The country’s antitrust body is taking a closer look into International Container Terminal Services Inc.’s (ICTSI) prospective acquisition of additional shares in Manila North Harbour Port Inc. (MNHPI), which would make the billionaire Enrique Razon-led company the single biggest stakeholder in the latter.
The transaction would jack up ICTSI’s stake in MNHPI to 50 percent from 34.83 percent.
The Philippine Competition Commission wants to see if this development can possibly lead to the “substantial lessening of competition in the market for port operation and transshipment services.”
“PCC’s merger review office seeks to investigate whether the transaction enhances the ability and incentive of the involved firms to engage in foreclosure of competitors where vertical relationships between ICTSI and MNHPI operations are present,” the PCC said in a statement.
PCC reviews mergers and acquisitions that are deemed large enough to affect competition. This review is done in phases, depending on the implications and the complexities of the deal.
In this case, PCC has already done phase 1 review of the transaction, but it needs a more detailed analysis of situation and additional information from the companies and other stakeholders.
Phase 2, which is done when more information is needed, started on Nov. 15. This means the deal could not push through at least until PCC finishes its phase 2 review, which could take as long as 60 days.
The PCC, however, clarified that the second phase of the review did not mean that the body already had a definitive finding that market competition would be hurt because of the deal. This only means a closer look into the deal is needed.
“The initial market investigation conducted by MAO (Mergers and Acquisitions Office) indicates that the transaction may affect the port industry, particularly the markets for the provision of port operation and transshipment services in the Port of Manila,” PCC said.
Post-transaction, PCC said ICTSI would own and control 50 percent of MNHPI, with the remaining shares held by San Miguel Holdings Corp. 43.33 percent), IZ Investment Holdings Inc. (6.50 percent) and Petron Corp. (0.17 percent).
ICTSI is a port management company dealing with international shipments and operating in various countries. On the other hand, MNHPI operates the Manila North Harbour which services domestic cargoes in the Port of Manila.
In the Philippines, ICTSI operates in Laguna, Olongapo, Batangas, Davao, Cagayan de Oro, and South Cotabato. It also owns and operates the Manila International Container Terminal which services international cargo from the Port of the Manila.
MNHPI is a subsidiary of SMHC, a company owned by San Miguel Corp., which is a Philippine conglomerate with interests in food and beverage, packaging, properties, fuel and oil, energy, infrastructure, and banking industries. The ultimate parent entity of San Miguel is Top Frontier Investment Holdings Inc.