• P1-B M&A threshold could be raised – PCC


    Competition regulators are considering changes to the P1-billion review threshold for mergers and acquisitions (M&As) to take into account inflation and economic growth.

    “There’s a group that is looking into it and hopefully within the first half of the year we would be able to know,” Philippine Competition Commission (PCC) Chairman Arsenio Balisacan told reporters at the sidelines of a business forum on Tuesday.

    The 2015 Philippine Competition Act provides that mergers and acquisitions worth P1 billion and above should first be cleared by the PCC given its mandate to maintain a level playing field and protect consumers.

    “That threshold has been around for some time and you know the economy is growing very fast … inflation has not been zero so you have to take into account the changing structure of the economy as well as the rate of growth,” Balisacan said.

    The PCC initiated a review in 2016 determine whether the P1-billion threshold was “too low”, noting that this could result in unreasonable regulatory costs for business and also over-burden the agency.

    Last year, however, Balisacan announced that following the “preliminary review of all relevant data and finds …
    there is a sound basis to maintain the P1-billion threshold, at least for now.”

    During yesterday’s forum, the PCC chief said the agency wanted to have some “automaticity” in the determination of thresholds.

    “In the United States, it is automatic that their threshold changes every year on the basis of inflation. We would want to have some automaticity in the thresholds; that it moves with the changes in the economy especially in the overall prices,” Balisacan said.

    This will not require changes to the Competition Act, he added.

    “The law provides that the PCC has the power to update the threshold so we have the mandate to revise that,” he said.

    “We issued a paper before [on the P1-billion threshold]but then the data we had was based on the 2012 census.

    The [Competition Act] was passed in 2015. The economy has been growing at a 6 to 7 percent. Obviously, there has been a lot of changes in the purchasing power of peso since then.”

    Aside from the possible adjustment of the M&A threshold, Balisacan said a technical working group had also been tasked to draft rules and guidelines for a leniency program, forbearance and inspection orders.

    The leniency program involves the grant of immunity from suit or a reduction of fines, which would otherwise be imposed on a participant in anti-competitive agreements, in exchange for the voluntary disclosure of information.

    “We hope to finish the draft of these rules by April to bolster our capability to combat cartels,” Balisacan said.

    With regard to forbearance, he said the PCC may refrain from applying provisions of the Competition Act, for a limited time, for entities that meet stringent and specific conditions.

    “The rules on forbearance are targeted to be drafted by July. A technical working group is working on that,” he said.

    “Finally, inspection orders will allow the PCC, upon order of the court, to undertake dawn raids or inspections of business property where it reasonably suspects that records or documents related to investigations are kept,” Balisacan added.

    “The guidelines for this component, allowing us to significantly bolster our enforcement efforts, will hopefully be drafted by May to be presented to the Supreme Court for its consideration and adoption.”


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