PCC exempts JVs seeking PPP projects from merger notification

Louella Desiderio (The Philippine Star) - June 29, 2020 - 12:00am

MANILA, Philippines — Joint ventures formed by private firms for unsolicited public-private partnership (PPP) projects are now exempt from the merger notification requirement under new rules issued by the Philippine Competition Commission (PCC) to streamline the review process and help accelerate the implementation of projects.

In Memorandum Circular (MC) 20-002 dated June 16, the PCC said agencies may seek exemption from compulsory notification by filing an application for certificate of project exemption on behalf of the original proponent and prospective bidders for unsolicited projects pursuant to the Build-Operate-Transfer Law.

The application must be filed anytime from the start of the negotiations with the original proponent, but before the issuance of the certificate of successful negotiation.

In the review of the application, the PCC may give inputs on the project documents and how the unsolicited project may affect competition in the market.

The PCC may also require the prospective bidders to address any potential competition issues.

After the PCC’s inputs are adopted on the final project documents, a certificate of project exemption in favor of the prospective winning project proponent will be issued.

In the event the agency fails to implement PCC’s inputs, or the winning project proponent does not execute the required undertakings, or substantial changes to the project take place after the antitrust body’s review, a full merger review of the transaction will be conducted.

PCC, with the PPP Center, will monitor the agency and the winning proponent’s compliance to the terms and conditions of the project contract to make sure the competition safeguards are followed.

The MC will take effect on July 11.

Prior to the issuance of the new rules, joint ventures of private entities for an unsolicited PPP project that meet the compulsory notification thresholds will have to go through the PCC’s full review after the award of the project.

The threshold for compulsory notification is P6 billion for the size of persons or the value of assets or revenues of the ultimate parent entity, and P2.4 billion for the size of transaction or value of assets or revenues of the acquired entity.

“Unsolicited PPP projects are critical in the government’s strategy to accelerate needed infrastructure development. This circular ensures that the implementing agency, the PCC, and the PPP Center conduct their processes in parallel to fast-track the rollout of these projects,” PCC chair Arsenio Balisacan said.

In July last year, PCC issued rules to exempt joint ventures formed for solicited PPP projects from compulsory notification.

PCC issued exemption rules for joint ventures for solicited and unsolicited projects following a memorandum of agreement entered into with the PPP Center to come up with guidelines on the facilitation and review of projects, among others.

Last week, PCC also issued rules to exempt from compulsory notification joint ventures between government agencies and private firms pursued under the framework of the National Economic and Development Authority’s joint venture guidelines.

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