PCC doubles mergers and acquisitions’ notification threshold to P2B

The Philippine Competition Commission (PCC) raised the transaction value of mergers and acquisitions that require antitrust review to P2 billion.

In Memorandum Circular No. 18-001 released on Monday, the antitrust watchdog raised the threshold to P2 billion from P1 billion.

“The thresholds are used to determine if a transaction triggers premerger reporting requirements to the PCC. Under Section 3 of the Implementing Rules and Regulations, parties to a transaction must notify the Commission if they satisfy two tests: Size of Person and Size of Transaction,” the commission noted.

“The Size of Person refers to the value of assets or revenues of the Ultimate Parent Entity of at least one of the parties, while Size of Transaction refers to the value of the assets or revenues of the acquired entity,” it said.

The PCC implemented a P5-billion threshold for the size of person.

“The adjustment stems from various considerations, including the size of actual notifications to date, the country’s economic growth, overall inflation, and efficient use of the Commission’s limited resources,” PCC Chairman Arsenio Balisacan said in an emailed statement.

The memorandum circular establishes the automatic adjustments of the threshold every year starting March 1, 2019 based on the official estimate of the nominal gross domestic product (GDP) growth of the previous calendar year, rounded up to the nearest hundred millions.

“The annual adjustment based on nominal GDP growth ensures that the thresholds maintain their real value over time and relative to the size of the economy,” Balisacan said.

“Adjusting the thresholds requires a delicate balance to make sure that it’s not too low as to create an undue burden on business, and that it’s not too high that transactions with potential anticompetitive effects in the market evade the scope of antitrust reviews,” he said.

The new thresholds will take effect 15 days after its publication on Monday, March 5, and will apply to all M&A transactions with definitive agreements executed after the memorandum circular is in place.

Balisacan has said the PCC is looking at the possibility of raising the threshold within the first half of the year. —Jon Viktor Cabuenas/VDS, GMA News