Philippines: Merger Control

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This country-specific Q&A provides an overview to merger control laws and regulations that may occur in The Philippines.

It will cover jurisdictional thresholds, the substantive test, process, remedies, penalties, appeals as well as the author’s view on planned future reforms of the merger control regime.

This Q&A is part of the global guide to Merger Control. For a full list of jurisdictional Q&As visit http://www.inhouselawyer.co.uk/index.php/practice-areas/merger-control-3rd-edition

  1. Overview

    Enacted on 21 July 2015, Republic Act No. 10667 or the Philippine Competition Act of 2015 (“PCA”) is the primary law that promotes fair market competition. It provides the guidelines on mergers and acquisitions which are competition-related activities. Its Implementing Rules and Regulations (“PCA IRR”) were released in June 2016.

    The PCA prohibits anti-competitive agreements and abuses of dominant position. More importantly, it requires parties to a merger or acquisition, including the formation of a joint venture, that meet the Size of Party and Size of Transaction Thresholds (i.e. PhP5 billion and PhP2 billion, respectively) to formally notify the Philippine Competition Commission (“PCC”) within thirty (30) days from singing of the definitive agreement and to obtain the approval of the PCC prior to the consummation of the transaction.

    The PCC’s Mergers and Acquisitions Office (“MAO”) is responsible for the review of voluntary notifications and motu proprio investigations of mergers and acquisitions that could substantially prevent, restrict or lessen competition in the relevant market.

  2. Is mandatory notification compulsory or voluntary?

    Under the PCC Rules of Merger Procedure, firms involved in mergers or acquisitions that breach the Size of Party and Size of Transaction Thresholds must notify the PCC within thirty (30) days from executing a definitive agreement. The PCA and its implementing rules do not contain exceptions to the compulsory notification requirement.

    Recently, the PCC has imposed a multi-million peso fine on a Philippine conglomerate that did not comply with the compulsory notification requirement (see In Re: Udenna Corporation, PCC Case No. M-2017-001). Even the late filing of a compulsory notification is penalized. In the case of In re: AXA SA, Camelot Holdings Ltd., and XL Group Ltd., PCC Case No. M-2018-004, Decision No. 30-M-03/2018, 30 August 2018, the PCC imposed a fine of “1/2 of 1% of 1% of the value of the Subject Transaction” for the filing of compulsory notification one hundred and twelve (112) days after the execution of the definitive agreement. The fine was imposed even though the merger was later on approved by the PCC.

  3. Is there a prohibition on completion or closing prior to clearance by the relevant authority? Are there possibilities for derogation or carve out?

    If the thresholds for compulsory notification are satisfied and the parties implement closing before clearance from the PCC is obtained, the transaction shall be considered void, and the parties shall be subject to an administrative fine of 1% to 5% of the transaction value.

    In the case of In Re: Udenna Corporation, PCC Case No. M-2017-001, the PCC voided a Philippine conglomerate’s acquisition of shares in a foreign corporation which has Philippine subsidiaries that hold substantial assets for non-compliance with the compulsory notification requirement under the PCA. The PCC also imposed a fine of around Twenty Million Pesos (PhP20,000,000.00). In the application of the Size of the Transaction Test, the PCC held that the Target Corporation’s shares in “entities it controls are excluded” but the “assets of the controlled corporations are still included in the valuation”.

    In the case of In re: AXA SA, Camelot Holdings Ltd., and XL Group Ltd., PCC Case No. M-2018-004, Decision No. 30-M-03/2018, 30 August 2018, the PCC held that merging firms have to notify the PCC within thirty (30) days from executing a definitive agreement. If the firms notify beyond the 30-day period but before consummating the transaction, they may be subjected to a fine of ½ of 1% of 1% of the value of transaction.

    At present, the PCA IRR does not provide for derogations or carve outs. This, however, does not mean that the PCC is precluded from recognizing derogations or carve outs in appropriate circumstances.

  4. What types of transaction are notifiable or reviewable and what is the test for control?

    The following types of transactions are subject to notification or review by the PCC:

    1. Mergers — the joining of two (2) or more entities into an existing entity or to form a new entity;

    2. Acquisition — the purchase of securities or assets, through contract or other means, for the purpose of obtaining control by:

    (i) one (1) entity of the whole or part of another;

    (ii) two (2) or more entities over another; or

    (iii) one (1) or more entities over one (1) or more entities.

