Antitrust body to ease rules for unsolicited PPP joint ventures

Font Size

PCC logo

By Arjay L. Balinbin, Reporter

THE Philippine Competition Commission (PCC) has drafted a circular that exempts from compulsory notification the joint ventures (JVs) of private entities formed for an unsolicited public-private partnership (PPP) project.

The antitrust body said in a statement on Thursday that the draft circular “aims to establish and institute a framework to exempt joint ventures of private entities formed for an unsolicited PPP project, consistent with the mandate of the PCC and the objectives of the Build-Operate-and-Transfer (BOT) Law.”

The PCC also invited stakeholders on Thursday, including government agencies and business, legal, academic, and trade groups to submit their comments on the draft circular to the Mergers and Acquisitions Office on or before Jan. 31.

In a phone message, Public-Private Partnership (PPP) Center Executive Director Ferdinand A. Pecson declined to comment on the matter as “the draft for unsolicited [PPP projects] is still under review.”

But he noted that the PPP Center supported the PCC circular on “solicited proposals,” which has been released, “as the exemption could minimize delays in the implementation of projects that could arise if the PCC review is done after the contract has been signed.”

As for the coverage, Section 2 of the draft circular on “process for exemption from compulsory notification” in unsolicited PPP projects states that it will apply “solely to unsolicited projects undertaken by agencies and instrumentalities of the national government, pursuant to the BOT Law and its implementing rules and regulations (IRR).”

Citing Republic Act No. 7718 or the BOT Law, the PCC noted in the draft circular that the government is mandated to provide the “most appropriate incentives to mobilize private resources in the financing of infrastructure projects.”

It added that such incentives should “include providing a climate of minimum government regulations and procedures.”

The PCC said further that Executive Order No. 8, series of 2010, “identifies PPP projects as the cornerstone strategy to accelerate infrastructure development and recognizes the need to fast-track the implementation of PPP projects.”

Under the IRR of the Philippine Competition Act (PPA), the joint ventures between public or private entities are subject to the compulsory notification requirement if the relevant thresholds under the IRR are met.

The IRR, as cited in the draft circular, also states that “if the winning bidder/s in unsolicited projects form a joint venture, a notification to the PCC is mandatory once notification thresholds are breached.”

The antitrust body had approved in 2018 its final guidelines for notification requirements covering future joint ventures.

Under the said guidelines, parties forming joint ventures are required to notify the PCC when the revenue or assets of one of the parties to the JV exceeds P5 billion.

Mandatory notification is also required if the value of the assets to be combined in the JV exceeds P2 billion.

JV partners are required to notify the PCC 30 days after they agree to transfer assets.

The guidelines define a JV as “a business arrangement whereby an entity or group of entities contribute capital, services, assets, or a combination of any or all of the foregoing, to undertake an investment activity or a specific project, where each entity shall have the right to direct and govern the policies in connection therewith, with the intention to share both profits and risks and losses subject to Agreement by the entities.”

The PCC’s standard for determining whether a deal constitutes a JV is a finding of joint control, defined as the ability of the partners to substantially influence or direct the actions or decisions of the joint venture, whether by contract, agency or otherwise.

“Forms of joint control may be seen in the equality of voting rights or appointment to decision-making bodies, veto rights, joint exercise of voting rights, or in similar or analogous cases,” the guidelines said.