JUNE 9, 2011

NR # 2430C

Solon decries PLDT-DIGITEL monopoly; urges Congress to reconsider franchise A lawmaker has urged the House of Representatives to reconsider the congressional franchise it granted to Digitel Telecommunications Philippines Inc. (Digitel) relative to Digitels deal with the Philippine Long Distance Telephone Co. saying it may perpetuate a monopoly. In a parliamentary inquiry, Rep. Reynaldo V. Umali (2nd District, Oriental Mindoro) said Digitels share swap deal will make the Philippine Long Distance Telephone Co. (PLDT) enjoy a dominant 70 percent share of the telecommunications market and gain effective control of 84 percent of the total usable radio frequency spectrum. The PLDT-Digitel deal, which Umali said may limit competition, behooves this august body to do its share in considering that what is at issue is a congressional franchise granted to Digitel, which emanated from this House. Umali stressed the urgent need for Congress to revisit the franchise given to Digitel through Republic Act 7678. He said Section 15 of RA 7678 specifically states that the grantee shall not lease, transfer, grant the usufruct of, sell or assign this franchise or the rights and privileges acquired thereunder to any person, firm, company, corporation or entity, nor merge with any other corporation or entity without prior approval of Congress. According to Umali, there is an urgent need to clarify the deal to determine whether it is monopolistic and may now be used as a tool to perpetuate combinations in restraint of trade or unfair competition. If so, this is violative of our fundamental law, Umali said, citing Section 19, Article XII of the 1987 Constitution that proscribed the deal which may be bordering or nearing monopoly. To rule out monopoly with certainty, the fundamental law mandates the State to regulate or prohibit monopolies when the public interest so requires, Umali said. Umali said on October 11, 2010, he, together with Rep. Czarina D. Umali, filed House Bill 3476, entitled, An Act prohibiting monopolies, attempt to monopolize an industry or line of commerce, manipulation of prices of commodities, asset acquisition and interlocking memberships in the Board of Directors of competing corporate bodies and price discrimination among customers. HB 3476 recommends penalties and the grant of additional powers and functions to

the National Consumer Affairs Council, Umali said. The bill is an anti-trust measure, which seeks to directly address the increasingly devious and complex schemes that serve to perpetuate monopolies and unfair competition, Umali explained. Umali said the PLDT-Digitel deal will serve as an ideal case study for analyzing anti-trust or unfair competition behavior, adding that several lawmakers including Reps. Bernadette R. Herrera-Dy (Party-list, Bagong Henerasyon), Danilo Suarez (3rd District, Quezon), Bayan Muna party-list Reps. Teddy Casino and Neri Colmenares had filed similar bills. Neither shall controlling interest in the grantee be transferred, whether as a whole or in parts and whether simultaneously or contemporaneously without prior approval of Congress, he said. Umali said that while there may be some exceptions, such must be reconsidered with the constitutional prohibitions against monopolies and combinations in restraint of trade and/or certain competition. He explained that the reason for requiring a Congressional approval is understandableto allow Congress to scrutinize the transaction and determine if it conforms to public interestthe rationale for granting the franchise and in order to regulate or prohibit monopolies and disallow unfair competition. I urge my colleagues to urge NTC to hold in abeyance the hearings being conducted (in connection with the deal), Umali said. We need to do our share by hearing the Resolutions filed by (the above-mentioned House of) Representatives, Umali said.
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