RHI Group to continue Nasugbu operations after antitrust body junks merger

Anna Gabriela A. Mogato
RHI Group to continue Nasugbu operations after antitrust body junks merger
(UPDATED) RHI Group still believes that the consolidation of the sugar mills will improve the efficiency of operations in Batangas

MANILA, Philippines (UPDATED) – Sugar and ethanol producer Roxas Holdings, Incorporated (RHI) Group said that it would continue to operate its sugar mill and refinery in Nasugbu, Batangasafter the Philippine Competition Commission (PCC) deemed its sale to Universal Robina Corporation (URC) as “uncompetitive.” 

In a disclosure to the Philippine Stock Exchange on Friday, February 15, the RHI Group  said that it was “saddened by the unfavorable decision from the commission because of the lost opportunity to advance the sugar industry in the Southern Luzon area.” 

 Last Thursday, the PCC junked RHI’s plan to sell the Central Azucarera Don Pedro, Incorporated (CADPI) to Gokongwei-led  URC amid the bleak situation in the sugar industry. The competition watchdog said that this would lead to monopoly in the area.

“Both URC and CADPI are currently extremely under-utilized because of the scarcity of sugar cane supply in the area, which to date, is in a continuously precipitous decline,” RHI in its disclosure said. 

In a BusinessWorld report, the Sugar Regulatory Administration said that that sugar production for crop year 2018-2019 will further drop from 2.225 million metric tons (MMT) to 2.079 MMT.

“We strongly believe consolidation of mills will bring about efficiencies for the benefit of all stakeholders.”

In a separate disclosure, URC said that as the decision doesn’t affect its business, it will also seek other options to imrpove the efficency of its mills in order to keep its prices affordable to consumers while maintaining the quality of its products. 

“URC initiated the proposed acquisition of CADPI with that objective mind, convinced that it would bring about such efficiencies that would translate to better sugar planter and consumer welfare driven by a more stable and profitable sugar production industry in Southern Luzon,” the disclosure read.

“We sought to address the concerns expressed by the PCC regarding the potential unintended consequences of such proposed transaction, offering commitments and safeguards where appropriate.” 

PCC Chairman Arsenio Balisacan on Friday afternoon told reporters they may be open to considering further mergers if the companies come back with a different model, but did not specify what kind of model they are looking for.

“The key there is that in this particular case, there is not strong reason why it is beneficial for the economy and the consumers. In some cases, there [is] natural monopoly like in services or utilities. If it is an efficient one and regulated to take care of the consumer welfare [we can allow it],” he added. – Rappler.com

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