THREE big-ticket mergers and acquisitions got the green light from the antitrust commission last week, bringing to the fore the importance of a gatekeeper in scrutinizing monopolistic and anti-competitive behavior of large corporations.
The Philippine Competition Commission approved the acquisition of beleaguered cigarette maker Mighty Corp. by the Japan Tobacco (Philippines) Inc., a deal valued at P45 billion. It also gave the joint venture by Rockwell Land Corp. and Mitsui Fudosan (Asia) Pte. Ltd. the thumbs up.
The ramifications of both transactions on consumers of cigarettes and real estate developments were likely not to result in anti-competitive behavior in the market, the PCC found in its months-long scrutiny of the deals.
The third deal—the acquisition of shares of stock in Globe Fintech Innovations Inc. by Alipay Singapore—took the PCC more than seven months to approve on the premise that its Mergers and Acquisitions Office found the deal may lessen competition in mobile financial services.
The commission approved the Alipay Singapore-Globe Fintech transaction on August 23. The subsidiary of Globe Telecom Inc. notified the PCC on February 17, seeking to provide the more than 85 million of unbanked Filipinos easy access to quality financial services via their mobile phones.
After a close scrutiny of the dynamics of players active in the non-bank electronic money market, the PCC verdict was that there was no increased ability or incentive for Globe Fintech to block the entry or expansion of other players in the market once the acquisition was consummated.
Beyond its mandate of promoting and protecting the well-being of a competitive market by approving multi-billion peso deals, the job of the PCC reverberates down to the very essence of survival in a material world—which means all Filipinos who live each day as consumers of products and services.
Budget Secretary Benjamin Diokno captured the essence of how the antitrust body could impact on existence when he was asked to deliver the keynote address during the first anniversary of the antitrust body in February 2017. “We all know that competition triggers efficiency and innovation. By fostering market competition, the government helps ordinary people afford necessities like rice, electricity and medicine. It helps consumers to enjoy goods and services with lower prices and better quality.”
By doing its job right, the PCC can create a level playing field where opportunities are made available and accessible to all and entrepreneurs are enabled to start their own companies.
“In effect, we hit two birds with one stone: competition policy doubles as a poverty-reduction tool that improves the ease of doing business,” the Cabinet official pointed out.
While the commission reports that 80 percent of notifications have been approved since its inception in February 2016, it is reasonable to argue that a slow review process is a deterrent to investment, particularly at this time when the government is trying to wean the economy from consumer-led growth to an economic powerhouse driven by investment and foreign trade.
It must not be seen as biased in any of its review, and the outcome must reflect prudent and honest scrutiny of the deals that would eventually influence the tempo of economic growth, because an agonizingly slow review process could dampen the interest of foreign investors, especially from priority countries under an independent foreign policy espoused by the Duterte administration.
As part and parcel of investment regulatory bodies, the PCC must aim for quicker reviews of proposed deals because slow approvals could create a bottleneck on investment and give the impression that the business environment is overregulated and less competitive.
The country needs a gatekeeper of valuable investment deals, peopled by highly competent vanguards of investment and competition as the Philippines languishes in 57th place out of 138 countries in the 2016 Global Competitiveness Report. We trust and believe the PCC can do its job as it gains more experience in keeping the spirit of competition alive and well.