PCC to review minimum P1B trigger value in merge probe
The Philippine Competition Commission (PCC) has received requests to hike the current P1-billion notification threshold for merger and acquisition deals.
Ar the sidelines of the Competition Forum of the European Chamber of Commerce of the Philippines (ECCP) and European Union-Philippines Business Network (EPBN) Wednesday, PCC Legal Office Director Gian Camacho told reporters that there have been requests forwarded to the Commission to review the threshold.
“The draft for the adjustment of the P1-billion notification threshold is expected to be proposed to the Commission by the first half of the year,” PCC Chairman Arsenio Balisacan said in his keynote speech during the Competition Forum.
Section 17 of Republic Act No. 10667 or the Philippine Competition Act provides that all merger and acquisition transactions worth more than P1 billion shall notify the PCC of the deal before consummation of the transaction.
The same law also authorized the PCC to determine the threshold for mergers and acquisitions notification.
“The concern is if the P1-billion (threshold) is too low for other jurisdictions. (There are) cross-border mergers that involve a lot of companies that really could go into the billions,” Camacho further said.
He also clarified the misconception that the valuation of the transaction was only based on the contract value.
He explained that the PCC assessed a merger through a twofold test – the size of the person and the size of transaction.
Camacho said the size of the person test checked if one of the parties involved in the merger and acquisition deal breached the P1-billion threshold in terms of assets or revenues derived from the Philippines.
The size of transaction test, on the other hand, looks into the aggregate value of the acquiring assets, which would include the companies controlled by the acquired company, he added.
“When you think about it, it is reflective of the worth of the deal. This is the value of what you are really getting,” the official said.
Last year, PCC conducted a review to determine if there was a need to raise the notification threshold. It later ruled to maintain the P1-billion threshold, noting that there was “no pressing need” at that time to hike the P1-billion notification threshold.
Balisacan said the Commission had received 151 merger and acquisition notifications and 135 transactions, 41 of which were global merger transactions.
The 135 transactions were valued at PHP2.25 trillion. (PNA)