    3. Joint Ventures —refers to a business arrangement whereby two or more entities or group of entities contribute capital, services, assets, or a combination of any or all of the foregoing, to undertake an investment activity or a specific project, where each entity shall have the right to direct and govern the polices in connection therewith, with the intention to share both profits and risks and losses subject to agreement by the entities. A joint venture can be either:

    (i) a contractual or unincorporated joint venture where the partnership between the joint venture partners is governed by contract and no legal entity is created; or

    (ii) an incorporated joint venture where a legal entity which is separate and distinct from the joint venture partners is formed and organized.

    Transactions which constitute an abuse of a dominant position or an anti-competitive agreement may be investigated by the PCC in a motu proprio investigation. The following acts are prohibited:

    1. Abuses of Dominant Position —acts that take advantage of market dominance with the intent of substantially preventing, restricting, or lessening competition such as but not limited to:

    (i) Predatory pricing;

    (ii) Imposing barriers to entry;

    (iii) Refusal to deal; or

    (iv) Discriminatory pricing.

    2. Anticompetitive agreements —contracts entered into with the object or effect of which is to substantially prevent, restrict, or lessen competition, such as:

    (i) Price-fixing;

    (ii) Bid-rigging;

    (iii) Setting, limiting, or controlling production, markets, technical development, or investment;

    (iv) Dividing or sharing the market, whether by volume of shares or purchases, territory, type of goods or services, buyers or sellers, or any other means; and

    (v) Other agreements that have the object or effect of substantially preventing, restricting, or lessening competition.

    Section 4(f) of the PCA defines “control” as the “ability to substantially influence or direct the actions or decisions of an entity, whether by contract, agency or otherwise.” Under the Merger Review Guidelines, control of an entity may either be legal or de facto. By way of example, the PCC recognizes that control can be exercised through acquisition of another entity’s assets, including goodwill, brand, or licenses.

    Pursuant to Section 25 of the PCA, “control is presumed to exist when the parent owns directly or indirectly, through subsidiaries, more than one half (1/2) of the voting power of an entity.”

    Section 25 of the PCA also provides that control exists even when an entity owns exactly one half (1/2) or less of the voting power of another entity but is attended by the following circumstances:

    (a) There is power over more than one half (1/2) of the voting rights pursuant to an agreement with investors;

    (b) There is power to direct or govern the financial and operating policies of the entity under a statute or agreement;

    (c) There is power to appoint or remove the majority of the members of the board of directors or equivalent governing body of the entity;

    (d) There is power to cast the majority votes at meetings of the board of directors or equivalent governing body of the entity;

    (e) There exists ownership over or the right to use all or a significant part of the assets of the entity; or

    (f) There exist rights or contracts which confer decisive influence on the decisions of the entity.

  5. In which circumstances is an acquisition of a minority interest notifiable or reviewable?

    A transaction which exceeds the Size of Party and Size of Transaction Thresholds is subject to compulsory notification notwithstanding the fact that it is merely an acquisition of a minority interest.

  6. What are the jurisdictional thresholds (turnover, assets, market share and/or local presence)? Are there different thresholds that apply to particular sectors?

    The thresholds for compulsory notification are based on revenue or asset value of the ultimate parent entity and the value of the transaction. Under Rule 4, Section 3 of the PCA IRR, as amended by PCC Policy Statement No. 18-01, parties to a merger or acquisition are required to provide notification to the PCC when:

    1. The aggregate annual gross revenues in, into or from the Philippines, or value of the assets in the Philippines of the ultimate parent entity of at least one of the acquiring or acquired entities, including that of all entities that the ultimate parent entity controls, directly or indirectly, exceeds Five Billion Pesos (PhP5,000,000,000.00) (the “Size of Party Threshold”); and
    2. The value of the transaction exceeds Two Billion Pesos (PhP2,000,000,000.00) as determined by the following factors (the “Size of Transaction Threshold”):


      a. The aggregate assets in the Philippines owned by the corporation whose voting shares are to be acquired or by entities it controls (the “Target Corporation”) exceed Two Billion Pesos (PhP2,000,000,000.00); or

      b. The Target Corporation’s gross revenues from sales in, into, or from the Philippines exceed Two Billion Pesos (PhP2,000,000,000.00); and

      c. As a result of the proposed acquisition of the voting shares, the acquiring entity would own Thirty Five Percent (35%) or more of the Target Corporation’s outstanding shares.

