PCC reviewing $2.15 B acquisition of Holcim by SMC

MANILA, Philippines — The Philippine Competition Commission (PCC) is conducting a deeper review of the $2.15 billion acquisition by San Miguel Corp. (SMC) of Holcim Philippines Inc. (HPI) to ensure it would not lead to reduced market competition. 

As the 30-day Phase 1 review on the deal ended on Aug.22, the PCC said it decided to proceed to the 60-day Phase 2 review. 

The transaction involves the acquisition by First Stronghold Cement Industries Inc., of an 85.7 percent stake in HPI. First stronghold is a wholly owned subsidiary of San Miguel Equity Investments Inc., which in turn is a wholly owned subsidiary of SMC.

PCC said initial findings of the merger review showed the deal may affect market concentration for the relevant products in the following areas: Northeast Luzon (Region II and the Cordillera Administrative Region); Northwest Luzon (Ilocos Norte, Ilocos Sur, La Union, and Pangasinan); Central Luzon (Region III) and National Capital Region; Southern Luzon (Regions IV-A, IV-B, and V); Northern Mindanao (Regions IX, X, XIII, and the Autonomous Region of Muslim Mindanao); and Southern Mindanao  (Compostela Valley, Davao del Norte, Davao del Sur, Davao Occidental, Davao Oriental, Davao City, South Cotabato, Cotabato, Sultan Kudarat, Sarangani, and General Santos City).

“Cement is a commodity with low product differentiation where brands undergo the same quality standards. While the transaction is national in scope, the initial review shows that geographic markets by region affect retailers and consumers differently in terms of production, distribution and price,” PCC said. 

The Phase 2 review involves having more detailed analysis of the transaction and requires parties to provide more information on the deal. 

In conducting the Phase 2 review, the PCC would like to determine if the deal would result in lessened competition. 

PCC’s Phase 2 review would also look at whether there would be greater likelihood for cement firms to engage in cartel-like activities. 

SMC is involved in the manufacturing and distribution of cement through its stake in Northern Cement Corp. and joint venture interest with Northern Cement and subsidiary Oro Cemento in two upcoming plants. 

SMC president and chief operating officer Ramon Ang is also the majority owner and chairman of cement maker Eagle Cement Corp., the PCC noted 

Meanwhile, Holcim manufactures and distributes cement worldwide.

PCC conducts a review of mergers to ensure transactions do not lead to substantial lessening of market competition and to advance consumer welfare.