Antitrust regulator also clears Rockwell Land-Mitsui Fudosan joint venture
Japan Tobacco’s acquisition of Mighty Corp. — the Philippines’ second-biggest cigarette company — has been cleared by antitrust regulators.
“There appears to be no ability nor incentive for the parties to engage in anti-competitive coordinated behavior,” the Philippine Competition Commission (PCC) announced on Tuesday.
“Sufficient competitive constraints remain from other market participants after the sale,” it added.
Japan Tobacco — whose brands include Winston and Camel — is snapping up Mighty for P45 billion as the latter seeks to settle multibillion-peso tax evasion cases filed by the government.
Wong Chu King Holdings, Inc. (WCKH), named after Mighty’s founder, and Mighty itself have already entered into a preliminary agreement with Japan Tobacco International (Philippines), Inc. (JTIP), the PCC noted.
Once the transaction is completed, JTIP will end up owning Mighty’s inventories, manufacturing facilities and equipment, and sales and distribution network. Affiliate Japan Tobacco International SA will own the trademarks and associated intellectual property of Mighty and WCKH.
The government filed three criminal complaints earlier this year against Mighty, claiming that the firm used fake tax stamps to avoid paying excise taxes. In July, the company offered to pay P25 billion to settle the matter, to be funded by the sale of its assets to JTIP.
Mighty remitted an initial tranche of P3.44 billion last month and the rest is expected to be forwarded following the PCC clearance.
The government has touted the settlement as the biggest on record and it expects to earn another P5 billion in value-added taxes from JTIP-Mighty deal.
Joint venture also cleared
Also yesterday, the PCC said it had approved a joint venture by Rockwell Land Corporation and Mitsui Fudosan (Asia) Pte. Ltd.
Both firms plan to engage in the development, construction and sale of real estate projects in the Philippines through Rockwell MFA Corporation (RMFA).
Rockwell will hold 80 percent of RMFA’s total outstanding shares whle the remaining 20 percent will be held by MFA through a yet to be incorporated local subsidiary.
PCC, the country’s anti-trust body, is mandated under the Philippine Competition Act to review mergers and acquisitions to ensure that these deals will not prejudice the interest of the consumers.