      In this regard, Section 3(f) of the PCA IRR provides that for purposes of calculating notification thresholds:

      (1) The aggregate value of assets in the Philippines shall be as stated in the last regularly prepared balance sheet or the most recent audited financial statements in which those assets are accounted for.

      (2) The gross revenues from sales of an entity shall be the amount stated in the last regularly prepared annual statement of income and expense of that entity.

    Transactions falling below the foregoing thresholds which constitute an anti-competitive agreement or an abuse of market dominance may be investigated by the PCC in a motu proprio investigation. An anti-competitive agreement may be an agreement which is prohibited per se (e.g. price fixing, bid rigging) or an agreement with the object or effect of substantially preventing, restricting or lessening competition (e.g. limiting supply, sharing markets). An ‘abuse of market dominance’, on the other hand, is the act of engaging in conduct that would substantially prevent, restrict or lessen competition, such as predatory pricing, price discrimination, and refusal to deal.

  7. How are turnover, assets and/or market shares valued or determined for the purposes of jurisdictional thresholds?

    Section 3(f) of the PCA IRR provides that for purposes of calculating notification thresholds:

    1. The aggregate value of assets in the Philippines shall be as stated on the last regularly prepared balance sheet or the most recent audited financial statements in which those assets are accounted for.
    2. The gross revenues from sales of an entity shall be the amount stated in the last regularly prepared annual statement of income and expense of that entity.
  8. Is there a particular exchange rate required to be used to convert turnover and asset values?

    The PCC’s Guidelines on the Computation of Merger Notification Thresholds state that if the financial statements of an entity are presented in a functional currency other than Philippine Pesos, the annual gross revenues from sales in, into or from the Philippines or the value of the assets in the Philippines of an entity shall be converted to Philippine Peso according to the average, over the twelve (12) months of that financial year, of the foreign exchange rate quoted by the Philippine’s central bank, the Bangko Sentral ng Pilipinas (“BSP”).

  9. In which circumstances are joint ventures notifiable or reviewable (both new joint ventures and acquisitions of joint control over an existing business)?

    Entities to a proposed JV that satisfy the thresholds in Section 3 of the IRR are required to notify the PCC. If notice is required, then all acquiring and acquired pre-acquisition ultimate parent entities (“UPEs”) or any entity or entities authorized by such UPEs to file notification on its behalf must each submit a Notification Form and comply with relevant rules and procedures. For purposes of notifying a proposed JV, the JV Partners shall be deemed as the Acquiring Entities while the JV Entity is the Acquired Entity.

  10. Are there any circumstances in which different stages of the same, overall transaction are separately notifiable or reviewable?

    Under the PCA IRR, a merger or acquisition consisting of successive transactions, or acquisition of parts of one or more entities, which shall take place within a one-year period between the same parties, or any entity they control or are controlled by or are under common control with another entity or entities, shall be treated as one transaction. If a binding preliminary agreement provides for such successive transactions or acquisition of parts, the entities shall provide notification on the basis of such preliminary agreement. If there is no binding preliminary agreement, notification shall be made when the parties execute the agreement relating to the last transaction which, when taken together with the preceding transactions, satisfies the Size of Party and Size of Transaction Thresholds (PhP5 billion and PhP2 billion, respectively).

  11. In relation to “foreign-to-foreign” mergers, do the jurisdictional thresholds vary?

    The PCA also contemplates foreign-to-foreign mergers with assets in the Philippines or gross revenues generated in or into the Philippines by assets acquired outside the Philippines that satisfy the Size of Party and Size of Transaction Thresholds (PhP5 billion and PhP2 billion, respectively).

  12. For voluntary filing regimes (only), are there any factors not related to competition that might influence the decision as to whether or not notify?

    Not applicable. The Philippines follows a compulsory filing regime.

