New competition panel set to review mergers, acquisitions of over P1B

THE NEWLY formed Philippine Competition Commission (PCC) issued transitory rules over the weekend, paving the way for the review of new merger and acquisition deals worth over P1 billion.

The transitory guidelines were issued so the PCC could begin its work even before the issuance of the formal implementing rules and regulations (IRR) of Republic Act No. 10667 or the Philippine Competition Act.

The act, described as the country’s first foray into antitrust regulation, was signed into law in July but it was only on Feb. 1 that Malacañang formed the quasijudicial commission with former Socio-economic Planning Secretary Arsenio M. Balisacan as its first chair.

It was reported that several foreign investments and big business deals had been put on hold because of the lack of new guidelines aimed at checking uncompetitive business practices.

In his first memorandum circular, Balisacan said the new body would begin to receive notifications of mergers and acquisitions worth over P1 billion which are sealed at the end of this month or 15 days after the effectivity of the circular, and until the official IRR is promulgated.

IRR deadline

Balisacan, who has a seven-year term, said he aimed to get the IRR out before President Aquino steps down after the May elections.

Under the competition law, the commission has “the power to review proposed mergers and acquisitions, determine thresholds for notification, determine the requirements and procedures for notification and upon exercise of its powers to review, prohibit mergers and acquisitions that will substantially prevent, restrict or lessen competition in the relevant market,” Balisacan noted in the circular.

With the circular, parties to mergers and acquisitions worth over P1 billion must notify the commission through a letter containing the following information: the parties to the merger or acquisition; the name and contact details of the authorized representatives of each party; a brief description of the businesses involved; the key terms of the transaction; and the timing for the execution or implementation of the transaction.

Failure to notify the PCC would void the transaction and subject the parties to an administrative fine of 1 percent to 5 percent of the value of the transaction.

According to Balisacan, mergers and acquisitions approved during this transitory period “may not be challenged under the law, except when the notification required… contains false material information.”

Exemptions

Exempted from the notification requirements are mergers and acquisitions sealed before the effectivity of the circular.

Mergers and acquisitions coursed through the Philippine Stock Exchange (PSE) will also not be covered by the transitory guidelines.

“Given the special nature of transactions effected through the PSE, transitory rules and guidelines pertaining to the notification of relevant transactions… shall be promulgated by the commission in a separate memorandum circular,” Balisacan said.

The Philippine Competition Act is aimed at ensuring fair competition in the business sector, putting in place administrative fines as well as criminal penalties for mergers or acquisitions that substantially restrict competition or represent abuse by a dominant business player.

It “aims to protect consumer welfare and advance both domestic and international trade and economic development,” Balisacan said.