MERGERS AND ACQUISITIONS that have been exempted from notifying the Philippine Competition Commission (PCC) under the Bayanihan to Recover As One Act (Bayanihan II) may still be reviewed after a year if they are seen as likely to “substantially lessen” competition.

The government’s competition watchdog issued guidelines on the implementation of Bayanihan II, which suspended the required notification and review of business mergers and acquisitions with transaction values below P50 billion.

The Bayanihan II exempts parties in these mergers and acquisitions from being required to notify the competition regulation body within two years from the effectivity of the law, which was signed on Sept. 11.

The PCC review of these transactions, conducted on its own initiative, has also been suspended for a year.

However, any transaction within the one-year period that is seen to substantially lessen competition can still be reviewed, PCC said in a statement on Monday. These reviews will be done a year after the effectivity of Bayanihan II.

PCC will determine if the transaction substantially lessens competition, based on its existing measures.

In addition, parties to mergers and acquisitions with values below the P50 billion threshold may still voluntarily notify the PCC.

“In its discretion, the PCC may give due course to the voluntary notification, with review periods of 45 days for Phase 1 and 90 days for Phase 2.”

Transaction parties that are required to notify the PCC include: the ultimate parent entity of at least one of the acquired or acquiring parties have annual gross revenues into or from the Philippines of P50 billion.

It also includes transaction values of P50 billion, including those where proposed acquisition of corporation voting shares earns them 35% of votes, or 50% if the entities already own more than 35%. It also includes a 35% threshold for acquisition of interest in a non-corporate entity, or 50% if the acquiring entities are already entitled to receive more.

An entity must also notify the PCC if the aggregate value of assets or gross revenues to be combined in the Philippines is at least P50 billion.

Mergers and acquisitions with successive transactions between the same parties within a year will be treated as a single transaction. They must also notify PCC of their preliminary agreement providing for successive transactions, if there is one.

Prior to Bayanihan II, the thresholds for compulsory notification were adjusted annually and set at P2.4 billion for the size of the transaction, and P6 billion for size of person for 2020.

PCC is reviewing five transactions they were notified of before Bayanihan II took effect.

“The PCC recognizes the need to strike a balance in implementing the policy objectives of promoting business continuity under the Bayanihan II and looking after market efficiency and consumer welfare under the Philippine Competition Act,” PCC Chairperson Arsenio M. Balisacan said.

“With fewer merger notifications expected, the PCC will intensify action in other areas of enforcing the competition law especially against anti-competitive agreements and abusive practices that harm consumers or unscrupulously take advantage of the crisis.” — Jenina P. Ibañez