Listed firms ordered to report M&As to new body

The newly established Philippine Competition Commission (PCC) has issued interim rules to monitor listed firms’ new merger and acquisition deals (M&A) worth over P1 billion.

Memorandum Circular No. 16-002 issued by PCC chair Arsenio M. Balisacan on Feb. 16 mandated that the companies involved in M&As, of which at least one is listed at the Philippine Stock Exchange (PSE), should also inform the commission of the planned transaction.

The Philippine Competition Act or Republic Act No. 10667, which created the new body, prescribed that these agreements that were not reported “shall be considered void and [the parties will be subjected] to an administrative fine of 1 percent to 5 percent of the value of the transaction.”

The Philippine Competition Act aims to ensure fair competition in the business sector, putting in place administrative fines as well as criminal penalties for mergers or acquisitions that substantially restrict competition or represent abuse by a dominant business player.

Balisacan said the parties should notify the PCC through a letter containing the following information: the parties to the merger or acquisition; the name and contact details of the authorized representatives of each party; a brief description of the businesses of the parties; the type of transaction (whether a merger or an acquisition); the key terms of the transaction; and the timing for the execution or implementation of the transaction.

Parties not listed at the local bourse but are part of the transaction are also required to notify the PCC of such a venture. They must inform PCC on the first working day after the deal has been signed.

The PCC also sought closer cooperation with the PSE. Balisacan said the local bourse should provide his office a list of the M&A deals also on the first working day after such transactions have been signed.

“The PSE shall also establish an information-sharing mechanism to facilitate the [PCC’s] ability to obtain relevant information regarding covered transactions,” it added.

The transitory guidelines were issued so that the PCC could finally do its job even in the absence of implementing rules and regulations (IRR) for the competition law.

RA 10667, described as the country’s first foray into antitrust regulation, was signed into law last July. Malacañang appointed Balisacan, former Economic Planning Secretary, to the PCC early this month.

Balisacan earlier said several foreign investments and big business deals have been put on hold because of the lack of new guidelines aimed at checking uncompetitive business practices.