Before the COVID-19 pandemic hit the Philippines, parties to mergers and acquisitions ("M&As") had to notify the Philippine Competition Commission ("PCC") of such M&A when these two thresholds are met: (i) the aggregate annual gross revenues in, into or from the Philippines, or value of the assets in the Philippines, of the ultimate parent entity ("UPE") of at least one of the acquiring or acquired entities (including that of all entities that the UPE controls, directly or indirectly) exceed PhP6 billion, and (ii) when the value of the transaction exceeds PhP2.4 billion. PCC also had the power to review, motu proprio, any M&A – including those that did not meet the foregoing thresholds – having a direct, substantial, and reasonably foreseeable effect on trade, industry, or commerce in the Philippines, based on factors deemed relevant by PCC.
To promote business continuity and capacity building during the pandemic, Philippine Congress passed the "Bayanihan to Recover as One Act". This increased the thresholds for compulsory merger notification to PhP50 billion for a period of two years from the effectivity of the law on 15 September 2020, and suspended PCC's power to review, motu proprio, any M&A for a period of one year, also from the effectivity of the law.
With the relaxation of the foregoing rules, merger notifications in 2020 decreased to 26 from the 46 notifications PCC received in 2019. In 2021, PCC has thus far received only four notifications.
With the recent expiration of the one-year moratorium on motu proprio merger review on 15 September 2021, PCC is hopeful that parties to M&As will be discouraged to enter into M&As that are potentially anti-competitive. PCC stressed that regulating M&As in the post-COVID-19 economic environment is critical to ensure that consolidation is not allowed to lead to highly concentrated markets.
Indeed, PCC's motu proprio review powers (as well as the compulsory notification requirement) allows it to predict and prevent anti-competitive practices before these materialise. The early determination of the merger's impact provides PCC the opportunity to intervene and remedy or prohibit a merger when anti-competitive effects are determined to occur.
As of 14 September 2021, PCC has received a total of 225 M&A transactions with a combined transaction value of PhP 4.56 trillion. The top five sectors based on frequency of M&A notifications are manufacturing (50), financial and insurance (37), real estate (33), electricity and gas (27), and transportation and storage (18).
