THE Department of Trade and Industry (DTI) expects San Miguel Corp.’s (SMC) acquisition of a majority stake in Holcim Philippines, Inc. to result in lower prices of locally produced cement.
“We can expect more synergies in their operations, more economies of scale which will hopefully bring down their cost, prices. But we still expect some segmentation of the market because we all know that the Eagle brand is always lower than Holcim. Just like in any industry, different brands still come up with different prices,” Trade Secretary Ramon M. Lopez said during a press conference organized by the Presidential Communications Operations Office.
Mr. Lopez noted the continuing imports of cement — which the DTI had imposed a temporary safeguard duty — can still provide “a healthy competitive environment for all the players.”
San Miguel, through First Stronghold Cement Industries, Inc. — a wholly owned subsidiary of San Miguel Equity Investments, Inc., which in turn is a wholly owned subsidiary of San Miguel — will acquire an 85.7% stake in the local arm of Switzerland-based LafargeHolcim Ltd.
Ramon S. Ang, who has full control of San Miguel, also owns Eagle Cement Corp. The move is widely seen as the tycoon’s expansionary move into the cement business to rake in amid the government’s ongoing massive infrastructure push.
The $2.15-billion deal, which falls as a notifiable transaction under the Philippine Competition Act (PCA) of 2015, has yet secure the go signal from the anti-trust body. The parties have 30 days after signing their definitive agreement to submit the notification.
The PCC noted that the review will not overlap with its ongoing enforcement case in the cement industry.
To recall, the PCC launched in 2017 a review founded on the complaint of former Trade undersecretary for consumer production Victorio Mario A. Dimagiba which alleges that the Cement Manufacturers Association of the Philippines’ former president Ernesto M. Ordoñez, LaFarge Holcim Philippines, Inc., and Republic Cement and Building Materials, Inc. are involved in anti-competitive deals that are explicitly prohibited under Sections 14 and 15 of the PCA.
Section 14 of the said law specifies that agreements between competitors are prohibited if they 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.
Meanwhile, Section 15 regulates the abuse of dominant market positions, prohibiting “one or more entities to abuse their dominant position by engaging in conduct that would substantially prevent, restrict, or lessen competition.” — Janina C. Lim