THE country’s antitrust body on Thursday adjusted yet again the threshold for mandatory notification for company mergers.
In a commission resolution, the Philippine Competition Commission (PCC) raised the thresholds to P5.6 billion from P5 billion for the size of person, and to P2.2 billion from P2 billion for the size of transaction. This was the second recalibration the PCC put in place since the Philippine Competition Act was passed.
The revised thresholds, when met together, are considered triggers for entities to notify PCC of their transactions. “Size of person” refers to the value of assets or revenues of the ultimate parent entity of at least one of the parties, while “size of transaction” refers to the value of assets or revenues of the acquired entity.
Under Memorandum Circular 18-001, the PCC is mandated to conduct an annual adjustment of the thresholds based on the nominal GDP growth of the previous year rounded up to the nearest hundred millions. Citing estimates from the Philippine Statistics Authority, the PCC said nominal GDP growth last year stood at 10.23 percent.
PCC Chairman Arsenio M. Balisacan said it is just right for the competition regulator to attune the threshold for acquisitions to the real value of the economy.
“The PCC observes that the appetite for mergers and acquisitions within a rapidly growing economy remains high. The adjustment based on nominal GDP growth ensures that the thresholds maintain their real value over time and relative to the size of the economy,” Balisacan said.
“A well-designed threshold must be reflective of the country’s economic condition, such that the scope of merger control remains faithful to the intent of the law. The rationale for setting a notification threshold is to ensure that mergers and acquisitions that are more likely to substantially lessen competition are subject to compulsory notification and review, and to exclude those that are less likely to pose competition concerns,” he added.
The new thresholds will apply to transactions with definitive agreements executed on or after March 1. They do not apply to acquisitions pending review by the PCC, notifiable transactions consummated before March 1 and transactions already subject of a decision by the commission.
The antitrust agency has so far received a total of 177 transactions and approved 161 of them amounting to a combined value of P2.83 trillion. The sectors with the most mergers remain largely unchanged from last year: manufacturing, finance and insurance, real estate, electricity and gas, and transportation and storage.