The Philippine Competition Commission (PCC) announced on 21 February 2019 that it will adjust merger notification thresholds with effect from 1 March 2019. The revised thresholds apply to mergers and acquisitions with definitive agreements executed on or after that date.
This is the second time the Philippine Competition Commission has adjusted its thresholds upward since the merger regime began.
|Threshold||2015||First adjustment: wef March 2018||Second adjustment:
wef 1 March 2019
|Size of Person^||PHP 1 Billion
(approx. € 17 million)
|PHP 5 billion
(approx. € 85 million)
|PHP 5.6 billion
(approx. € 95 million)
|Size of Transaction*||PHP 1 Billion
(approx. € 17 million)
|PHP 2 billion
(approx. € 34 million)
|PHP 2.2 billion
(approx. € 37 million)
^Definition: value of the assets or revenues of the Ultimate Parent Entity, including entities it controls, of at least one of the parties.
*Definition: value of the assets or revenues of the acquired entity.
Exchange rate as at 28 February 2019
An automatic annual adjustment of merger notification thresholds was put in place during the PCC’s first adjustment review in 2018. The merger notification thresholds are adjusted annually, based on nominal GDP growth of the previous year rounded up to the nearest hundred millions. The Philippines’ nominal GDP increased by 10.23% in 2018.
PCC Chairman Arsenio M. Baliscan commented on the rationale of setting merger notification thresholds:
“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 rationale for setting a notification threshold is to ensure that M&As that are more likely to substantially lessen competition are subject to compulsory notification and review, and to exclude those that are less likely to pose competition concerns.”
The Philippine Competition Act requires that mergers and acquisitions with transaction values that cross its thresholds be notified to the PCC prior to the closing of the transaction. The PCC has received a total of 177 merger notifications and approved 161 of them, since the law came into force. It issued its first decision to prohibit a merger on 14 February 2019, finding that the merger between two sugar millers, URC and Don-Pedro RHI, will lead to a monopoly in Southern Luzon.
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Without careful management from the outset, merger control in ASEAN can disrupt your M&A transaction plans and timetables.
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