The Philippine Competition Commission, the government’s anti-trust body, increased again the threshold for compulsory notification of mergers and acquisitions from P2 billion to P2.2 billion for the size of the transaction beginning March 1.
It also raised the notification level for the size of person, or the value of assets or revenues of the ultimate parent entity of at least one of the parties, from P5 billion to P5.6 billion.
This was the second threshold adjustment since the Philippine Competition Act was passed in 2015 from a baseline threshold of P1 billion for both SoP and SoT. The latter refers to the value of assets or revenues of the acquired entity.
The SoP and SoT thresholds, when met together, are considered triggers for entities to notify the commission of their transactions.
PCC issued Memorandum Circular No. 18-001 in 2018 to establish the automatic annual adjustment of the thresholds based on the nominal gross domestic product growth of the previous year rounded up to the nearest hundred million.
Based on official estimates from the Philippine Statistics Authority, nominal GDP growth in 2018 reached 10.23 percent.
“The PCC observes that the appetite for mergers and acquisitions within a rapidly growing economy remains high. The adjustment based on nominal GDP growth ensures that the thresholds maintain their real value over time and relative to the size of the economy,” said PCC chairman Arsenio Balisacan.
“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,” he said.
The PCC has received a total of 177 transactions and approved 161 of them amounting to a combined value of P2.83 trillion.
The five most active sectors are manufacturing, finance and insurance, real estate, electricity and gas and transportation and storage.
PCC is mandated under the Philippine Competition Act to review mergers and acquisitions to ensure that these deals will not substantially prevent, restrict or lessen competition in the market.