PCC raises threshold for merger notifications

MANILA -- The Philippine Competition Commission (PCC) has raised the threshold for mandatory notifications of mergers and acquisitions (M&A) to ensure that transactions will not substantially lessen competition in the market.

In its statement on Thursday, the PCC said the threshold will increase from PHP 5 billion to PHP 5.6 billion for the Size of Person (SOP) and from PHP 2 billion to PHP 2.2 billion for the Size of Transaction (SOT) effective March 1.

SOP refers to the value of assets or revenues of the ultimate parent entity of at least one of the parties while SOT refers to the value of assets or revenues of the acquired entity.

“A well-designed threshold must be reflective of the country’s economic condition, such that the scope of merger control remains faithful to the intent of the law. The rationale for setting a notification threshold is to ensure that M&As that are more likely to substantially lessen competition are subject to compulsory notification and review, and to exclude those that are less likely to pose competition concerns,” according to PCC Chairman Arsenio Balisacan.

The revised thresholds apply to M&As with definite agreements that took effect on or beyond March 1. These will not cover M&As pending review by the Commission, notifiable transactions consummated before March 1, and transactions already subject of a decision by the Commission.

The thresholds are set by the PCC to mandate companies to notify of their transactions for review.

Currently, the PCC has received a total of 177 transactions and approved 161 of them amounting to a combined value of PHP 2.83 trillion mostly from the manufacturing, finance and insurance, real estate,

electricity and gas, and transportation and storage sectors.

The antitrust commission has released last year PCC Memorandum Circular No. 18-001 which mandates automatic annual adjustments of threshold based on estimated nominal gross domestic product (GDP) growth of the previous year.

Nominal GDP growth for 2018 was at 10.23 percent based on estimates from the Philippine Statistics Authority.