PCC proposes divestment as remedy for URC deal

THE Philippine Competition Commission (PCC) said divestment could be a remedy for Universal Robina Corp.’s (URC) rejected acquisition of Roxas Holdings, Inc.’s (RHI) Central Azucarera Don Pedro, Inc. (CADPI), based in Nasugbu, Batangas.

“If they want to pursue it… it’s possible to give up Balayan and buy the other. If they really want the other company badly, they can sill buy it. That way there’s no overlap or monopolization,” Competition Chair Arsenio M. Balisacan told reporters on Friday in Makati City.

He was referring to URC’s Balayan, Batangas sugar operation, which is the only other sugar central in Batangas. Control of CADPI would give URC a monopoly on sugar milling in the region.

The PCC last week decided to block the CADPI acquisition, citing the potential monopoly that might result.

Under the deal, URC will acquire all of CADPI’s assets, including buildings, improvements, machinery and equipment, laboratories, spare parts and transportation assets, and CADPI’s land.

The parties to the deal submitted voluntary undertakings but these did not suffice to address the PCC’s concerns.

Asked to comment, URC Senior Vice-President Michael P. Liwanag said the firm is open to exploring strategic business options for growth “if they make commercial sense” but a divestment may not be among them.

“... the option may not include what you mentioned above,” Mr. Liwanag said in a mobile message over the weekend.

“In the meantime, we will continue to invest and operate our Balayan sugar mill,” he added.

In an interview last week, Competition Commissioner Johannes Benjamin R. Bernabe said another option for URC to pursue its expansion is “to switch” operations with RHI-CADPI.

Mr. Bernabe added that another option could be RHI selling CADPI to another buyer.

In an e-mail over the weekend, RHI said that it plans to focus on continuing operations at CADPI, adding: “We have not received yet, at this point, any expressions of interest from other companies.”

RHI has said that the consolidation of both mills could generate efficiencies amid the weak supply of sugarcane supply in Southern Luzon.

Mr. Balisacan said that although some markets allow natural monopolies to exist for the benefit of stakeholders, “there’s no strong reason why it’s beneficial for the country and consumers to be under a monopoly” in the sugar milling sector. —