PCC sets new thresholds for mergers, acquisitions

CEBU, Philippines — The Philippine Competition Commission (PCC) has officially declared an adjustment to the thresholds triggering mandatory merger reviews for transactions.

Starting March 1, 2024, mergers and acquisitions (M&As) that exceed the size of the party (SOP) of P7.8 billion and the size of the transaction (SOT) of P 3.2 billion must be notified to the PCC before they can proceed.

According to PCC, the new thresholds are an increase from the SOP and SOT of P7 billion and P2.9 billion, respectively, that were in effect from March 1, 2023, to February 29, 2024.

The PCC adjusts its thresholds for compulsory notification annually based on nominal gross domestic product (GDP) growth to ensure they remain relevant to the evolving economic landscape.

In 2023, the Philippines recorded a 10.3 percent nominal GDP growth based on data from the Philippine Statistics Authority.

For a merger or acquisition to be subject to compulsory notification to the PCC, both the SOP and SOT thresholds must be exceeded. SOP pertains to the aggregate value of assets or revenues of the ultimate parent entity of either party involved in the transaction, while SOT refers to the total value of assets or revenues of the acquired entity and all its controlled entities.

The updated thresholds do not affect notifications filed before March 1, 2024, M&As currently under review, or those already reviewed and decided upon by the Commission.

To date, the PCC has reviewed a total of 293 M&A transactions, with a combined value exceeding P5.49 trillion, of which 289 were formally notified to the Commission.

In 2023 alone, the PCC received 24 notifications of M&A transactions worth almost P610 billion, the majority of which came from the real estate, electricity gas, and information and communication sectors. The PCC is mandated by the Philippine Competition Act (PCA) to review M&As and prohibit transactions that will substantially lessen competition in the relevant market.

Even if a transaction does not breach the thresholds, the PCC’s merger review mandate may be exercised motu proprio, or by its own initiative, if it finds reasonable grounds that the transaction is likely to result in a substantial lessening of competition or has led to such given preliminary indications.