PCC hikes thresholds for mergers and acquisitions notifications

MANILA, Philippines — The Philippine Competition Commission (PCC) has increased the thresholds for compulsory notifications of mergers and acquisitions (M&As) set to take effect by next month.

In a resolution issued yesterday, the PCC raised the threshold to P2.2 billion from P2 billion for the size of transaction (SoT) or value of assets or revenues of the acquired entity.

For the size of person (SoP) or value of assets or revenues of the ultimate parent entity of at least one of the parties, the PCC increased the threshold to P5.6 billion from P5 billion.

The latest adjustment is the second to be made by the PCC since the Philippine Competition Act was passed in 2015.

When the PCC started, the baseline threshold for both the SoT and SoP was at P1 billion.

The recalibration of thresholds is in line with Memorandum Circular 18-001 released last year stating there would be an automatic annual adjustment of the thresholds based on the nominal gross domestic product (GDP) growth of the previous year rounded up to the nearest hundred millions.

Based on official estimates from the Philippine Statistics Authority, last year’s nominal GDP growth was at 10.23 percent.

“The PCC observes that the appetite for mergers and acquisitions within a rapidly growing economy remains high. The adjustment based on nominal GDP growth ensures that the thresholds maintain their real value over time and relative to the size of the economy,” PCC chairman Arsenio Balisacan said. 

He said a well-designed threshold must reflect the country’s economic condition.

“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,” he added.

The adjustments will apply to M&As with definitive agreements executed on or after March 1.

PCC said the revised thresholds do not apply to M&As pending review, notifiable transactions consummated before March 1, and transactions already subject of a decision by the antitrust body.

To date, the PCC has received 177 transactions and approved 161 with a combined value of P2.83 trillion.

The top five most active sectors for M&As remain largely unchanged from last year which are: manufacturing, finance and insurance, real estate, electricity and gas, and transportation and storage.

PCC reviews M&As to make sure such would not substantially prevent, restrict or lessen competition in the relevant market.