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CLC-Trans-Asia deal under review

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THE Philippine Competition Commission (PCC) on Wednesday started a review of Chelsea Logistics Holdings Corp.’s (CLC) acquisition of Trans-Asia Shipping Lines, Inc.

The Phase 1 review comes after the anti-trust body received the companies’ notification of the deal last Sept. 21.

To recall, the transaction was earlier voided due to CLC and Trans-Asia Shipping’s failure to notify the PCC, even as the size of the transaction fell under the compulsory notification threshold of P1 billion.

The voided deal led to the PCC approving CLC’s purchase of shares in KGLI-NM Holdings, Inc., which owns 2Go Group, Inc. The PCC had said the Trans-Asia transaction initially raised competition concerns, as both 2Go and Trans-Asia were owned by Udenna Corp.

A hearing was held at the PCC on Sept. 17, as the parties sought to have both decisions reconsidered.

The PCC said Udenna Chairman and CEO Dennis A. Uy and company representatives committed to complying with the notification requirements, as well as make “voluntary commitments” to address the competition concerns.

“These include the commitment to be bound by a price monitoring scheme and provide necessary information to implement the same,” the PCC said.

Because of this, the PCC set the applicable administrative fine at 1% of the transaction value amounting to P11.4 million. This lower than the P22.8 million penalty set by the PCC.

“Compliance is the cornerstone of fostering a culture of competition. The competition law is fair as it rewards faithful observance of the rules while it penalizes violations,” PCC Chairman Arsenio M. Balisacan was quoted as saying in a statement.

Under PCC rules, the Phase 1 review is conducted within 30 days from notification and payment of filing fees. The review will determine whether or not the deal will raise competition concerns. If competition concerns arise, the PCC will proceed to a Phase 2 review.

Based on its previous review of the Chelsea/KGLI-NM transaction, PCC found that Chelsea’s control of both 2Go and Trans-Asia would lead to a substantial lessening of competition affecting Roll-On/Roll-Off passenger shipping services in six routes, namely Cebu-Cagayan De Oro; Cagayan De Oro-Cebu; Cebu-Ozamis; Ozamis-Cebu; Cebu-Iligan and; Iligan-Cebu legs.

It also found substantial lessening of competition in the cargo shipping services in the same areas plus the Cebu-Zamboanga leg. — JCL