Antitrust regulators tighten rules for mandatory review of M&As

MANILA, Philippines — The Philippine Competition Commission “provisionally” tightened the thresholds that would trigger a review of upcoming mergers and acquisitions (M&A) following the expiration of a law that clipped the review powers of antitrust regulators.

Companies with planned M&As valued at P2.5 billion must notify the PCC first before they can proceed so that antitrust regulators can check if the transaction is anti-competitive.

At the same time, if the ultimate parent company of one of the parties to an M&A has an aggregate assets or revenues in the Philippines amounting to P6.1 billion, the companies must also notify the PCC of the transaction for review.

These thresholds will remain effective until PCC approves new thresholds for compulsory notification.

To recall, legislators that passed the Bayanihan to Recover As One Act (Bayanihan 2) in 2020 inserted a provision at the last minute that raised the bar for M&As to trigger a review of antitrust authorities. Prior to this legislation, the thresholds in 2020 were set at P6 billion for size of party and P2.4 billion for size of transaction.

Under Bayanihan 2, M&As would only be reviewed by PCC if the transaction is worth over P50 billion, a staggering amount that only a few local conglomerates, and their transactions, are likely to hit. To make matters worse, PCC is also prevented from inquiring on itself about these transactions for 1 year.

Increasing the price threshold for a review virtually eliminates one of PCC’s core functions since most local corporates tend to be small, while the larger ones are not big enough to trigger a review under the Bayanihan 2. 

The lax regulations stayed for 2 years since Bayanihan 2’s enactment. During that period, the PCC said it received notifications of nine transactions, six of which were approved while three had been withdrawn.

The Bayanihan 2 law expired yesterday.

To date, the PCC said it has received a total of 227 notifications from parties and approved 205 transactions with a combined value of P4.63 trillion.