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PCC adjusts ceiling for compulsory notification of mergers, acquisitions

The Philippine Competition Commission (PCC) has upwardly adjusted the thresholds for the mandatory notification of mergers and acquisitions to the antitrust body.

In a statement, the PCC said the recalibration of the ceilings for the compulsory notification was made “to reflect changes in the economy facing high inflation and reeling from the effects induced by the pandemic.”

Starting March 1, 2023, the antitrust watchdog said that it should be notified on mergers and acquisitions reaching the size of party (SoP) of P7 billion and a size of transaction (SoT) of P2.9 billion for review before the consummation of the transaction.

To recall, in September last year, the PCC set provisional thresholds for SoP of P6.1 billion and SoT of P2.5 billion after the two-year temporary thresholds of P50 billion for SoP and SoT 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 SoT ceiling was P2.4 billion while the SoP threshold was P6 billion.

The SoP 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 SoT refers to the value of assets or revenues of the acquired entity and the entities it controls.

Both ceilings for SoP and SoT must be met to trigger compulsory notification to the antitrust body of a merger or acquisition.

“The Commission’s merger review thresholds are adjusted to keep pace with the changes in the markets and to reflect the businesses’ real value over time and relative to the size of the economy,” the PCC said.

The antitrust watchdog noted that the revised thresholds do not apply to mergers and acquisition “pending review by the agency, notifiable transactions consummated before March 1, and transactions already subject of a decision by the Commission.”

The PCC annually adjusts its thresholds following Memorandum Circular No. 18-001 which is based on the official estimate of the nominal gross domestic product (GDP) growth of the previous year.

To date, the antitrust body has approved 206 transactions with a total transaction value of P4.94 trillion.

The top five sectors with the most number of mergers and acquisitions agreements involve manufacturing (51 transactions), financial and insurance (42), real estate (33), electricity and gas (27), and transportation and storage (19).

“In the event transactions with high public interest do not meet the thresholds, the PCC may launch motu proprio reviews in the interest of consumers,” the antitrust body said. — RSJ, GMA Integrated News