MANILA - The Court of Appeals ruled that the acquisition of Globe Telecom Inc and PLDT Inc of a rival firm's telecommunications assets was legal, as it directed the country's anti-trust watchdog to stop investigating the deal.

Before the P70-billion purchase, San Miguel Corp had attempted to establish a third player to challenge the dominance of Globe and PLDT. The 2 leading carriers said the deal would help them improve internet speeds.

The court said the Philippine Competition Commission should "recognize the subject acquisition as approved by operation of law" and "cease and desist from conducting further proceedings for the pre-acquisition review and/or investigation of the subject acquisition."

Globe and PLDT had argued that the transaction was "deemed approved" when it served notice of the deal. The PCC countered saying it could not be considered as such pending its evaluation.

The court said the National Telecommunications Commission had approved PLDT and Globe's co-use of the San Miguel frequency and the PCC had no authority to review or modify frequency allocations.

PLDT shares were down 0.47 percent while Globe shares were down 0.6 percent in early trading after the decision was announced.