PCC approves Air 21 takeover by AC Logistics

MANILA, Philippines — The Philippine Competition Commission (PCC) has cleared Ayala-led AC Logistics Holdings Corp.’s proposed acquisition of a controlling interest in Air 21 Holding Inc., pointing out that this does not substantially lessen competition in relevant markets in the logistics sector.

Under the proposed transaction, AC Logistics entered into an exchange note agreement for conversion shares with Air 21 Holdings, its owner Alberto Lina, and its eight logistics companies in the network, subject to certain conditions.

The conversion shares will result in at least 60-percent stake in Air 21 Holdings, which controls Airfreight 2100 Inc., Air 2100 Inc., LGC Logistics Inc., Cargohaus Inc.,U-Freight Phils. Inc., U-Ocean Inc., Waste & Resources Management Inc. and Integrated Waste Management Inc.

The PCC noted that the proposed acquisition does not result in substantial lessening of competition in relevant markets within the logistics sector.

“This is due to substantial competitive constraints exerted by other market players in this sector nationwide,” the antitrust body said.

It added that customers of the relevant services were also found to engage with multiple service providers, demonstrating competition in the industry in terms of price and service quality.

“As operations by AC Logistics and Air 21 Holdings were found to overlap in some markets, PCC’s review looked into the competition effects in the national markets of domestic courier and messenger services; domestic air, sea, and road freight forwarding; nationwide or regional market for trucking services; general warehousing and storage services in Luzon, and cold storage services in Metro Manila and Southern Luzon,” the PCC said.

The PCC’s Mergers and Acquisitions Office said the merging parties would not result in dominant market position given its resulting market share in the relevant markets.

“The parties were also found to have no increased ability nor incentive to engage in anti-competitive foreclosure, such as exclusively supplying its own downstream customers or restricting its services to other downstream markets or players,” the PCC said.

It said it was unlikely for the transaction to effectively limit access of other players to a significant customer base in the same relevant markets.

AC Logistics is the logistics arm of Ayala Corp. Air 21 Holdings, on the other hand, has a logistics network offering door-to-door service deliveries, international and domestic freight forwarding, and warehousing and waste logistics management.

The PCC said the proposed takeover by AC Logistics is the first transaction submitted for voluntary merger review by the parties under the Bayanihan To Recover As One Act (Bayanihan 2) period with the increased threshold of P50 billion.

It added that the transaction, however, would have also qualified for regular review under pre-Bayanihan threshold conditions.

Under Bayanihan 2, which came into effect in September 2020, mergers and acquisitions (M&As) with transaction values below P50 billion are exempt from the compulsory notification with PCC within two years from the effectivity of the law.

Prior to the Bayanihan 2 law, M&As that meet the P2.4 billion threshold for size of transaction and P6 billion for the size of party, are required to be notified with the PCC.

PCC is mandated under the Philippine Competition Act to review mergers, acquisitions, and joint ventures of firms across all sectors that meet the threshold to ensure that these deals do not harm the interest of consumers.