URC shrugs off PCC rejection of sugar deal, to seek other opportunities

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UNIVERSAL Robina Corp. (URC) said it continues to seek opportunities that will strengthen its business after the antitrust regulator rejected its plan to buy the sugar milling and refinery unit of Roxas Holdings, Inc.

“URC continuously looks for opportunities to attain greater production efficiency which in turn leads to the provision of quality products at affordable prices to consumers,” the food company said on Friday.

URC and Roxas Holdings separately confirmed receipt of the decision issued by the Philippine Competition Commission (PCC) to reject the acquisition of the milling and refinery assets of Central Azucarera Don Pedro Inc. (CADPI).

“The decision by the PCC does not materially affect the business plans of URC,” URC told the stock exchange.

“URC accepts the PCC decision and affirms its commitment and support to the efforts of government for a strong market economy,” it added.

URC said it had entered into the agreement with Roxas Holdings with the closing of the sale transaction subject to, among others, obtaining the approval of the PCC.

The company said it proposed to acquire CADPI’s assets in Nasugbu, Batangas with the objective of attaining greater production efficiencies.

It said with that goal in mind, it was “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.”

“We sought to address the concerns expressed by the PCC regarding the potential unintended consequences of such proposed transaction, offering commitments and safeguards where appropriate,” it said.

“Despite such efforts, the PCC in the exercise of its mandate, decided not to allow the proposed transaction to proceed,” it added.

In a statement dated Feb. 14, the PCC said it found URC’s acquisition of its only competitor in the sugarcane milling services market leads to a monopoly in Southern Luzon.

URC’s mill is in Balayan, Batangas.

The PCC had raised competition concerns about the proposed acquisition, with the parties voluntarily submitting commitments “but these failed to sufficiently address the competition concerns.”

“The prohibition prevents this deal from creating a monopoly in the relevant market that could harm the welfare of the sugar cane 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 said.

The PCC said both mill operators are in Batangas but the monopoly to be created by the merger would substantially reduce competition in the sugar milling services market not only in Batangas, but also in Cavite, Laguna, and Quezon.

On Friday, URC rose 1.53% to P146, while Roxas Holdings was up 0.67% at P3.02. — Victor V. Saulon