SMC to address PCC concerns over Holcim purchase

MANILA, Philippines — Tycoon Ramon Ang, president and chief operating officer of San Miguel Corp., is open to addressing the concerns of the Philippine Competition Commission (PCC) regarding SMC’s acquisition of Holcim Philippines Inc.

Ang said SMC is also looking at the possibility of divesting his stake or the company’s stake in other cement firms. 

This after the PCC launched a phase 2 review of SMC’s acquisition of Holcim, saying there is a need to do a deeper probe to see if the transaction would substantially lessen competition in the cement market. 

“We are willing to sit down with them,” Ang told reporters when asked about his reaction to PCC’s decision to do a deeper review of Holcim acquisition.

Last May, SMC won the bid to acquire Holcim, beating foreign cement giants. 

However, after the PCC conducted an initial 30-day phase 1 review which ended on Aug. 22, it decided to move to a  60-day phase 2 review of the transaction.

The commencement of phase 2 review signifies that a more detailed analysis of the transaction is required using additional information from the parties and stakeholders, the PCC said.

The PCC noted that SMC is engaged in the manufacture and distribution of cement in the Philippines. It has stakes in Northern Cement Corp. and has a joint venture interest in Northern Cement and subsidiary Oro Cemento in two upcoming plants.

It noted that Ang is the majority owner and chairman of another cement firm, Eagle Cement.

The acquiring entity, First Stronghold Cement Industries Inc., is a wholly-owned subsidiary of San Miguel Equity Investments Inc., which in turn is a wholly-owned subsidiary of SMC. 

However, Ang said his ownership in Eagle Cement and SMC’s stakes in other cement firms shouldn’t be a problem. 

Asked if he was willing to divest in Eagle to address whatever issues the PCC may have, Ang said he is open to discussing such options.

Initial findings of the merger review showed that the takeover might affect market concentration for the identified relevant product markets in many parts of Luzon and in Northern and Southern Mindanao. 

“The phase 2 review will also assess whether there will be an increased likelihood of cartel-like coordination among cement firms operating in the identified geographic areas,” it said.

According to the PCC, cement is a commodity with low product differentiation where brands undergo the same quality standards.

 While the transaction is national in scope, the initial review shows that geographic markets by region affect retailers and consumers differently in terms of production, distribution and price.

Ang assured that SMC’s acquisition of Holcim would translate to cheaper cement prices in the market.