MANILA – The Philippine Competition Commission (PCC) is urging firms with huge merger and acquisition (M&A) transactions for voluntary review as they will not be exempted from the antitrust body’s motu proprio review when the PHP50-billion notification threshold will be lifted in September this year.
In a virtual briefing Thursday, PCC commissioner Emerson Aquende said the commission recently received an application for voluntary review for its intended merger transaction.
It seeks PCC’s expertise to ensure that the deal will not result in a substantial lessening of competition.
“That is also something that is to be really taken into account because that also shows the strong reputation of the PCC, that even if they are not subject to the compulsory process of review, they are voluntarily submitting themselves to the review of the Commission. And I think that is to the credit of the Commission that it shows that the Commission is credible,” Aquende added.
The Bayanihan to Recover as One (Bayanihan 2) hiked the notification for M&A deal to PHP50 billion for the Size of the Person, which was only at PHP6 billion, while it also suspended the conduct of motu proprio review —an investigation on its own initiative— in the commission.
M&A transactions rose during the pandemic as struggling companies resorted to mergers and acquisitions deals to survive the difficult business environment.
PCC Commissioner Johannes Bernabe bared that according to the monitoring division of the Merger and Acquisition Office, there are at least two transactions that may be subjected to motu proprio review.
He declined to identify these transactions but cited that these are in the sectors of distribution and industrial.
“I think the message we wish to put forward is that even if they are undertaken when the threshold was at USD1 billion or PHP50 billion, they are still not immune from the conduct of a motu proprio review,” Bernabe said.
He added that if those M&A deals sought to take advantage of the moratorium to get away with the possible substantial lessening of competition in the market, this move could be “more painful” for these companies.
“And I think that is a disincentive for firms to try and work around the merger review system of the Philippines because it would be more painful for these firms to unravel their transaction, one or two years down the line if on a motu proprio review it is found that they cause this substantial lessening of competition in the market,” Bernabe said.
In the same briefing, the Paris-based Organisation for Economic Co-operation and Development (OECD) Competition Division head Ori Schwartz said “too high” a value for mandatory notification of M&A deals and the moratorium of motu proprio review is a policy that the OECD does not recommend.
“A merger is a one-time action that changes the market. There is no way back, and the effect of anticompetitive action will affect the market basically forever,” Schwartz said.
PCC chairman Arsenio Balisacan said that so far, there is no move to further extend the PHP50-billion minimum notifiable M&A transaction value and the moratorium on conducting motu proprio review, which will expire this September. (PNA)