PCC sets higher bar for reporting M&As

The Philippine Competition Commission (PCC) has set a higher threshold for compulsory reporting of mergers and acquisitions (M&As), thus slightly narrowing its scope of supervision on these market-moving transactions.

Citing its commission resolution No. 04-2023, the PCC adjusted the size of party (SOP) threshold from P6.1 billion to P7 billion, while the threshold for the size of transaction (SOT) was raised from P2.5 billion to P2.9 billion.

The SOP refers to 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.

Beginning March 1, companies whose mergers and acquisitions reach these thresholds will need to notify the antitrust agency.

Regular adjustment

“The commission’s merger review thresholds are adjusted to keep pace with the changes in the markets and to reflect the businesses’ real value over time and relative to the size of the economy,” the PCC said in a statement.

Further, the antitrust agency said these new thresholds do not apply to mergers and acquisitions that were pending review by the commission, to notifiable transactions consummated before March 1, and to transactions that were already subject to a decision by the commission.

The PCC annually adjusts the thresholds and bases them on the official estimate of the nominal Gross Domestic Product growth of the previous year.

It paused the adjustments in 2020, the year of the outbreak of the pandemic, when the thresholds were set at P50 billion under the Bayanihan to Recover as One Act to provide regulatory relief during the height of the pandemic.

206 transations

The effectivity of this P50-billion threshold began in September 2020 and remained in effect until the same month in 2022.

To date, the PCC said it had approved 206 transactions with a total transaction value of P4.94 trillion.

The PCC said the top five sectors with the most mergers and acquisitions were manufacturing with 51 transactions, financial and insurance with 42, real estate with 33, electricity and gas with 27, and transportation and storage with 19.