PCC raises thresholds for compulsory M&A notification

The Philippine Competition Commission (PCC) has again raised the threshold for required notification of mergers and acquisitions (M&As), raising the bar for the kind of M&As that would need PCC’s approval.

The PCC said in a statement on Monday that it had raised the thresholds from P5.6 billion to P6 billion for the size of person (SoP) threshold and from P2.2 billion to P2.4 billion for the size of transaction (SoT).

SoP refers to the value of assets or revenues of the ultimate parent entity of at least one of the involved parties, while SoT refers to the value of assets or revenues of the acquired entity.

Although only announced to the media yesterday, this was already issued in a commission resolution on Feb. 11.

If both thresholds are met, companies would have to notify the country’s antitrust body within 30 days from signing of the definitive agreements. The PCC will then review the business deal to make sure it won’t harm competition in the market.This marks the third time the thresholds were raised since the Philippine Competition Act in 2015 set a baseline threshold of P1 billion. The first two adjustments were done in March 2018 and March 2019.

A memorandum circular in 2018 allowed the PCC to raise the thresholds every year to better reflect the real value of transactions over time and relative to the size of the economy.

This, the PCC said, is based on the nominal gross domestic product growth of the previous year. Last year, this stood at 6.8 percent, as per the official estimates from the Philippine Statistics Authority.

“Adjustment of the thresholds ensures that potentially anticompetitive M&As are subject to compulsory notification and review, while those that are less likely to pose competition concerns are excluded,” PCC Chair Arsenio Balisacan said.

To date, the PCC has received a total of 207 transactions with a combined value of P3.6 trillion. Last year, the top five most active sectors were manufacturing, electricity and gas, finance and insurance, real estate, and transport and storage. INQ