PCC maintains M&A review trigger at P1 billion
THE PHILIPPINE Competition Commission (PCC) is keeping the threshold for mergers and acquisitions (M&A) that require its approval, saying there is “no pressing need” to raise the P1-billion cap for such deals it needs to review.
“The Commission initiated a preliminary review of all relevant data and finds that there is a sound basis to maintain the P1-billion threshold, at least for now,” PCC Chairman Arsenio M. Balisacan was quoted as saying in a statement yesterday.
Mr. Balisacan earlier this month said the PCC is open to adjusting the threshold for M&As that require its approval to avoid dampening the business environment.
The PCC said it conducted the review to find out whether the P1-billion threshold is “too low.”
A low threshold, it said, could mean additional delays for companies engaged in M&A transactions, while at the same time over- burdening the one-year old competition agency,
“The Commission said the P1-billion minimum is reasonable as a cross-country comparison with other jurisdictions with mandatory notification requirements showed that the country’s threshold is similar to economies of comparable size such as Colombia and South Africa,” PCC added.
The PCC was organized under Republic Act No. 10667 or the Philippine Competition Act of 2015. Signed into law on July 21, 2015, the measure prohibits abuse of dominant position and anticompetitive M&A, among others.
The PCC requires notification on M&A deals worth more than P1-billion. The commission started the review following comments it received about the threshold being low and possibly hampering M&A activity in the Philippines.
PCC said based on the assets of companies in the Philippines, less than 1% of firms would be subject to the current threshold if they decide to expand their businesses through M&A.
Mr. Balisacan had said so far, the threshold has not restrained companies from pursuing mergers and acquisitions, as well as the PCC from acting on notifications and inquiring into possible anti- competitive practices in a timely manner.
Over the past year of operation, there has been no backlog in the PCC’s merger review docket, the release added.
Despite maintaining the current threshold, PCC said it will conduct “regular monitoring” of M&A notification and will “revisit the threshold level periodically to make sure it is responsive to changes in the markets and the economy.”
“The Commission will continue to monitor developments in the country’s markets and consider additional information from forthcoming notifications. PCC’s review of the threshold could consider factors such as inflation, GDP growth, and changes in technology, consistent with the practices in other jurisdictions. Ultimately, in determining the threshold, the PCC will consider what is best for the country,” Mr. Balisacan further said.
Mr. Balisacan, who had served as socioeconomic planning secretary before heading the PCC, expects M&A activity to remain healthy as the domestic economy continues to expand and attract more investors around the world.
In its first year, the PCC has received 80 notifications for M&A deals and eight referrals for possible anti- competitive behavior in some sectors.
Aside from reviewing M&A, the antitrust enforcer is working on the National Competition Policy Review, a comprehensive evaluation aimed at determining policies that will curb anti-competitive practices across industries.