Published 16 August 2019, The Daily Tribune
Media giant Ruport Murdoch could not have said it better: “The world is changing very fast. Big will not beat small anymore. It will be the ‘fast’ beating the ‘slow.’” In line with the clamor for expedited services from regulatory bodies, the Philippine Competition Commission (PCC) has recently issued rules meant to fast-track the review process for qualified mergers and acquisition (M&A) transactions.
Section 16 of Republic Act No. 10667, otherwise known as the Philippine Competition Act (“PCA”), mandates the PCC to review mergers and acquisitions. Recently, to streamline the review of mergers and acquisitions, the PCC adopted the Rules on Expedited Merger Review (“Expedited Merger Rules”). Effective 2 July 2019, the new rules would cut short the review route for transactions that are less likely to substantially prevent, lessen, or restrict competition in their relevant markets.
Under the Implementing Rules and Regulations (IRR), the PCC ordinarily has 30 calendar days to conduct Phase 1 review. Within this period, the PCC may request for additional details on the merger or acquisition under a Phase II review which has the effect of extending the period within which the agreement may not be consummated for an additional sixty (60) days.
But under the Expedited Merger Rules, PCC’s assessment of qualified transactions will only take 15 working days.
The following mergers are qualified for expedited review:
In order to determine whether a merger may be qualified for expedited review, the thresholds stated in various issuances such as Rule 4 of the Implementing Rules and Regulations, as amended by PCC Memorandum Circular No. 18-001, the PCC Guidelines for Notification of Joint Ventures, and Section 1.5 of the Rules on Expedited Merger Review are observed. Currently, parties to a merger or acquisition are required to provide notification when the aggregate annual gross revenues in, into or from the Philippines, or value of the assets in the Philippines of the ultimate parent entity of at least one of the acquiring or acquired entities, including that of all entities that the ultimate parent entity controls, directly or indirectly, exceeds Five Billion Pesos (PHP 5,000,000,000.00). Notification is also compulsory when the value of the transaction exceeds Two Billion Pesos (PhP 2,000,000,000.00), in certain instances.
Prior to notification under expedited review, parties are strongly encouraged to request and have a pre-notification consultation with the Mergers and Acquisitions Office (MAO). Under the IRR, to request a meeting, the parties must provide the following information in writing: (1) the names and business contact information of the entities concerned; (2) the type of transaction; and (3) the markets covered or lines of businesses by the proposed merger or acquisition. During such pre-notification consultations, the parties may seek non-binding advice on the specific information that is required to be in the notification.
Notifying Parties must submit their Expedited Review Notification Form within thirty (30) days after the signing of definitive agreements relating to the merger but prior to any acts of consummation. Prior to this submission, the parties must each inform the MAO of their intention to submit their respective Expedited Forms at least two (2) days prior to the target submission date, specifically indicating as purpose the submission of the Expedited Forms. The Expedited Form must be accompanied by an original Secretary’s Certificate or Special Power of Attorney showing that the signatory is authorized to submit the request.
The review shall be conducted within a period of fifteen (15) working days from acceptance by the PCC of the Expedited Forms. Upon completion of the review within this 15-day review period, the PCC shall issue a short-form clearance decision stating the names of the acquiring and acquired entities, nature of the transaction, markets covered by the transaction, and a statement that the merger is approved because it does not raise any competitive concerns and it falls within one or more grounds under these Rules on Expedited Merger Review.
Indeed, the expedited review of non-problematic mergers will strengthen the cooperation between the private sector and the government towards the establishment of a holistic regulation of M&As. To this end, monopolies that restrain trade and tilt the scales against consumers are better policed without the usual long delays associated with government review.
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