Gov’t tightens rules on mergers and acquisitions

MANILA, Philippines - Mergers and acquisitions will undergo tighter scrutiny from government agencies to ensure compliance with various competition laws in the Philippines.

The Securities and Exchange Commission (SEC) and the Department of Justice (DOJ) signed a memorandum of agreement to closely monitor mergers and acquisitions pending the passage of comprehensive competition laws, an official said.

“Under the Corporation Code, we’re supposed to approve mergers and consolidations. Whenever you apply for a merger, we would require that the Office for Competition will first look at it,” said SEC chairperson Teresita J. Herbosa.

Herbosa said the agreement is in line with the implementation of Executive Order 45 dated June 2011. It created the Office for Competition under the DOJ, which was designated as the competition authority.

The DOJ has the power to investigate all cases involving violations of competition laws, enforce competition policies, supervise competition in markets, monitor and implement measures to promote transparency, disseminate studies and reports on competition, and promote international cooperation.

“We have the constitutional prohibition that the state may regulate monopolies if the public interest so requires,” Herbosa said.
However, there is an absence of a comprehensive competition law, with bills still pending in Congress, Herbosa said.

To date, competition policies are scattered in more than 60 sector-specific regulations like the Electric Power Industry Reform Act, Oil Deregulation Law, Price Act and Public Telecommunications Policy Act. The strength of the Philippine economy has encouraged conglomerates to pursue consolidation programs in several sectors like retail, property, power, telecommunications and infrastructure.

Meanwhile, the SEC is on the lookout anew for a new headquarters, preferably in the Bonifacio Global City, following a failed bid early this year.

Herbosa said the SEC is scheduling another bidding for an office space
provider as only Hanjin Heavy Industries & Construction Corp. sent its proposal in February.

The corporate regulator’s current 11-story building in Greenhills in Mandaluyong is marred by safety concerns. However, the SEC Employees Association raised concerns on the new office’s accessibility and the inadequate area to handle public transactions.
So far, SEC has 412 plantilla workers. There are 800,000 SEC-registered companies to date, of which 500,000 are active corporations.