PCC raises thresholds for M&A plans

The Philippine Competition Commission (PCC) has raised the thresholds for compulsory notification of mergers and acquisitions, with the changes to take effect next month.

In a statement, the PCC said mergers and acquisitions that breach the new threshold of P7 billion for size of party or aggregate value of assets or revenues of the ultimate parent company of one of the entities, and P2.9 billion for size of transaction or value of assets or revenue of the acquired entity, would have to be notified to the antitrust authority starting March 1.

Prior to the adjustment, the PCC set provisional thresholds for mergers and acquisitions required to be notified at P6.1 billion for size of party and P2.5 billion for size of transaction in September last year as the two-year temporary thresholds of P50 billion provided under Bayanihan 2 or Bayanihan to Recover As One Act expired.

Transactions that meet the thresholds need to be notified to the PCC so it can conduct a review to ensure these do not prevent or limit competition in the market.

For transactions that do not meet the thresholds but are likely to lessen competition in the market, the PCC may launch a motu proprio review in the interest of consumers.

The PCC said the revised thresholds do not apply to merger and acquisitions pending review by the commission, those undertaken before March 1, and transactions already subject of a decision by the antitrust authority.

“The commission’s merger review thresholds are adjusted to keep pace with the changes in the markets and to reflect the businesses’ real value over time and relative to the size of the economy,” the PCC said.

Adjustments to the thresholds are being made annually in line with PCC’s Memorandum Circular 18-001 issued in 2018.

The changes made are based on the official estimate of the nominal gross domestic product growth of the previous year.

Based on official estimates from the Philippine Statistics Authority, the nominal GDP growth last year was at 13.5 percent.

To date, the PCC has approved 206 transactions with a total transaction value of P4.94 trillion.

Sectors with the most number of mergers and acquisitions are manufacturing (51 transactions), financial and insurance (42), real estate (33), electricity and gas (27) and transportation and storage (19).