mergers and acquisitions

PCC clears Enrique Razon’s stake in Ayala’s Manila Water

Ralf Rivas
PCC clears Enrique Razon’s stake in Ayala’s Manila Water

Rolly Barayang Jr.

The Philippine Competition Commission says Enrique Razon Jr gaining controlling interest in Manila Water will not lessen market competition

The Philippine Competition Commission (PCC) on Tuesday, August 25, cleared tycoon Enrique Razon Jr’s acquisition of a stake in the Ayala group’s Manila Water.

The deal involves Razon acquiring at least 25% of common shares of Manila Water, as well as 51% of voting rights. Ayala maintains most of the equity share of Manila Water at around 38%, but now has voting rights of only 32%. Simply put, Ayala retains economic interest, but Razon will have a bigger say on company structure and operations.

The PCC found no substantial lessening of competition in the market of the supply of raw water to the East Zone concession area, which covers 23 areas including Makati, Mandaluyong, Pasig, Pateros, San Juan, Taguig, Marikina, parts of Quezon City, Manila, and portions of Rizal. 

The PCC’s Mergers and Acquisitions Office added that the merged entity will neither have incentive nor ability to engage in customer or input foreclosure in the market. 

Manila Water is the sole water distributor in Metro Manila’s East Zone. The PCC described it as a “natural monopoly” allowed by law through regulation. The company has a concession agreement with Metropolitan Waterworks and Sewerage System (MWSS).

“While PCC found that there is absence of horizontal overlaps between the parties and [they] are not direct competitors, the PCC review noted that a vertical relationship exists between the parties’ notifying group within the water sector before this merger transaction,” the PCC said.

“However, the PCC found that customer or input foreclosure is unlikely given that the arrangement is meant to service the East Zone even beyond the lifetime of Manila Water’s concession. Such foreclosure is deemed unlikely by PCC since operations – including the procurement, development, allocation, rate rebasing, and other supply-and-demand dynamics in the water sector – are highly regulated by MWSS.”

Razon’s Trident Water is a subsidiary of Prime Metroline Holdings, whose range of business interests span hotel and gaming operations, mining, infrastructure, power generation and distribution, and port services.

Meanwhile, Manila Water is among the Ayala group’s embattled companies, which were subjected to President Rodrigo Duterte’s tongue lashing over the water crisis in 2019 and an arbitral ruling over water tariffs which the utility firm won against the government.

Duterte threatened to take over Manila Water as well as West Zone concessionaire Maynilad Water Services. The concession agreements of the two firms are under review by government lawyers. –

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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.