The Philippine Competition Commission (PCC) has hit out at the country’s two leading operators for closing their acquisition of San Miguel Corp’s telecom assets despite facing an open legal challenge from the PCC.
PLDT and Globe made the final payment of PHP13 billion ($261 million) last week, after the pair agreed to purchase SMC’s operations as a 50:50 joint acquisition in May 2016. Between them, the two operators host 99% of the country’s mobile connections.
However, the PCC had previously asked that the operators avoid “performing any action for the consummation or implementation of the terms of the acquisition” until the Supreme Court had reached a decision on whether to repeal an injunction that is preventing the agency from reviewing the deal.
Before reaching an agreement with PLDT and Globe, SMC had been in talks with Australia’s Telstra over whether to form a joint venture that would bring some fresh – and highly desirable – competition into the Philippines’ mobile market. However, after talks proved fruitless, Globe and PLDT announced the surprise acquisition.
The fact that the two incumbents are essentially strengthening their footprints via the acquisition seems to have aroused the suspicions of the PCC, which has been attempting to review the deal under the Philippines’ fair competition law. Globe claimed that this scrutiny was unfair and amounted to the PCC “changing the rules suddenly in the middle of a game.”
Both Globe and PLDT’s Smart then filed for temporary restraining orders against the PCC in July 2016, effectively stymieing its review of the deal. A month later, the PCC stated that it believed the deal would “likely” have an adverse impact on competition in the Philippines.
In a statement, the PCC confirmed that it “stands by its position that Globe and PLDT should not have proceeded with the payment of their final instalment on the telco deal, considering pending cases filed before the Supreme Court and Court of Appeals. Completing the payment for the telco assets is a move that unduly pre-empts the forthcoming rulings.”
With the demand for greater competition rising, President Rodrigo Duterte has hit out at both Globe and Smart. In October 2016 he stated that unless both firms significantly improved their unsatisfactory service, he would open up the market to competition from Chinese firms. Since obtaining 700MHz spectrum, both operators have been rapidly rolling out coverage and increasing speeds.