PCC voids Chelsea–Trans-Asia deal
Chelsea Logistics Holdings Corp.’s purchase of Trans-Asia Shipping Lines has been voided due to their failure to properly notify the Philippine Competition Commission (PCC).
Both companies were also fined P22.8 million by the anti-trust body, which said the nullification was also a factor in the conditional clearance of a related transaction – Chelsea’s acquisition of KGLI-NM Holdings, Inc.
Chelsea and parent firm Udenna Corp. had argued that the Trans-Asia deal fell below the P1-billion compulsory notification threshold as the stake involved was only worth P205.3 million.
Chelsea on Tuesday reiterated the claim that the deal was not covered by a mandatory review, also noting that the PCC had recently raised the value floor to P2 billion.
“Parties to the voided transaction are currently weighing their options on whether to first file a motion for reconsideration with the commission or to go straight to the Court of Appeals for redress. As the decision is not yet final, it has no impact to the business, operations and financial conditions of Chelsea,” it said in a statement.
The PCC, in a June 28 decision, said transactions should be considered based on aggregate asset value or gross revenues from sales. Trans-Asia’s total assets of P1.14 billion, it noted, meant the deal had to be cleared with the competition body.
PCC rules call for the imposition of a 2-percent penalty based on the transaction value, thus the P22.8-million fine.
In a separate June 28 decision, the antitrust body referred to the Trans-Asia ruling in deciding not to take further action on the KGLI-NM transaction despite a finding by its Mergers and Acquisitions Office that a “substantial lessening of competition” would occur.
Both Trans-Asia and KGLI-NM’s 2G0 operate in overlapping passenger shipping markets, leading to the “strong likelihood of price increases of a magnitude that adversely affects customers,” the decision states.
“Considering that the ownership by Udenna through Chelsea of Trans-Asia gives rise to the horizontal overlaps with 2Go which result in the finding of a substantial lessening of competition, the nullification of the Trans-Asia agreements eliminates such horizontal overlaps,” the PCC said.
“Nonetheless, the commission emphasizes that the harms identified are still likely to occur, if not for the non-notification decision,” it added.
Follow a subsequent review, the PCC said it “resolves that it will take no further action with respect to the transaction, on the condition that the transaction subject of the non-notification decision is void.”|
Should Udenna or any of its units wish to pursue the Trans-Asia purchase, they will have to file a new notification and the commission will again initiate a review based on relevant rules.
WITH A REPORT FROM REICELENE JOY N. IGNACIO
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