MANILA --The Philippine Competition Commission (PCC) said Thursday that it will block the acquisition by Universal Robina Corp. (URC) of the assets of its lone competitor, a sugar miller in Batangas, as the deal will result in a monopoly.
PCC said it does not approve of URC's buyout of Central Azucarera Don Pedro, Inc. (CADPI), as well as the property of Roxas Holdings, Inc. (RHI) where CADPI's milling and refining assets are located.
"The prohibition prevents this deal from creating a monopoly in the relevant market that could harm the welfare of the sugar cane planters," PCC Chairman Arsenio Balisacan said.
There are only two sugar millers in Batangas -- the one owned by CADPI in Nasugbu and the other one is in Balayan, which was already bought by URC back in 2016.
If the acquisition will proceed, URC will have the sugar milling monopoly in the said province.
The PCC has already rejected the voluntary commitments made by the parties. The antitrust body then proceed to review track of the transaction and made the decision last Tuesday.
PCC's Merger and Acquisition Office noted that the transaction would be a merger-to-monopoly deal.
It also feared that the transaction will give URC the market power to unilaterally cut the planters' share in the planter-miller sharing agreement, as well as the theoretical recovery rates quoted to planters, and the incentives provided to planters.
It added that the barriers to entry for new competitors will become higher if URC will have such market power.
“A merger-to-monopoly deal is among the most detrimental types of business transactions. The URC takeover removes its only competitor, erodes the benefits of competition for the sugarcane planters, and leaves market power at the hands of a single provider in an area,” Balisacan noted.
In a text message to the Philippine News Agency, Balisacan said if URC will proceed with the buyout, the transaction remains void and the stakeholders can be subject to administrative fine of up to PHP100 million.
"If the transaction is void, it does not give rise to enforceable rights and obligations. That is, it cannot have any legal effect," he added. (PNA)
