PCC sets thresholds for review of M&AS

The Philippine Competition Commission (PCC) said it will begin implementing the thresholds provisionally set for compulsory notification of mergers and acquisitions on September 16.

“Starting September 16, 2022, mergers and acquisitions that reach a Size of Party (SOP) of P6.1 billion and a Size of Transaction (SOT) of P2.5 billion will have to be notified to the PCC for mandatory merger review,” the competition watchdog said in statement issued on Friday.

“If mergers and acquisitions meet the thresholds for compulsory notification, these transactions will be subject to review by the PCC before they can be consummated.”

The party size refers to the aggregate value of assets or revenues in the Philippines of the ultimate parent entity of one of the parties to a transaction, while the transaction size refers to the value of assets or revenues of the acquired entity and the entities it controls, said the country’s competition watchdog.

The PCC said these thresholds will remain effective until the approval of the commission en banc of new thresholds for compulsory notification.

The competition watchdog said it calculated the thresholds to be “provisionally” set by updating the 2020 thresholds based on the country’s nominal gross domestic product growth in the past two years, reflecting the contraction of the economy by 8.09 percent in 2020 and subsequent growth of 8.13 percent in 2021.

The PCC noted that it had to calculate provisional thresholds since the two-year temporary thresholds of P50 billion for party size and transaction size under the Bayanihan to Recover as One Act (Bayanihan 2) were set to expire on September 15, 2022.

“Parties seeking confirmation that they are not subject to compulsory notification under the previous P50 billion thresholds must submit definitive agreements signed before September 16 with their Letter of Non-coverage [LNC] to the PCC’S Mergers and Acquisitions Office,” said PCC.

The PCC said that under the two-year effectivity of the thresholds under Bayanihan 2, it received notifications of nine transactions, six of which were approved, and three withdrawn.

During this period, the competition watchdog said it also processed 55 LNCS for transactions that did not breach the Bayanihan two-prescribed thresholds, involved internal restructuring or consolidation of ownership without change in control, and referred to the acquisition of lands.