Companies undertaking mergers and acquisitions (M&A) should voluntarily submit to a review regardless of size under the Bayanihan to Recover as One Act (Bayanihan II). The law provides that all M&A with a transaction value of less than P50 billion that were undertaken within two years from the law’s effectivity are exempt from compulsory PCC notification. The law expires in September.
THE Philippine Competition Commission (PCC) reminded companies undertaking large mergers and acquisitions (M&A) to first submit to a competition review voluntarily.
PCC Commissioner Emerson B. Aquende said during a virtual briefing on Thursday that deals are not exempt from review regardless of size, should competition issues arise, reported Business World.
“Even if there is a P50 billion threshold in effect until September, it doesn’t really exempt them from being reviewed by the commission eventually, if the transaction is noted to have adverse impact on competition,” Aquende said.
Republic Act No. 11494 or the Bayanihan to Recover as One Act (Bayanihan II), provides that all mergers and acquisitions with a transaction value of less than P50 billion that were undertaken within two years from the law’s effectivity are exempt from compulsory PCC notification.
However, once the law expires in September, companies whose parent company assets exceed P6 billion and whose M&A transactions exceed P2.4 billion will once again be required to notify the PCC.
Aquende said an application for voluntary review was recently received by the PCC. He did not provide further details.
“That is a good development that shows the interest of firms to submit to the process of review to ensure that their intended merger transaction will not result in a substantial lessening of competition,” Aquende said.
PCC Commissioner Johannes Benjamin R. Bernabe said there are at least two transactions (in the distribution and industrial sectors) which may be subjected to motu propio review, in which the commission acts on its own initiative, judging from the assessments of its monitoring division, a unit of the commission’s (M&A) office.
“Those transactions… sought to take advantage of the moratorium so as to get away with possible substantial lessening of competition in the market. I think the message that we wish to put forth is that even if they were undertaken when the threshold was at P50 billion, they are still not immune from the conduct of a motu propio review,” Bernabe said.
‘Disincentive’
“That is a disincentive for firms to try and work around the merger review system of the Philippines because it would be more painful for these firms to unravel their transaction one or two years down the line if a motu propio review (finds) that they caused a substantial lessening of competition in the market,” he added.
PCC Chairman Arsenio M. Balisacan said the commission is monitoring developments in various markets for potential anti-competitive mergers.
Balisacan added that there is no move so far to extend the moratorium and threshold set out in Bayanihan II.
“We hope that we have learned the lessons from many other countries. We should (give) the competition authority the opportunity to review what might be potentially anti-competitive mergers and acquisitions,” said Balisacan.
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