PCC sets provisional ceiling for compulsory notification of mergers, acquisitions

The Philippine Competition Commission (PCC) on Friday began the implementation of provisional thresholds for mandatory notification of mergers and acquisitions to the antitrust body.

In a statement, the PCC said, starting September 16, 2022, it should be notified on mergers and acquisitions reaching a size of party of P6.1 billion and a size of transaction of P2.5 billion for review before consummation of the transaction.

The provisional thresholds will remain in effect “until the approval of the Commission en banc of new thresholds for compulsory notification.”

The size of party refers to the aggregate value of assets or revenues in the Philippines of the ultimate parent entity of one of the parties to a transaction, while the size of transaction refers to the value of assets or revenues of the acquired entity and the entities it controls.

The PCC said it calculated the provisional thresholds by updating the 2020 thresholds based on the country’s nominal gross domestic product (GDP) growth in the past two years, reflecting the contraction of the economy by 8.09% in 2020 and subsequent growth of 8.13% in 2021 since the two-year temporary thresholds of P50 billion for size of party and size of transaction under the Bayanihan to Recover as One Act or Bayanihan 2 expired on September 15, 2022.

Prior to Bayanihan 2’s passage, the PCC’s prevailing size of transaction threshold was P2.4 billion while the size of party threshold was P6 billion.

The thresholds were initially set at P1 billion in 2015 under the Philippine Competition Act. The mergers and acquisitions ceilings have since been subject to adjustment under PCC Memorandum Circular 2018-001.

This ensures that the notification thresholds account for inflation and the country’s overall economic performance, according to the PCC.

“Parties seeking confirmation that they are not subject to compulsory notification under the previous P50-billion thresholds must submit definitive agreements signed before September 16 with their Letter of Non-Coverage (LNC) to the PCC’s Mergers and Acquisitions Office,” the antitrust body said.

Under the two-year effectivity of the thresholds under Bayanihan 2, the PCC said it received notifications of nine transactions, six of which were approved, and three withdrawn.

During this period, the antitrust body said it also processed 55 LNCs for transactions that did not breach the Bayanihan 2-prescribed thresholds, involved internal restructuring or consolidation of ownership without change in control, and referred to the acquisition of lands.

To date, the PCC said it has received a total of 227 notifications and has approved 205 transactions with a combined value of P4.63 trillion.

The antitrust body said it has blocked one transaction, namely Universal Robina Corp.’s acquisition of Roxas Holdings Inc.’s sugar mill, Central Azucarera Don Pedro Inc., in Batangas.—AOL, GMA News