P1-B M&A DEALS REQUIRED DISCLOSED
SANS implementing rules and regulations ( IRR) for its operations, the newly organized Philippine Competition Commission ( PCC) ordered companies to report mergers and acquisition ( M& A) deals amounting to at least P1 billion.
The order contained in Memorandum Circular 16- 002 by PCC Chairman Arsenio M. Balisacan also requires disclosure of M& A deals if one or both firms involved is listed at the Philippine Stock Exchange (PSE).
This reporting requirement will be imposed during the interim period until the PCC is able to come up with its IRR, which is expected to be completed before the end of the year. The members of the newly constituted PCC, a quasi- judicial body that will look into anticompetitive practices, will not be affected by the end of the Aquino administration because they were appointed with fixed terms.
Otherwise, such covered deal, which would affect the merger or acquisition, shall be considered void. Also, this will subject the parties to an administrative fine of 1 percent to 5 percent of the value of the transaction.
Even those transactions that were not previously required to be reported to the PSE or the Securities and Exchange Commission (SEC) would now have to be reported to the PCC within one working day after the transaction occurred.
“Parties to a covered transaction, which is not required to be disclosed or notified to the PSE prior to being consummated under the Securities Regulation Code and its implementing rules and regulations, and is to be consummated within the covered period shall notify the PCC before the close of business of the first working day after that in which the covered transaction occurred through a letter addressed to the PCC,” Balisacan’s circular said in Paragraph 2.
The circular said the transactions over, which the PCC had been notified, would be “deemed approved” and, thus, shall enjoy a disputable presumption that those transactions were not violating Republic Act 10667, or the new competition law. Previously, listed corporations are required only to
disclose such covered transactions to the PSE and the SEC. But with the new competition law in place, the PCC is required to be notified of those covered transactions to ensure that no anticompetitive mergers and acquisitions will be consummated.
Some practices that the PCC seeks to prevent are the creation of monopolies, duopolies and cartels. These entities will ultimately prejudice consumers in terms of peddling poor quality of goods or services, like Internet access, as well as high prices on these goods and services.
The PCC also seeks to stop, upon a verified petition, other anticompetitive practices. Some of these practices include a corporation’s abuse of dominant position in the market, bid manipulations, undermining competitors by artificially setting prices below the production cost and imposing low purchase prices over goods offered by marginalized agricultural producers and+ micro-, small-, and medium-scale enterprises.