PCC warns of review if 3rd-player criteria stand

THE Philippine Competition Commission will ask the Department of Information and Communications Technology (DICT) to incorporate the commission’s recommendations in the selection criteria for the telecom industry’s third entrant, the so-called third player.
Arsenio M. Balisacan, who chairs the PCC, said the recommendations may save the third player from undergoing the PCC’s 90-day review.
“If the PCC’s recommendations are adequately accommodated in the Terms of Reference (ToR), then we may not even need to review post-award,” Mr. Balisacan told reporters last week.
“If these are implemented, then they could no longer have to be subjected to an extensive review that we are carrying out in other mergers and acquisition cases. Otherwise, telco deals are complicated, we might need to conduct a Phase 2 review,” he added.
The PCC’s recommendations include, among others, ensuring the third player has no existing relationships with the incumbents.
In an Aug. 18 draft proposal presented by the PCC, as posted by the DICT on its website, the Commission noted the need to make explicit the definition of a “Related Party”; a prohibition on mergers, combinations or becoming a related party to an incumbent telco; the return of frequencies should it become a related party; the monitoring and evaluation of compliance with the terms; and the clawback of spectrum in case of non-use.
The PCC also sought automatic notification from the third player in the event that it merges or enters a joint venture with an incumbent, or otherwise acquires, directly or indirectly, or in stages, at least 20% of the shares of stock of a related party to any incumbent.
In addition, the PCC wants to make the return of frequencies to the government, should it be ordered, to be “mandatory” instead of the ToR’s “voluntary” process.
Also, should the third player fail to use any radio frequency spectrum awarded to it as stipulated in its roll-out plan, the frequency automatically reverts to the government.
“The PCC has recommended the foregoing inputs to address the competition concerns in the terms of reference for the selection of the (third player). With these, notification and review of the transaction could be dispensed with, in accordance with PCC’s power to exempt entities from review under Sec. 19(c) of the PCA [Philippine Competition Act of 2015],” it said in the draft, referring to its notification thresholds.
“However, in the absence of the foregoing inputs in the terms of reference, PCC would be constrained to pursue a regular review of the transaction, in accordance with its mandate under Sec. 17 of the PCA,” it added.
Under Section 17 of the said law, parties to the merger or acquisition agreement are mandated to notify the PCC of the said deal if value of the transaction exceeds P2 billion. — Janina C. Lim