SENATOR Juan Miguel F. Zubiri on Monday recommended that the Philippine Competition Commission (PCC) vary the notification thresholds for mergers and acquisition (M&A) deals by industry, rather than providing a fixed minimum transaction value applicable to all business sectors as prescribed in the Philippine Competition Act.
“If you do benchmarking, I recommend that to the Philippine Competition Commission because if you look at the laws that were passed in Vietnam and Thailand, I think they’re going to do benchmarking in terms of rates,” he said at the Senate hearing on the proposed measure he filed seeking to raise the notification threshold for mergers and acquisition deals from over P1 billion to over P10 billion.
The senator, who chairs the Senate committee on trade, industry and entrepreneurship, said he would request a technical working group involving the PCC, Department of Trade and Industry (DTI), Securities and Exchange Commission (SEC), as well as the Bangko Sentral ng Pilipinas (BSP), among others to come up with notifications threshold for each industry.
“We might amend the Senate Bill to instead of coming up with one amount but come out several amounts for different industry players… We can look at nine industries, come up with suggested thresholds for those industries. And then present it as a committee report,” Mr. Zubiri told BusinessWorld.
Senate Bill 1771 filed on Feb. 27 seeks amendments to Republic Act No. 10667 or the Philippine Competition Act by raising the notification threshold from over P1 billion to over P10 billion. It also calls for changing the term of office among PCC officials from the fixed seven-year term to one coterminus with the tenure of the President.
The idea of identifying notification thresholds per industry was suggested by Federation of Filipino Chinese Chambers of Commerce and Industry (FCCCI) board member George Siy at the hearing. “Maybe it has to be, to some extent, industry-based,” he said.
Philippine Chamber of Commerce, Inc.’s advocacy and research department manager Rhuby R. Conel, backed Mr. Siy’s proposal for industry-specific thresholds for mergers and acquisitions.
“We support in principle the initiative to increase the M&A notification threshold to leverage this with global standards to encourage more foreign direct investment,” she said.
PCC Chairman Arsenio M. Balisacan said the agency welcomed the proposal on industry benchmarking regarding the notification threshold, but appealed for time to carefully review the proposal.
“As much as possible we would like to pursue things we do in the commission to be evidence-based… We commit to reviewing these thresholds periodically and we will also (be) looking to the issue of benchmarking by industry,” he said
“I would take positively their comments, especially from the industry. I asked indulgence to give us the time to also study the proposal because we can’t afford to fail,” he added.
He said PCC was “hesitant” to increase the notification threshold to P10 billion as proposed in the Senate bill, saying that the agency has already increased its notification thresholds for mergers and acquisitions to P2 billion and the size of party threshold from P1 billion to P5 billion. The measure will take effect on March 20.
He added that setting notification threshold to P10 billion would exclude 76% of transactions reviewed by the PCC in 2017.
Senator Sherwin T. Gatchalian, chair of the Senate committee on economic affairs, called for the congressional oversight committee to convene the Congressional Oversight Committee on Competition (COCC) in order to push forward the implementation of the Philippine Competition Act.
According to the law, the COCC is composed of the chairpersons of the Senate committees on trade and commerce, economic affairs and finance; the chairpersons of the House of Representatives committees on economic affairs, trade and industry and appropriations; and two members from each chamber to be determined by Congress leaders.
Mr. Zubiri said he would push for meeting with the COCC to discuss adjustments to the notification thresholds for mergers and acquisitions. — Camille A. Aguinaldo