Chelsea, Trans-Asia to appeal PCC decision voiding acquisition deal

Chelsea Logistics Corp. intends to make an appeal against the Philippine Competition Commission’s (PCC) decision voiding the acquisition of Trans-Asia Shipping Lines Inc.

The deal was priced below the threshold for compulsory notification regarding mergers and acquisitions, Chelsea said on Tuesday.

The company has received on Tuesday the PCC decision regarding the acquisition deal that happened 2016, and the imposition of a P22.8-million fine on Chelsea and Trans-Asia for failing to notify the commission about the deal, according to a regulatory filing submitted by Chelsea vice president Ignacia Braga.

“Parties to the voided transaction are currently weighing their options on whether to first file a motion for reconsideration with the commission or to go straight to the Court of Appeals for redress,” Chelsea said.

In its decision, the PCC said that the parties should have informed the antitrust body of the transaction as it exceeded what was then the P1-billion threshold for compulsory notification because Trans-Asia’s assets were worth P1.1 billion.

“Chelsea and the former owners of Trans-Asia disagree. Notification to the commission is not required since Trans-Asia’s net asset value at the time of the sale was way below the commission’s P1-billion threshold,” Chelsea said. It did not elaborate.

“The parties argue that the basis for the P1-billion size of transaction threshold should be computed based on ‘Net Assets’,” Chelsea noted.

Trans-Asia had debts in its books, with the amount bringing down its net asset value to not even half of the commission’s P1-billion threshold, Chelsea said.

“The commission, however, stated that the size of transaction test should be determined based on ‘gross’ assets, not ‘net’ assets,” the company said.

The PCC only issued its guidelines in December 2017, a year after the Chelsea-Trans-Asia deal.

“Chelsea and the sellers are convinced that the commission should reconsider what the parties consider an unfair decision,” Chelsea noted.

“It will be recalled that the Commission early this year raised its own size of transaction threshold to P2.0 billion citing as reason that transactions below this amount will not likely raise competition issues,” it said.

The nullification of the transaction and theP22.8-million fine are “unduly harsh” in light of the “ambiguity” in the commission’s own rules.

“As the decision is not yet final, it has no impact to the business, operations and financial conditions of Chelsea,” it said. —Ted Cordero/VDS, GMA News