PCC lowers M&A mandatory review thresholds

The Philippine Competition Commission (PCC) started implementing on Friday a lower threshold for compulsory reporting of mergers and acquisitions following the expiry of the temporary P50-billion thresholds under the Bayanihan to Recover as One Act (Bayanihan 2), effectively expanding its scope of supervision of market-moving agreements.

The PCC announced that effective Sept. 16, firms whose mergers and acquisitions reach a size of party (SoP) of just P6.1 billion and a size of transaction (SoT) of P2.5 billion will need to notify the antitrust agency, which will then review if the deals will not crimp competition in the marketplace.

The SoP is the aggregate value of assets or revenues in the country of the ultimate parent entity of one of the parties to a transaction, while the SoT is the value of assets or revenues of the acquired entity and the entities it controls.

The PCC said in a statement that with the expiry last Sept. 15 of the two-year temporary thresholds of P50 billion for SoP and SoT under Bayanihan 2, it calculated the new thresholds based on the country’s nominal gross domestic product growth in the past two years.

These new thresholds will remain in effect until March 2023.Penelope Endozo of the PCC’s Communication and Knowledge Management Office said in a follow-up phone interview with the Inquirer that the antitrust agency used to review and fine-tune the threshold in March of every year before the pandemic.

“When we screen the companies which go through us, we make sure that these are the companies that are significant enough or big enough that it will be market-moving when they do a merger,” she said.

She said that the provisions on Bayanihan 2, which sought to provide regulatory relief during the peak of the pandemic, essentially excused a lot of firms because of the higher thresholds that were set.

“That is why there are many companies that didn’t need to go through with our reviews because they were practically exempted,” said Endozo.

Before the legislative intervention, the thresholds in 2020 were P6 billion for SoP and P2.4 billion for SoT, a fraction of what the Bayanihan 2 stipulated, according to Endozo.

The threshold was originally set at P1 billion in 2015 under the Philippine Competition Act.

To date, the PCC has received a total of 227 notifications, approved 205 transactions with a combined value of P4.63 trillion, blocked one supposedly harmful transaction and conditionally approved two transactions.