US drops anti-trust case vs RP telcos

The US Department of Justice has finally given up on its quest to pin down Philippine telecommunications companies for alleged violation of American anti-trust laws after it terminated its grand jury investigation into the matter, putting to rest an issue that has hounded local telcos and strained relations with their US counterparts.

Sources disclosed that the US DOJ anti-trust division’s decision not to proceed with the investigation against Philippine telcos was an offshoot of an earlier decision handed down by Judge David Ezra of the circuit court of Hawaii which said that US courts have no jurisdiction over companies that do not engage in continuing business in America, a decision that is expected to have far-reaching implications on the matter of extra-territorial jurisdiction of foreign courts.

Officials of Bayan Telecommunications Inc. revealed yesterday that the US DOJ has advised BayanTel’s US counsel, Vinson & Elkins that it is terminating its two year old grand jury investigation into the international termination rates of BayanTel and other Philippine carriers without taking any action. Other telcos interviewed said they have yet to be officially informed by their American lawyers but said "this is definitely good news and a precedent-setting development."

The US DOJ two years ago initiated a grand jury investigation into possible violations by Philippine telcos of US anti-trust laws when they unilaterally raised their termination rates (or the amount which Philippine telcos charge US carriers for landing calls in the Philippines either through fixed line or mobile) from eight to 12 cents in the case of landline and 12 to 16 cents for mobile calls.

The same increase in termination rates was earlier the subject of a complaint filed by American giants AT&T and MCI WorldCom against six Philippine carriers namely PLDT, Globe Telecom, Smart Communications, Bayan Telecommunications, Digital Telecommunication, and PLDT subsidiary Subic Telecom.

The US Federal Communications Commission upheld the findings of its international division that the Philippine telcos are guilty of "whipsawing" an administrative violation which occurs when foreign businesses resort to actions that tend to force US companies to agree during the course of negotiations.

Apparently not contended with the US FCC administrative findings, US carriers filed a complaint with the US DOJ anti-trust division which sought a grand jury probe.

It will be recalled that there was a huge controversy over the conduct of the investigation when, at the annual Pacific Telecommunications Council conference in Waikiki in January of last year, Philippine telecoms executives were arrested by FBI agents and questioned. They were later released. Even US telecoms executive protested this, noting that it could lead to US executives being detained in other countries when they attended industry conferences.

When the Hawaii grand jury filed a motion with Judge Ezra for the issuance of a subpoena to compel Philippine companies to submit documents to aid the jury in its investigation, Globe filed its opposition and the circuit court ruled in favor of the latter when it said that the jury had no jurisdiction over companies like Globe that do not engage in continuing business in the US.

The STAR learned that the US DOJ appealed Judge Ezra’s decision with the US Court of Appeals several days back only to withdraw it.

Violations of the US anti-trust laws which aim to prevent unlawful restraints, price-fixing, and monopolies carry fines of up to $10 million for corporations, and fines of up to $350,000 and prison sentences of up to three years for persons. The federal government, states, and individuals can collect triple the amount of damages they have suffered as a result of injuries.

The biggest US antitrust action since those involving AT&T and IBM was that of computer software giant Microsoft Corp. which arose after competitors complained that Microsoft used illegal arrangements with buyers to ensure that its disk operating system would be installed in nearly 80 percent of the world’s computers. Microsoft was found guilty of violating the Sherman Anti-Trust Act.