PCC to issue guidelines on review moratorium of M&As under Bayanihan

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    The Philippine Competition Commission (PCC) is set to issue the guidelines on mergers and acquisitions (M&A) that will be facilitated within the next two years.

    The rules will implement the exemption to mandatory reporting of these M&As under the Bayanihan To Recover As One (Bayanihan 2) Act.

    The law, recently signed by the President Duterte, has exempted from compulsory notification M&As worth P50 billion “if entered within two years of thos Act.

    Section 4(eee)1 of the Bayanihan 2 Act also suspends PCC’s exercise of motu proprio review of these M&As for a period of one year.

    “As the nation faces the challenges brought by the pandemic, the PCC will do its part as antitrust authority to contribute to the country’s economic recovery and perform its mandate with renewed vigor,” the PCC said.

    “In line with the Bayanihan 2’s policy objective of enforcing measures to protect the people from cartels, monopolies, and combinations in restraint of trade, which affect the supply, distribution and movement of essential goods and services, the PCC is intensifying enforcement activities to scan the market for anti-competitive agreements and abusive practices that harm the Filipino people,” it added.

    The agency vowed to ensure that “consumer welfare and competition are safeguarded especially at a time when consumers and small businesses are more vulnerable to unscrupulous business practices.”

    The secondment of competition regulation to economic recovery under Bayanihan 2 is hoped not to stifle market competition in the Philippines.

    PCC chairman Arsenio Balisacan early in the pandemic has flagged the possible increase in appetite for M&As due to the economic disruption caused by the new coronavirus disease 2019.

    In his address to legislators in May, Balisacan warned losses and uncertainty will lead to market exits of firms, especially the smaller ones.

    “There will also be an increased appetite for mergers as firms attempt to recover and strengthen their market positions,” he said in his speech.

    As failing firms exit or as firms merge, he said the resulting increase in market concentration may lead to monopolization or substantially raise market power, possibly giving rise to consumer harm if it comes with the ability and incentive to exercise that market power in the form of higher prices, lower quality of goods and services, or less innovation.

    He also cautioned that to avoid losses, some firms might resort to employing extraordinary means, including anti-competitive behavior such as cartel activity