Chelsea, Trans-Asia deal nullified
The Philippine Competition Commission has nullified the acquisition by Chelsea Logistics Holdings Corp. (CLC) of Trans-Asia Shipping Lines, which has passenger and cargo operations in Cebu.
PCC fined CLC—led by businessman Dennis Uy—P22.8 million for its failure to notify the antitrust watchdog about the deal in December 2016.
Under competition law, companies doing mergers and acquisitions that are large enough to affect competition are required to notify PCC so the government can review the deal.
The nullification came as part of a conditional clearance for a 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.
This marks the second deal that PCC made void due to nonnotification.
Coincidentally, the first voided deal for nonnotification was also a company led by Uy. It was later approved after a review found no competition concerns.
PCC said this nullificaton 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 out having Chelsea control both 2GO’s and Trans-Asia’s passenger and cargo shipping legs 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.
“With the Trans-Asia agreements out of the picture because of the nullification order, the overlaps with 2GO in the six 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 it 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 would take no further action on CLC’s acquisition of KGLI-NM shares, “on the condition that the transaction subject of the nonnotification decision is void.”
Asked for comment, CLC CEO Chryss Alfonsus Damuy told the Inquirer that the company was weighing its legal options.
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