PCC: P1B threshold stays for reviewing mergers, acquisitions

MANILA, Philippines – After a review, the Philippine Competition Commission (PCC) concluded there is “no pressing need” to raise the P1-billion threshold for reviewing merger and acquisition (M&A) deals in the country.

“The commission initiated a preliminary review of all relevant data and finds that there is a sound basis to maintain the P1-billion threshold, at least for now,” PCC Chairman Arsenio Balisacan said in a statement on Tuesday, February 21.

Under Republic Act (RA) No. 10667 – also known as the Philippine Competition Act – the antitrust regulator should be notified for M&A deals with transaction values above P1 billion, before the transaction is sealed.

The PCC said it conducted the review to assess whether the P1-billion threshold is too low. (READ: PCC: Make policy changes to open telco, energy markets)

This was after the agency received comments that its threshold is low and could hamper M&A deals in the country.

“A low threshold could mean additional delays for companies engaged in M&A transactions, while at the same time over-burdening the one-year-old competition agency,” the PCC said.

But it added that the P1-billion minimum is “reasonable,” compared to other countries with mandatory notification requirements.

The agency said its review showed that the Philippines’ threshold is similar to those in economies of comparable size, like Colombia and South Africa.

No backlog

Over the past year of operations, the PCC said there has been no backlog in its merger review docket.

Based on the assets of companies in the Philippines, the PCC said “less than 1% or at most 15,000 firms” would be subject to the current threshold if they decide to expand through M&A.

Transaction value refers to the companies’ total assets located in the Philippines or the revenues that are earned from the country.

During its 1st year of operations, the PCC received 80 notifications for M&As and 8 referrals for probable anti-competitive deals in several sectors.

Its most publicized case so far is the P69.1-billion buyout of San Miguel Corporation’s telecommunications assets by telco giants PLDT and Globe Telecom.

The PCC said it will conduct regular monitoring of the M&A notifications and will revisit the threshold level periodically to make sure it is responsive to changes in the markets and the economy.

“PCC’s review of the threshold could consider factors such as inflation, gross domestic product growth, and changes in technology, consistent with the practices in other jurisdictions,” Balisacan said.

“Ultimately, in determining the threshold, the PCC will consider what is best for the country.” – Rappler.com