Government’s antitrust watchdog nullified another acquisition by a company led by Dennis Uy after the firm failed to notify the body about the business deal.
The Philippine Competition Commission (PCC) invalidated the acquisition by Chelsea Logistics Holdings Corp. (CLC) of Trans-Asia Shipping Lines, which operates passenger and cargo operations in Cebu.
PCC fined CLC P22.8 million for its failure to notify the antitrust watchdog about the deal in December 2016. Under the competition law, companies doing mergers and acquisitions that are large enough to affect competition are required to notify PCC so the government can review it.
The nullification came as part of a conditional clearance for another related acquisition by CLC — a company which PCC said overlaps or directly competes with Chelsea’s Trans-Asia operations.
The nullification and the conditional clearance were detailed in two separate PCC decisions dated June 28, but made public on Tuesday. A copy of these decisions are available online.
This marks the second deal that PCC voided due to non-notification. Coincidentally, the first voided deal for non-notification was also a company led by Uy — but which was later approved after a review found no competition concerns.
Conditional clearance of a related-CLC deal
PCC said this nullfiicaton led to a conditional clearance of CLC’s acquisition of KGLI-NM Holdings Inc., which in turn controls 2GO Group Inc., the country’s biggest integrated supply chain operator.
To recall, PCC said CLC acquired shares in KGLI-NM to consolidate its majority ownership in KGLI-NM and gain a 52.98 percent stake in the 2GO group.
PCC said its investigation initially found Chelsea having control of both 2GO’s and Trans-Asia’s passenger and cargo shipping legs that would lead to a “substantial lessening of competition” in the Visayas and Mindanao market.
The antitrust body said that 2GO and Trans-Asia overlap or compete directly with each other in the following roll-on and roll-off passenger legs: Cebu-Cagayan De Oro, Cagayan De Oro-Cebu, Cebu-Ozamis, Ozamis-Cebu, Cebu-Iligan and Iligan-Cebu.
The same is claimed true for cargo shipping services in the same areas plus the Cebu-Zamboanga leg.
No more overlaps if the deal is nullified
“With the Trans-Asia agreements out of the picture because of the nullification order, the overlaps with 2GO in the 6 legs of passenger shipping services and 7 areas in cargo shipping services in Visayas and Mindanao found earlier in PCC’s Statements of Concerns have been ruled out,” PCC said in a statement.
In a decision dated June 28, PCC ordered Trans-Asia to inform the antitrust body within 30 days from execution of merger or acquisition agreements involving any of its shares after the nullification order.
In a separate order also dated June 28, PCC spelled out that it will take no further action on CLC’s acquisition of KGLI-NM shares, “on the condition that the transaction subject of the non-notification decision is void.”
PCC said if Udenna Corp., Chelsea’s parent firm, or any of its subsidiaries or affiliates purchase or re-execute the voided Trans-Asia deal, the parties should notify the transaction to PCC regardless of whether it is notifiable under current rules.
Chelsea mulls going to court
Asked for comment, CLC President and CEO Chryss Alfonsus Damuy told the Inquirer that the company is currently weighing its options with its legal team.
“We are weighing between filing a motion for reconsideration or going to court,” he said. /kga