NextGen Day

When the PHP50 billion notification barrier is lifted in September, the Philippine Competition Commission (PCC) is asking companies with large merger and acquisition (M&A) transactions to submit them for voluntary review, since they would not be immune from the antitrust body’s motu proprio assessment.

PCC commissioner Emerson Aquende said in a video briefing on Thursday that the commission had received an application for voluntary review of its planned merger transaction.

PCC’s expertise is sought to ensure that the deal does not result in a significant reduction in competition.

“That is also something that should be taken into consideration since it demonstrates the PCC’s excellent reputation because even if they are not subject to the mandatory review procedure, they are voluntarily submitting themselves to the Commission’s evaluation.” And I believe it is to the Commission’s credit that it demonstrates its credibility,” Aquende continued.

The Bayanihan to Recover as One (Bayanihan 2) raised the notification threshold for M&A deals to PHP50 billion for the Size of the Person, up from PHP6 billion previously, and stopped the commission’s motu proprio review, which is a probe conducted on its own initiative.

During the pandemic, mergers and acquisitions (M&A) activities increased as struggling businesses sought to survive the challenging business environment.

According to the Merger and Acquisition Office’s monitoring section, at least two transactions may be subject to motu proprio scrutiny, according to PCC Commissioner Johannes Bernabe.

He declined to name the transactions but said they were in the distribution and industrial sectors.

“I believe the message we want to send is that they are still subject to a motu proprio review even if they were done when the threshold was at USD1 billion or PHP50 billion,” Bernabe added.

He noted that if those M&A agreements were to take advantage of the moratorium to get away with the possible substantial loss of competition in the market, this move may be “more painful” for these corporations.

“And I think that is a disincentive for firms to try and work around the Philippine merger review system because it would be more painful for these firms to unravel their transaction one or two years down the road if it is found on a motu proprio review that they cause this substantial lessening of market competition,” Bernabe said.

The Competition Division head of the Organisation for Economic Co-operation and Development (OECD) in Paris, Ori Schwartz, said in the same briefing that obligatory notification of M&A agreements is “too high” and that a moratorium on motu proprio review is a policy that the OECD does not endorse.

“A merger is a once-in-a-lifetime event that alters the market.” There is no going back, and anticompetitive activity will have a long-term impact on the market,” Schwartz warned.

According to PCC Chairman Arsenio Balisacan, there has been no movement to extend the PHP50 billion minimum notifiable M&A transaction amount or the prohibition on conducting motu proprio reviews, which would expire in September.

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