Philippine competition chief Arsenio Balisacan said his office facilitated P470 billion worth of mergers and acquisition (M&A) deals last year.
This is despite the effectivity of the Bayanihan to Heal as One Act (RA11494) that increased the transaction threshold and suspended the Commission’s power to conduct a review of transaction motu proprio for any M&A transaction in the country.
Balisacan in a report outlined the sectors the Commission will focus on in 2022 – e-commerce, health and pharmaceuticals, food and agriculture, energy and electricity, insurance, construction, water, and telecommunications.
Balisacan said 2021 remained tough amid the ongoing pandemic, which led to the enactment of the RA 11494, which aims to assist businesses in recovering fast from the pandemic, and in effect the economy.
The law, however, clipped the powers of the PCC to police M&As in the Philippines for a period of time, increasing the minimum threshold for transactions that have to be mandatorily reported to its office for review to P50 billion transaction – from the old P2.4 billion M&A transaction size, and a P6-billion asset threshold for any company that is involved in a M&A deal – two years from its signing in 2020. RA 11494 also suspended the PCC’s power to review M&A transactions motu proprio for one year.
“As such, we received only four M&A notifications for the entire 2021. The PCC approved two of these, while two transactions were withdrawn because they were exempt from compulsory notification. These four transactions, with a total transaction value of P470 billion, were engaged in real estate (2), finance and insurance (1), and transportation and storage (1),” Balisacan said.
With the return of the motu proprio power to review in September last year, Balisacan said his office “has continued to diligently monitor transactions that may have caused a substantial lessening of competition in the market.”
“The Commission reiterates that transactions that may significantly increase market concentration, lead to the creation of monopolies, erect barriers to entry, or encourage anti-competitive conduct must undergo competition review to ensure the protection of consumer welfare,” he said.
“Economic recovery demands concerted efforts by all stakeholders, especially in establishing a new normal that mitigates the economic scarring experienced amid the crisis… as firms continue to struggle from lower demand and micro, small, and medium enterprises (MSMEs) remain vulnerable to indebtedness and closures, risks of anti-competitive behavior persist, including anti-competitive mergers and acquisitions, cartel activities, and abuses of dominance,” he added.
Balisacan said a level playing field is necessary if the country wants to attract foreign investments “to hasten” recovery and growth of the economy.
Balisacan said the PCC also plans to do market studies in the bus transport, telecommunications (internet service providers, wholesale broadband, and spectrum management), and water while conducting competition impact assessments in the energy, food, and sports sectors.
For merger review and competition enforcement, the PCC shall continue to monitor markets and initiate motu proprio merger reviews of transactions that may have substantially lessened competition, Balisacan said.
It will also continue its review of M&As under lower and adjusted thresholds once the two-year period under the RA 11494 expires in September 2022.
Balisacan said the PCC will also “develop and issue guidelines on the review of non-horizontal mergers, ramp up enforcement activities to investigate markets in priority sectors, monitor complaints, and further develop its bid-rigging screening tool in partnership with other agencies to detect indicators of bid rigging in public procurement.”
