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Competition watchdog further reviews San Miguel-Holcim deal

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THE Philippine Competition Commission (PCC) is conducting a further review of San Miguel Corporation’s (SMC) $2.15-billion acquisition of Holcim Philippines Inc. (HPI), if the deal will lessen competition in certain markets in Luzon and Mindanao.

“The initial market investigation conducted by MAO (Mergers and Acquisitions Office) indicates that the Transaction may affect competition in the candidate markets for grey cement, clinker, ready-mix-concrete, and aggregates within the Northeast Luzon, Northwest Luzon, Central Luzon, National Capital Region, Southern Luzon, Northern Mindanao and Southern Mindanao Markets,” the competition watchdog said in a Sept. 6 statement released on Sept. 7.

After the Phase 1 review ended on Aug. 22, the MAO began the Phase 2 review on Aug. 23. It has 60 calendar days to complete the review.

“The second-level inquiry is set to determine if the merger of two of the biggest cement manufacturers in the country — SMC’s cement-manufacturing subsidiaries and Holcim — will likely lead to a substantial lessening of competition in the relevant markets,” the PCC said.

The commission said the Phase 2 review also seeks to find out if “there will be an increased likelihood of cartel-like coordination among cement firms in the identified geographic areas.”

“The PCC notes that cement is a commodity with low product differentiation where brands undergo the same quality standards,” the commission said.




“While the transaction is national in scope, the initial review shows that geographic markets by region affect retailers and consumers differently in terms of production, distribution and price,” it added.

SMC and HPI announced on May 10 the $2.15-billion deal, which is considered a notifiable transaction under the Philippine Competition Act of 2015.

First Stronghold Cement Industries Inc. (FSCI), a subsidiary of San Miguel Equity Investments, Inc., will buy 85.73% of the local arm of Switzerland-based LafargeHolcim, Ltd.

FSCI has ownership stake in Northern Cement Corp., and joint venture interest with Northern Cement and subsidiary Oro Cemento in two planned cement plants.

Also, SMC President and Chief Operating Officer Ramon S. Ang is the majority owner and chairman of Eagle Cement Corp.

To recall, the PCC also launched an investigation into the cement industry in 2017, in response to a complaint lodged by former trade undersecretary for consumer production Victorio Mario A. Dimagiba, who alleged that members of the industry entered into anti-competitive agreements.

Prohibited under the Philippine Competition Act are anti-competitive agreements that restrict “competition as to price or components thereof or other terms of trade; fix price at an auction in any form of bidding including cover bidding, bid suppression, bid rotation, and market allocation,” among others.

Also, the abuse of dominant market positions by engaging in activities that will bring about a substantial lessening of competition is also prohibited.

The PCC has yet to release the report on the findings on the cement investigation. — J.P.Ibañez

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