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Stock Commentary

PCC to continue transaction monitoring after Bayanihan 2 moratorium lapsed

Merkado Barkada
PCC to continue transaction monitoring after Bayanihan 2 moratorium lapsed

The PCC is a government agency that seeks to “prohibit anti-competitive agreements, abuses of dominant position, and anti-competitive mergers and acquisitions” through mandatory reviews of all transactions with a value threshold of P2.4 billion thresholds, or where one of the parties had a value of more than P6 billion.

Bayanihan 2 prevented the PCC from exercising its powers on any transaction that was under P50 billion in value, but that restriction lapsed on Wednesday, and the PCC is eager to get back to reviewing potential transactions to prevent potential anti-competitive outcomes.


MB BOTTOM-LINE

 The PCC is used to prevent companies from developing into monopolies or developing dominant power in the market. This is not a toothless group. They have the authority (and have used it) to block some massive deals between some of the country’s most connected and powerful players.

The highest-profile example that I can remember is from early 2020 when the PCC stepped in to block San Miguel’s [SMC 114.00 1.04%] P100+ billion takeover bid for Holcim Philippines [HLCM 6.55 0.77%], citing competition concerns arising out of the market dominance that SMC would enjoy post-transaction in some regions of Luzon and elsewhere. While businesses regard the PCC step in the acquisition process as a pain-in-the-butt, as a consumer I am thankful for this watchdog and its unusually effective oversight of the market.

PCC reviews do not take an unreasonable amount of time, and so far their rulings appear to be relatively apolitical and free of the tired reach of traditional “influence”. So, while mergers and acquisitions activity has been relatively light through the pandemic, business development teams in boardrooms across the country will now need to remember to consider the PCC as a variable in all their potential deals going forward.

This is a small bit of news that can have quite a big impact on the behind-the-scenes action.

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Merkado Barkada is a free daily newsletter on the PSE, investing and business in the Philippines. You can subscribe to the newsletter or follow on Twitter to receive the full daily updates.

Merkado Barkada's opinions are provided for informational purposes only, and should not be considered a recommendation to buy or sell any particular stock. These daily articles are not updated with new information, so each investor must do his or her own due diligence before trading, as the facts and figures in each particular article may have changed.

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