Antitrust body issues rules on merger, acquisition reviews under Bayanihan 2

The Philippine Competition Commission (PCC) has issued rules to implement a provision in the Bayanihan to Recover As One Act or Bayanihan 2, concerning the review of mergers and acquisitions (M&As). 

Section 4 (eee) of the Bayanihan 2 states that “the Philippine Competition Commission (PCC) shall promote business continuity and capacity building, as such, all mergers and acquisitions with transaction values below Fifty billion pesos (P50,000,000,000.00) shall be exempt from compulsory notification under Section 17 of Republic Act No. 10667 or the ‘Philippine Competition Act’ if entered into within a period of two (2) years from the effectivity of this Act, and further, shall be exempt from the PCC’s power to review mergers and acquisitions motu proprio provided in Section 12 of Republic Act No. 10667 for a period of one (1) year from the effectivity of this Act.”

With this, the PCC published on October 5 the rules detailing the exemptions from compulsory notification and motu proprio review, computation of new thresholds, and the option for voluntary notification of M&A transactions while the Bayanihan 2 is in effect. 

Under the rules, the following M&As are still subject to compulsory notification: 

• Transaction value is at least P50 billion
• Entered into before the effectivity of Bayanihan 2 and exceed the applicable thresholds when the definitive agreement was signed

In determining the transaction value, the PCC said the rules apply P50 billion as the new size of person (SOP) and size of transaction (SOT) thresholds for compulsory notification.

Prior to this, the antitrust body said thresholds were adjusted annually and set at P2.4 billion for SOT and P6 billion for SOP for 2020.

To date, the PCC said it is reviewing five transactions notified before Bayanihan 2’s effectivity. 

In terms of motu proprio review, the following M&As are not covered by Bayanihan 2’s exemption:

• Entered into before the effectivity of Bayanihan 2 which have not yet been the subject of PCC review
• Pending review by PCC before the effectivity of Bayanihan 2

M&As that are likely to substantially lessen competition may be reviewed motu proprio after 1 year from Bayanihan 2’s effectivity, according to the PCC.

It noted that parties to M&As below the P50-billion threshold may choose to voluntarily notify their transaction to undergo merger review.

In its discretion, the PCC said it may give due course to the voluntary notification, with review periods of 45 days for Phase 1 and 90 days for Phase 2. 

“The PCC recognizes the need to strike a balance in implementing the policy objectives of promoting business continuity under the Bayanihan 2 and looking after market efficiency and consumer welfare under the Philippine Competition Act,” PCC Chairperson Arsenio Balisacan said.

“With fewer merger notifications expected, the PCC will intensify action in other areas of enforcing the competition law especially against anti-competitive agreements and abusive practices that harm consumers or unscrupulously take advantage of the crisis,” Balisacan said. — RSJ, GMA News