Merger, acquisition deals to be scrutinized by government

THE Philippine Competition Commission (PCC) is placing two mergers and acquisition (M&A) deals under further review, as the deals have raised a possible competition concern.

PCC Commissioner Stella Luz Quimbo told reporters on Tuesday these two deals are in the sectors of logistics and manufacturing but declined to name the specific transactions.

“Being under phase 2 means we need more information and a deeper probe. On the 60th day of the second phase, three things can happen: they are approved, disapproved or be granted conditional approval on the transaction,” Quimbo clarified in a chance interview at the sidelines of a PCC briefing.

The PCC exercises its mandate to foster competition through two main routes: through review of M&A and through competition enforcement.

The two M&A notifications have entered into the second phase of review. The first phase consisting of 30 days involves determining if the transaction raises any competition concerns under the Act that would warrant a more detailed review.

Since the agency wasn’t able to rule out any competition concerns in the first phase, a deeper review in a second phase was merited, according to Quimbo.

Now into the phase-2 review, the parties involved in the M&As, according to the draft rules of procedures, are prohibited from consummating the deal until the PCC gives the go-ahead.

In this stage of review, the agency will be developing a “theory of harm” that will determine if there was a violation of the Philippine Competition Act (PCA).

Based on the PCA Implementing Rules and Regulations, parties to a merger or acquisition are required to provide notification to the PCC when the value of the transaction exceeds P1 billion and when the value of the assets in the Philippines of the parent entity of a party exceeds P1 billion.

The 140 merger notifications amount to total transactions of P2 trillion. About 62 percent of these mergers are from the manufacturing, finance, electricity and transportation sectors.