MANILA – The Philippine Competition Commission (PCC) will hike the threshold for the mandatory notification for merger and acquisition (M&A) deals starting March 1.
“Beginning March 1, 2023, mergers and acquisitions that breach a Size of Party (SoP) of PHP7 billion and a Size of Transaction (SoT) of PHP2.9 billion will have to be notified to the PCC for mandatory merger review,” the PCC said in a statement.
Since the Bayanihan 2 Act lapsed in September last year, the PCC has placed the M&A threshold at PHP6.1 billion for SoP and PHP2.5 billion for SoT.
SoP is the aggregate value of assets in the Philippines of the ultimate entity of one of the parties to a transaction, while SoT is the value of assets or revenues of the acquired entity and the entities it controlled.
Both thresholds should be met to trigger the compulsory notification to PCC for a merger or acquisition transaction.
The commission said it has “recalibrated the thresholds for compulsory notifications of mergers and acquisitions, marking an increase to reflect changes in the economy facing high inflation and reeling from the effects induced by the pandemic.”
In 2022, the country’s gross domestic product grew by 7.6 percent.
On the other hand, inflation hit 8.7 percent in January 2023.
Since the enactment into law of the Philippine Competition Act (PCA), thresholds for both SoP and SoT were at PHP1 billion.
SoP threshold grew to PHP5 billion in 2018, PHP5.6 billion in 2019, and PHP6 billion in 2020 before the pandemic.
SoT threshold, meanwhile, increased to PHP2 billion in 2018, PHP2.2 billion in 2019, and PHP2.4 billion in 2020.
At the height of the pandemic, M&A thresholds were at PHP50 billion.
To date, the total M&A deals that the PCC has approved stand at PHP4.94 trillion.
“The top five sectors with the most number of M&A agreements involve manufacturing (51 transactions), financial and insurance (42), real estate (33), electricity and gas (27), and transportation and storage (19),” the commission added. (PNA)
