for the illegal consummation of the subject acquisition.’