PCC airs concerns over SM’s Goldilocks acquisition

By Patrizia Paola C. Marcelo,
Reporter

THE Philippine Competition Commission (PCC) has expressed concern over the SM Group’s acquisition of Goldilocks Bakeshop, Inc., saying the deal may give the latter an undue advantage over competitors operating in SM malls.

The PCC is currently reviewing SM Investments Corp.’s acquisition of a controlling stake in Goldilocks, which has breached the P1-billion threshold and requires the commission’s approval.

“The first one is making sure that… with potential tenants, that the same criteria will be applied to them, meaning automatically you will score low because you end being a competitor for example of Goldilocks. The other set would have to do with the kind of information that SM would have with regard to Goldilocks as well as the competitors of Goldilocks,” PCC Commissioner Stella Luz A. Quimbo said in a press briefing on Tuesday.

The PCC is asking SM to give a voluntary commitment to apply the same criteria for Goldilocks and its competitors when leasing mall space.

“One way is by voluntary commitments… They are well aware of what we think would be the competition problems. We have also provided guidance on how they can proceed, meaning specific guidelines on specific commitments they can propose and what are acceptable to the PCC,” Ms. Quimbo said.

Another possibility is for SM to set up a “Chinese wall” to prevent Goldilocks from accessing crucial information on competitors.

“As you know, there’s a centralized system which SM would have and which would allow SM to have detailed information on sales, pricing, etc. not only for Goldilocks, which it would own after the transaction, but all its competitors, to the extent that it would give undue advantage to SM,” Ms. Quimbo said.

SM currently operates 66 malls with a total gross floor area of 8 million square meters in the Philippines, while Goldilocks has a network of more than 500 stores in the country and abroad.

APPEAL
Meanwhile, the PCC said it filed an appeal with the Supreme Court over the Court of Appeals (CA) decision to junk its bid to review PLDT, Inc. and Globe Telecom, Inc.’s acquisition of San Miguel Corp.’s telecommunications assets.

“(On Monday), we in fact filed our appeal to the Supreme Court stemming from the decision of the Court of Appeals (CA) 12^th division,” PCC Commissioner Johannes Benjamin R. Bernabe said.

In the appeal, Mr. Bernabe said they argue the CA erred in deciding the $1.5-billion telecommunications deal was deemed approved.

In October, the CA’s former 12^th division ordered the PCC to permanently stop its review of the acquisition of SMC’s assets by the two telco giants.

The PCC also welcomed the possibility of the entry of a third player in the telecommunications industry, but cited challenges that need to be addressed for the new company to become a viable player.

“Based on the statistics that we have, we found that only 12.8% of the spectrum would be available for a potential third player,” Ms. Quimbo said. She added that a favorable SC decision would pave the way for a chance to “farm out” the limited frequencies.

Malacañang earlier identified China Telecom Corp. Ltd. as the Chinese government’s choice to enter the Philippine market. The National Transmission Corp. also said they can partner with a Chinese company, to hold 60%, or partner with another private company and share the 60%. Philippine laws require a maximum of 40% stake for foreign entities in public utilities.

PSE-PDS DEAL
The PCC has also cleared the merger of the Philippine Stock Exchange (PSE) and Philippine Dealing System Holdings, Corp. (PDS). PSE made an initial filing but then withdrew due to need to comply with requirements.

“Once it was deemed sufficient, then the review period commenced… on the 30^th day, a decision was arrived at, which essentially, effectively cleared the transaction from PCC’s end,” Mr. Quimbo said.