  13. What is the substantive test applied by the relevant authority to assess whether or not to clear the merger, or to clear it subject to remedies? Are there different tests that apply to particular sectors?

    The test applied by the PCC is the Substantially Prevents, Restricts or Lessens Competition (“SLC”) Test. The PCC will look at the effects on competition over time in the relevant market or markets affected by the merger. A merger gives rise to an SLC when it has a significant effect on competition, and consequently, on the competitive pressure on firms to reduce prices, improve quality, become more efficient or innovative. A merger that gives rise to an SLC is likely to result to an adverse effect on consumers.

  14. Are factors unrelated to competition relevant?

    Public interest issues are very much relevant and material in the review process. The public policies behind competition law include the prevention of monopolies, improvement of industrial efficiencies, and promotion of consumer welfare. These are all overriding considerations which will have a great impact in the decision-making process.

    Recently, the PCC assumed jurisdiction to review the sale of business by a potential third telecommunications player to two (2) of the largest and only telecommunications companies in the Philippines despite an official issuance that certain mergers submitted within a certain deadline were ‘deemed approved’. The PCC’s decision to assert its jurisdiction is spurred by public clamor for an improvement in the quality of service currently provided by existing telecommunications companies which enjoy a virtual duopoly in the Philippines. The issue is currently pending litigation before the Philippine Supreme Court.

  15. Are ancillary restraints covered by the authority’s clearance decision?

    While the PCA and its implementing rules do not contain any references to ancillary restraints, the PCC’s review of mergers and acquisitions, which involves an assessment of whether the transaction would substantially prevent, restrict or lessen competition in the relevant market, would cover ancillary restraints (i.e. non-competition clauses). An ancillary restraint which does not substantially prevent, restrict or lessen competition is generally allowed by the PCC.

  16. For mandatory filing regimes, is there a statutory deadline for notification of the transaction?

    Parties to a merger or acquisition that satisfy the thresholds for compulsory notification must notify the PCC within thirty (30) days after the signing of a definitive agreement. The filing of the notification to the PCC should be made prior to the consummation of the agreement. A merger or acquisition is considered consummated when the parties have transferred, conveyed, assigned, encumbered any right, title, interest, property or asset that is subject of the definitive agreement. The failure to comply with this notification requirement shall render the agreement void and shall subject the parties to an administrative fine of 1% to 5% of the value of the transaction. This was applied in the case of In Re: Udenna Corporation, PCC Case No. M-2017-001. The late filing of a compulsory notification may result in the imposition of a fine of “1/2 of 1% of 1% of the value of the Subject Transaction” even if the transaction’s validity is upheld. (In re: AXA SA, Camelot Holdings Ltd., and XL Group Ltd., PCC Case No. M-2018-004, Decision No. 30-M-03/2018, 30 August 2018).

  17. What is the earliest time or stage in the transaction at which a notification can be made?

    Notification can be made at any time prior to the execution of a definitive agreement.

  18. Is it usual practice to engage in pre-notification discussions with the authority? If so, how long do these typically take?

    Yes, pre-notification consultation is a usual practice encouraged by the PCC to incentivize compliance. Rule 4, Sec. 4 of the PCA IRR provides:

    (a) Prior to filing a notification pursuant to this Rule, parties to a proposed merger or acquisition that are required to notify may inform the Commission of their proposed merger or acquisition and request a pre- notification consultation with the staff of the Commission.

    To request a meeting, the parties must provide the following information in writing:

    1. the names and business contact information of the entities concerned;
    2. the type of transaction; and
    3. the markets covered or lines of businesses by the proposed merger or acquisition.

    (b) During such pre-notification consultations, the parties may seek non- binding advice on the specific information that is required to be in the notification.

    There is no fixed time limit for a pre-notification consultation and it can take as long as necessary to resolve the issues or obtain a non-binding advice consistent with the size, complexity and other peculiar factors surrounding the proposed transaction.

  19. What is the basic timetable for the authority’s review?

    The procedure for review of M&A detailed in the PCA IRR is best understood by noting that there may be two phases of review with corresponding waiting periods:

    (1) a Phase I review that lasts for a maximum period of thirty (30) days; and

    (2) a Phase II review that lasts for a maximum period of sixty (60) days.

