Court of Appeals upholds P70 billion purchase by PLDT, Globe of San Miguel telco assets

October 23, 2017

The Court of Appeals has upheld the validity of the P70-billion buyout deal of Philippine Long Distance Telephone Company and Globe Telecommunications involving acquisition of the telco assets of San Miguel Corp.

In an 54-page decision, the CA Former 12th Division through Associate Justice Ramon Bato ruled that Philippine Competition Commission committed grave abuse of discretion when it ordered a full review of the acquisition despite PLDT and Globe’s compliance to its Memorandum Circular 16-002.

With this ruling, the CA issued a writ of mandamus compelling the PCC “to recognize the subject acquisition as deemed approved by operation of law.”

In a statement, the PCC  said it has not received a copy of the decision, it added "we will take the appropriate legal steps to move this multi-billion acquisition case forward."

But the PCC said "that a year after the sale, the public continues to complain of slow, expensive and poor quality of internet and mobile services."

Memorandum Circular 16-002 requires parties to a merger acquisition to merely notify the commission through a letter addressed to the commission containing certain information.

“With the subject notice being compliant with the requirements of MC 16-02 and there being no false material statement therein, the subject acquisition is deemed approved by operation of law and may no longer be challenged under the PCA (The Philippine Competition Act),” the appellate court declared.

“It follows that PCC is duty-bound to recognize that status and give effect thereto. The petition for mandamus is therefore, meritorious,” it said.

But the CA said approval of the deal does not remove the power of PCC to conduct a post-acquisition review to ensure  PLDT and Globe would not engage in any anti-competitive conduct.

“If the parties misuse the subject acquisition to engage in anti-competitive behavior, then PCC may very well exercise its powers to prevent and punish anti-competitive behavior under R.A. 10067 (or The Philippine Competition Act ),” the CA  said.

In its letters on June 7 and June 17, 2016, the PCC ordered the pre-acquisition review and investigation of the acquisition made by PLDT and Globe of all issuing and outstanding shares and assets of Vega Telecom Inc., a subsidiary of SMC, for allegedly violating the Philippine Competition Act on suspicion of conspiracy on its sale.  DMS