THE Philippine Competition Commission (PCC) has raised anew the threshold asset and transaction values for compulsory notification of mergers and acquisitions.
In a statement on Monday, PCC said that starting March 1, companies whose parent company assets exceed P6 billion and whose merger and acquisition transactions exceed P2.4 billion must notify the commission.
The thresholds were last adjusted to P5.6 billion for parent company assets and P2.2 billion for transactions in 2019.
The threshold for the parent company assets, or “size of person,” refers to the value of either the assets or gross revenues of the parent entity of at least one of the parties concerned. The “size of transaction” refers to the value of assets or revenues of the concerned entities.
The PCC in 2018 set an automatic annual adjustment of merger thresholds based on the nominal gross domestic product (GDP) growth of the previous year. The growth is based on official estimates of the Philippine Statistics Authority.
The commission explained that the adjustment ensures the thresholds maintain their real value over time and relative to the size of the economy.
Philippine nominal GDP growth in 2019 was 6.8%, according to the Philippine Statistics Authority.
PCC Chairperson Arsenio M. Balisacan said that adjusting the threshold ensures that potentially anti-competitive mergers and acquisitions are reviewed, and transactions that are unlikely to pose competition are excluded from the review.
“With the increase in thresholds streamlining the intake of notified cases, this will allow the Commission to efficiently use its resources towards other equally important elements of competition enforcement, including the conduct of cartel investigations, market monitoring and motu proprio merger review,” he said.
PCC explained in a policy statement in 2018 that economic growth and inflation increases the number of businesses that exceed the threshold if it is not adjusted. PCC said the growth in assets are due to real business expansions or increases in price.
The parties included in the deal have 30 days after the signing of agreements to notify the commission.
According to the resolution, the adjusted threshold applies until March 1 of the following year.
The commission said the new thresholds will not apply to mergers and acquisitions that have been pending for review and subject to a decision as well as notifiable transactions consummated before March 1.
The PCC said it had received a total of 200 transactions with a combined value of P3.6 trillion, of which it had approved 192 and blocked one. The most active sectors in 2019 were manufacturing, electricity and gas, finance and insurance, real estate, and transport and storage. — Jenina P. Ibañez