PCC raises M&A review thresholds
Credit to Author: The Manila Times| Date: Thu, 21 Feb 2019 16:23:54 +0000
Thresholds for compulsory merger and acquisition (M&A) reviews have been raised for a second time to reflect economic growth, the Philippine Competition Commission (PCC) announced on Thursday.
The “size of transaction” and “size of party” limits — the latter referring to the revenues/assets of the ultimate parent of at least one of the firms involved — were raised to P2.2 billion and P5.6 billion, respectively, from P2 billion and P5 billion.
The new thresholds, which take effect March 1, were based on nominal gross domestic product (GDP) growth having hit 10.23 percent last year, it said. Nominal GDP growth, which unlike real GDP growth is not adjusted for inflation, was 9.2 percent in 2017.
The PCC decided last year to drop the Philippine Competition Act’s default thresholds of P1 billion and also set annual reviews utilizing the previous year’s official nominal GDP growth.
PCC Chairman Arsenio Balisacan, in a statement, said compulsory notification based on corresponding trigger thresholds were necessary as substantial M&A deals could pose competition risks.
“The PCC observes that the appetite for mergers and acquisitions within a rapidly growing economy remains high. The adjustment based on nominal GDP (gross domestic product) growth ensures that the thresholds maintain their real value over time and relative to the size of the economy,” he added.
“A well-designed threshold must be reflective of the country’s economic condition, such that the scope of merger control remains faithful to the intent of the law.”
The PCC clarified that the newly adjusted thresholds would not apply to M&A deals currently under review, notifiable transactions before
March 1, and those already covered by decisions.
To date, 177 transactions have been reviewed, 161 of which — with a combined value of P2.83 trillion — were approved.
The PCC reported that the most active sectors since last year were manufacturing, finance and insurance, real estate, electricity and gas, and transportation and storage.
The PCC, a quasi-judicial body established in 2016 under the Philippine Competition Act of 2015, is tasked with reviewing mergers and acquisitions for possible adverse effects on competition and also initiating investigations into anti-competitive practices.
TYRONE JASPER C. PIAD
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