PCC raises merger, acquisition review thresholds to reflect economic growth

The Philippine Competition Commission (PCC) has raised the notification thresholds for mergers and acquisitions (M&As), in line with the country’s economic expansion and to better focus on transactions with potential impact on market competition.

In a statement released Wednesday, the PCC announced that the new threshold for the Size of Party (SOP) is now set at %u20B18.5 billion, while the Size of Transaction (SOT) is pegged at %u20B13.5 billion. The adjustments took effect last month and apply to all M&A transactions moving forward.

The SOP represents the total value of assets or revenues of the parent company of either party involved in the deal, while the SOT refers to the value of the acquired entity and its controlled firms.

“The thresholds for compulsory notification are adjusted annually based on the previous year’s nominal gross domestic product (GDP) growth,” the PCC explained, noting this is the eighth adjustment since the enactment of the Philippine Competition Act.

Last year, the SOP was %u20B17.8 billion and the SOT stood at %u20B13.2 billion.

The PCC emphasized that even if a deal falls below these new thresholds, the commission reserves the right to initiate a review motu proprio, or on its own initiative, especially if there are signs that a transaction may substantially reduce competition in a given market.

“As the Philippines' antitrust authority, the PCC reviews M&As to prevent deals that could substantially lessen competition in the relevant market,” the agency said.

Since it began receiving M&A notifications, the PCC has reviewed 328 transactions with a combined value of %u20B16.27 trillion. The highest concentration of deals has been in the manufacturing (57), financial and insurance (53), real estate (47), electricity and gas (45), and transportation and storage (32) sectors.

The annual adjustment of M&A thresholds is seen as a way to ensure that only transactions with significant market implications undergo rigorous antitrust scrutiny, allowing the commission to better allocate its resources while protecting consumer welfare and promoting fair competition.