Competition watchdog voids Uy-led Chelsea's takeover of Trans-Asia

MANILA, Philippines — The Philippine Competition Commission voided Chelsea Logistics Holdings Corp.’s acquisition of Trans-Asia Shipping Lines Inc. due to the companies’ failure to notify the antitrust body about the deal.

In a statement, the PCC said it also imposed a P22.8 million fine after Dennis Uy’s Chelsea Logistics and Trans-Asia failed to inform the competition watchdog about the transaction in December 2016.

Under the old rules, parties to the merger and acquisition (M&A) deals above P1 billion are prohibited from completing their agreement until 30 days after providing notification to the PCC. Last March, the antitrust watchdog raised the threshold for compulsory M&A notifications to P2 billion.

“Every M&A notification subjected to PCC review is evaluated in a fair and transparent manner with the public’s welfare as foremost concern,” said PCC Chairman Arsenio Balisacan.

“There are sanctions for violations, there are clearances when there are no competition concerns,” Balisacan added.

Chelsea is a wholly-owned subsidiary of Udenna Corporation. Through its subsidiaries, it is engaged in maritime trade and shipping transport. On the other hand, Trans-Asia is primarily engaged in domestic shipping by transporting passengers and cargoes.

‘Conditional clearance’

Meanwhile, the nullification of the Trans-Asia deal also led to PCC’s “conditional clearance” of Chelsea Logistics’ takeover of shares in KGLI-NM Holdings Inc. (KGLI-NM), a key shareholder of integrated transport solutions provider 2Go Group Inc.’s parent company.

To recall, an initial investigation by the PCC found that Chelsea Logistics’ control of both 2Go and Trans-Asia would lead to a substantial lessening of competition in six legs of passenger shipping services, as well as in seven areas in cargo shipping services in Visayas and Mindanao.

With the Trans-Asia agreement out of the picture because of the nullification order, the PCC's earlier findings have been "ruled out."

“In two separate Commission Decisions dated June 28, PCC ordered Trans-Asia to inform the antitrust commission within 30 days from execution of merger or acquisition agreements involving any of its shares after the nullification order,” the PCC said in a statement.

“On the other hand, if Chelsea Logistics’ parent entity Udenna Corporation or any of its subsidiaries/affiliates pursue the purchase or re-execute the voided Trans-Asia deal, the parties should notify the transaction to PCC regardless of whether it is notifiable under the mandatory notification regime of the Philippine Competition Act,” it added.

In response to the PCC's ruling, Chelsea Logistics told the stock exchange that the decision was "unfair."

"The twin voiding of the transaction and the penalty of P22.8 million is likewise unduly harsh in light of the ambiguity in the commission’s own rules," the company said. 

"Parties to the voided transaction are currently weighing their options on whether to first file a Motion for Reconsideration with the Commission or to go straight to the Court of Appeals for redress," it added. — Ian Nicolas Cigaral