THE Philippine Competition Commission (PCC) on Thursday said it has blocked Universal Robina Corp.’s (URC) takeover of a Roxas Holdings, Inc. (RHI) subsidiary’s sugar milling and refining assets in Nasugbu, Batangas, saying the deal will create a monopoly in Southern Luzon.
In a statement, the anti-trust body said it issued the decision after finding that URC’s acquisition of Central Azucarera Don Pedro, Inc. (CADPI) “leads to a monopoly in South Luzon.”
“The prohibition prevents this deal from creating a monopoly in the relevant market that could harm the welfare of the sugarcane planters. It is the duty of the Commission to prevent the creation of monopolies when applying the merger control powers conferred on it by the Philippine Competition Act,” PCC Chairman Arsenio M. Balisacan was quoted as saying in the statement.
The PCC described CADPI as URC’s only competitor in the sugarcane milling services market in the area. URC has a sugar mill in Balayan, Batangas.
“A merger-to-monopoly deal is among the most detrimental types of business transactions. The URC takeover removes its only competitor, erodes the benefits of competition for the sugarcane planters, and leaves market power at the hands of a single provider in an area,” Mr. Balisacan said.
Last July, URC said it was acquiring the sugar milling and refining assets owned by CADPI and RHI in Barangay Lumbangan, Nasugbu in Batangas. The following month, the competition watchdog conducted a further review of the deal, after concerns over its effect on the local sugar industry.
In January this year, the PCC flagged the same competition concerns on the transaction.
To salvage the merger, the parties submitted voluntary commitments but the PCC did not consider these sufficient to address the monopoly issue.
“Both mill operators are in Batangas but the monopoly to be created by the merger will substantially lessen competition in the sugar milling services market not only in Batangas, but also in Cavite, Laguna, and Quezon,” the PCC said.
While the deal mainly concerns sugarcane farmers in Southern Luzon, the PCC noted the sugar processed in these facilities are sold throughout the country.
In a statement, URC said it accepted the anti-trust body’s decision.
“URC initiated the proposed acquisition of CADPI with that objective mind, convinced that it would bring about such efficiencies that would translate to better sugar planter and consumer welfare driven by a more stable and profitable sugar production industry in Southern Luzon,” the Gokongwei-led company said.
URC said the PCC decision “does not materially affect the (company’s) business plans”, as it continues to look for “opportunities to attain greater production efficiency.”
URC is engaged in various food-related businesses, including the production of packed foods and beverages, sugar, agro-industrial products, and bioethanol. Its mills, which produce raw and refined forms of sugar and molasses, are located in Batangas, Iloilo, Negros Oriental, Negros Occidental, and Cagayan.
RHI, also engaged in the trading of raw and refined sugar, and molasses, has 100% stake in CADPI which operates an integrated sugar cane milling and refining plant in Batangas. — Janina C. Lim