Europe-PH News

THE Philippine Competition Commission (PCC) plans to raise the current P1 billion hurdle on merger and acquisition transactions that would require compulsory notification to the commission. PCC chairman Arsenio Balisacan in his speech at a competition forum hosted by the European Chamber of Commerce of the Philippines yesterday, said in order to create a more efficient merger review process, the PCC will issue a new policy by the first half the year adjusting the hurdle. Section 17 of the Philippine Competition Act or Republic Act10667 provides that all mergers and acquisitions with transaction values exceeding P1 billion need to be notified to the PCC prior to consummation of the transaction. Gian Camacho, PCC head of legal, said the commission has received requests to raise the hurdle saying P1 billion is too low compared to those imposed in other jurisdictions.

Camacho said this is especially true for cross­ border transactions involving big companies. Camacho said the plan is to make parties to a merger or acquisition to go through a two­ fold test where the first is based on the value of either parties(in terms of assets and revenues) if such value reaches P1 billion.The second test involves the value of the transaction itself.Camacho said the two­ step process is deemed more reflective of the true nature of the deal. He said the PCC is watching out for what he calls are "creeping acquisition" where a company slowly accumulates share holdings in a target company and eventually take control and evade antitrust checks. As part of its powers, the PCC is authorized to determined thresholds and promulgate other criteria for notification. The PCC in fact earlier reviewed the threshold although it later decided to maintain it, over the short­ term. The commission in that preliminary review, took consideration whether the P1 billion threshold is too low such that businesses are made to bear an unreasonable regulatory cost and whether the PCC might be over­ burdened by the requirement to review an inordinate number of transaction in its early stage of institution building. A cross­ country comparison of thresholds in jurisdiction with mandatory notification regimes shows that the Philippines P1 billion threshold is similar to economies of comparable size such as South Africa and Colombia. In making the decision to maintain the level, a threshold of PI billion, very few businesses (less than 1 percent or at most 1,500 firms) will be subject to mandatory notification if these decide to expand their business through mergers or acquisition