PCC raises thresholds for M&A review

MANILA, Philippines — The Philippine Competition Commission (PCC) raised the thresholds for the compulsory notification of mergers and acquisitions (M&A), with the adjustments to take effect next month.

PCC said it raised the threshold for the size of persons or the value of assets or revenues of the ultimate parent entity to P6 billion from P5.6 billion previously.

For the size of transaction or value of assets or revenues of the acquired entity, the new threshold was increased to P2.4 billion from P2.2 billion.

These new thresholds apply to M&A with definitive agreements executed on or after March 1.

Parties to a M&A transaction within the thresholds would have to notify the PCC of the deal within 30 days from signing of the definitive agreement.

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

When the PCC started, the baseline threshold for both size of person and size of transaction was just at P1 billion.

Changes to the thresholds are made in line with Memorandum Circular 18-001 which was issued in 2018 and set an automatic annual adjustment of the merger thresholds based on the nominal gross domestic product (GDP) growth of the previous year rounded up to the nearest hundred millions.

Official estimates from the Philippine Statistics Authority showed the nominal GDP growth last year was at 6.8 percent.

 “Adjustment of the thresholds ensures that potentially anti-competitive M&As are subject to compulsory notification and review, while those that are less likely to pose competition concerns are excluded,” PCC chairperson Arsenio Balisacan said.

“With the increase in thresholds streamlining the intake of notified cases, this will allow the commission to efficiently use its resources towards other equally important elements of competition enforcement, including the conduct of cartel investigations, market monitoring and motu proprio merger review,” he added.

PCC reviews M&A deals to protect consumer welfare by giving them more choices and to promote competitive businesses by encouraging market players to be more efficient and innovative.

To date, PCC has received a total of 207 transactions with a combined value of P3.6 trillion.

Of the total transactions, PCC has approved 192 and blocked one deal.

Last year, the top five sectors for mergers and acquisitions are manufacturing, electricity and gas, finance and insurance, real estate, and transport and storage.