Antitrust body sets higher threshold for M&As

Photo from Philippine Competition Commission/WEBSITE

MANILA, Philippines  — The Philippine Competition Commission (PCC) on Friday said it had set a higher threshold for the mandatory reporting of mergers and acquisitions (M&As), raising the cap for the third straight time and further narrowing its scope of supervision on such transactions.

Beginning March 1, the government’s antitrust agency said that they must be notified of M&As that fulfill both the conditions of exceeding a size of party (SOP) of P7.8 billion, and a size of transaction (SOT) of P3.2 billion.

The SOP is the aggregate value of assets or revenues, within the country, of the ultimate parent entity of one of the parties to a transaction. The SOT is the value of assets or revenues of the acquired entity and the entities it controls.

Evolving economic landscape

“The PCC adjusts its thresholds for compulsory notification annually based on nominal gross domestic product growth to ensure they remain relevant to the evolving economic landscape,” the agency said in a statement.

READ: PCC lowers M&A mandatory review thresholds

Earlier, back in February 2023, the PCC had set the threshold for the SOP at P7 billion, while the cap for the SOT was at P2.9 billion. From Sept. 16, 2022 until the 2023 adjustment, the caps were set respectively at P6.1 billion and P2.5 billion.

This followed the expiry of the two-year effectivity of the thresholds that were set under the Bayanihan to Recover as One Act, which was enacted in September 2020.

M&A scene

Under the legislative actions meant to help the market during the pandemic, both thresholds were adjusted to P50 billion, drastically higher than the cap of P6 billion for SOP and P2.4 billion for the SOT that had been originally set for 2020.

READ: PH ripe for M&A deals, says BofA exec

Sought for comment, Rizal Commercial Banking Corp. chief economist Michael Ricafort agreed when asked if the new thresholds are enough to spur growth in the local M&A scene.

“Yes, given better economic and market conditions that would support higher selling prices attractive for sellers to enter into more M&As” Ricafort told the Inquirer. INQ