Antitrust body slams San Miguel-Holcim deal, raises monopoly concerns

Ralf Rivas

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(UPDATED) The Philippine Competition Commission says San Miguel’s planned acquisition of Holcim Philippines will weaken competition in the grey cement market

MANILA, Philippines (UPDATED) – The Mergers and Acquisitions Office (MAO) of the Philippine Competition Commission (PCC) raised concerns that San Miguel Corporation’s takeover of cement giant Holcim Philippines might lead to monopoly in the grey cement industry.

In a strongly-worded statement on Friday, January 31, the PCC said the deal might result in “increased market power, and potential collusion arising from the merger” as well as “substantial lessening of competition in the market for grey cement in 4 key areas in the Philippines.”

The commission noted that San Miguel already runs grey cement facilities in Metro Manila as well as in Central and Northeastern Luzon, owning Eagle Cement and wielding control over another cement company, Northern Cement.

Holcim Philippines, on the other hand, manufactures, sells, and distributes cement and related aggregates with 8 cement facilities in the Philippines.

Interlocking ownerships

San Miguel Equity Investments, through another company under it called First Stronghold, was set to acquire 85.7% or 5,531,566,062 common shares of Holcim Philippines. (READ: Cement shortage seen to delay construction projects – Pronove Tai)

The PCC noted that First Stronghold and San Miguel Equity Investments are under another company called Top Frontier Investment Holdings, which is headed by Ramon Ang, San Miguel’s president and CEO.

Top Frontier has two cement plants slated to begin commercial operations, namely Northern Cement and Oro Cemento Industries Corporation.

The MAO review included Eagle Cement Corporation, another cement company owned by Ang.

“MAO alleged that Top Frontier exercises control and influence over Northern Cement’s policies and operations despite its 35% minority stake shareholding in the latter. It also looked into interlocking officers and directors between Northern Cement and Eagle Cement, and between Eagle Cement and Top Frontier,” PCC said. 

The merger review reported the following antitrust concerns:

  • In Northwest Luzon, the merger eliminates Top Frontier’s only competitor in the area, resulting in a monopoly in the market for grey cement.
  • In Greater Metro Manila, Central Luzon, and Northeast Luzon, the transaction results in high combined market shares, allowing Top Frontier to control a majority of the supply in these areas.
  • Post-transaction, no new players are likely to or can timely counteract the parties’ market power in Northwest Luzon.
  • Post-transaction, any entrant has little to no ability to constrain the exercise of market power of the parties in Greater Metro Manila, Central Luzon, and Northeast Luzon.

MAO added that the following factors were considered in assessing the existence of control and influence:

  • Top Frontier and Northern Cement were reported to have coordinated marketing strategies and exert influence on the board of directors of each other.
  • Top Frontier has access to sensitive corporate information of Northern Cement.
  • Sellers, distributors, and hardware owners in the relevant markets viewed Eagle Cement and Northern Cement as “sister companies” and part of the Top Frontier group. 

In a statement on Saturday, February 1, San Miguel said its proposed acquisition of Holcim Philippines will benefit, and not hurt, consumers and the cement industry.

“[We] are committed to achieving a favorable outcome of the review process. We firmly believe that the acquisition of Holcim by San Miguel Corporation, a Filipino company, will be beneficial to consumers, the industry, and our country’s development,” it said. –

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Ralf Rivas

A sociologist by heart, a journalist by profession. Ralf is Rappler's business reporter, covering macroeconomy, government finance, companies, and agriculture.