PCC reviews voluntary commitments in San Miguel’s acquisition of Holcim

MANILA, Philippines — The Philippine Competition Commission (PCC) is reviewing an offer for voluntary commitments submitted by parties to address competition concerns in relation to the acquisition by San Miguel Corp. (SMC) of Holcim Philippines Inc. (HPI).

PCC commissioner Johannes Bernabe told reporters yesterday an offer for voluntary commitments to address concerns on the deal was submitted last month.

“I think the parties submitted an offer (for) VCs, voluntary commitments. So, that is something that we await decision of the mergers and acquisitions office,” he said.

He declined to say what voluntary commitments were offered by the parties of the deal.

Through the transaction, First Stronghold Cement Industries Inc., a wholly owned subsidiary of San Miguel Equity Investments Inc., which in turn is a wholly owned subsidiary of SMC, would acquire an 85.7 percent stake in HPI

To address competition concerns, Bernabe said parties could offer either behavioral or structural voluntary commitments.

“Structural means they will be required to divest certain assets that they are acquiring as part of the transaction. The behavioral commitment simply means, okay, we will allow you to purchase the whole asset base, the whole assets, but we will discipline the way you behave in the market,” he said.

Under PCC rules, the Phase 2 review is suspended when an offer for voluntary commitments is submitted.

As the 30-day Phase 1 review of the SMC-HPI deal ended on Aug.22, the PCC launched its Phase 2 review or deeper probe of the transaction to ensure it would not lead to reduced market competition.

Through the Phase 2 review, the PCC would conduct a more detailed analysis of the transaction and ask for more information from the parties.

Initial findings by the PCC on the deal showed it may affect market concentration of relevant products in many parts of Luzon, as well as Northern and Southern Mindanao.

Earlier, SMC president and chief operating officer Ramon Ang said the group is willing to address the concerns of the PCC.

He has also expressed openness to divest his stake or the company’s stake in other cement firms.

After the mergers and acquisitions office completes its assessment on whether the voluntary commitments offered by parties address the concerns on the deal, it would then make a recommendation to the commission which would make the final determination.

Should the voluntary commitments be seen to be insufficient to address the concerns, Bernabe said the PCC would go back to the Phase 2 review.