    Both phases involve the same review of the subject M&A. A Phase 1 review involves an assessment to determine if the notified merger raises any competition concerns under the PCA that would warrant a more detailed review. A Phase II review is essentially an extension of the original thirty (30)-day period for the Phase I review, and is conducted when the PCC deems it necessary to obtain more information from the parties.

    The significance of these waiting periods is that Section 17, Paragraph 4, of the PCA explicitly provides that the expiration of the “waiting periods,” in the absence of any decision, results in constructive approval of the M&A involved. The said provision is likewise reiterated in Section 5(n), Rule 4 of the PCA IRR:

    “(n) When the above periods have expired and no decision has been promulgated for whatever reason, the merger or acquisition shall be deemed approved and the parties may proceed to implement or consummate it.” [Emphasis supplied]

    The law requires the PCC to inform the parties, within the thirty (30)-day period of the Phase I review if it needs “further information that are reasonably necessary and directly relevant” to determine whether the transaction shall “substantially prevent, restrict or lessen competition in the relevant market or in the market for goods or services as may be determined by the Commission”.

    Phase II commences on the day after the PCC’s request for information is received by the parties. Section 5(i), Rule 4 of the IRR sets forth the effects of the issuance by the PCC of the request for more information during the Phase I review, and these are outlined below:

    (1) The issuance by the PCC of the request for more information or documents relevant to its review has the effect of extending the period within which the agreement may not be consummated for an additional sixty (60) days. The additional sixty (60) day period shall begin on the day after the request for information is received by the parties;

    (2) In no case shall the total period for review by the PCC of the subject agreement exceed ninety (90) days from the time the initial notification by the parties is deemed complete;

    (3) Should the parties fail to provide the requested information within fifteen (15) days from receipt of the said request, the notification shall be deemed expired and the parties must refile their notification; and

    (4) Alternatively, should the parties wish to submit the requested information beyond the fifteen (15) day period, the parties may request for an extension of time within which to comply with the request for additional information, in which case, the period for review shall be correspondingly extended.

    It must be emphasized that the PCC’s approval of a transaction is dependent on the actual contents of the submission. Parties to a proposed transaction under review are required to inform the PCC of any substantial modifications to the transaction. On the basis of the information provided, the PCC will determine if a new notification is required. The PCC, in its discretion, may terminate a waiting period prior to its expiration.

  20. Under what circumstances may the basic timetable be extended, reset or frozen?

    Under Rule 4, Sec. 5(n) of the PCA IRR, the foregoing timetable is fixed such that if the periods for PCC action expire and no decision has been promulgated for whatever reason, the merger or acquisition shall be deemed approved and the parties may proceed to implement or consummate it. Nonetheless, as stated above, if the parties wish to submit the requested information beyond the fifteen (15) day period during the Phase 2 review, the parties may request for an extension of time within which to comply with the request for additional information, in which case, the period for review shall be correspondingly extended.

  21. Are there any circumstances in which the review timetable can be shortened?

    The PCC, in its discretion, may terminate a waiting period prior to its expiration.

  22. Which party is responsible for submitting the filing?

    Under Rule 4, Sec. 2 of the PCA IRR, if notice to the PCC is required for a merger or acquisition, then all acquiring and acquired pre-acquisition ultimate parent entities or any entity authorized by the ultimate parent entity to file notification on its behalf must each submit a Notification Form (‘Form’) and comply with the procedure set forth in the PCA IRR. The parties shall not consummate the transaction before the expiration of the relevant periods provided in the PCA IRR.

    In the formation of a joint venture (other than in connection with a merger or consolidation), the contributing entities shall be deemed acquiring entities, and the joint venture shall be deemed the acquired entity.

  23. What information is required in the filing form?

    The PCC’s Notification Form requires the following particulars:

    1. Details of the Ultimate Parent Entity (“UPE”)
      a. Name
      b. Mailing address of head office
      c. Website
      d. Telephone and Fax Number
    2. Details of Entity filing for UPE, if applicable (“Filing Entity”)
    3. Contact Information of Persons representing Filing Entity/UPE
    4. Details of Parties to Transaction
    5. Details of Other Entities directly or indirectly controlled by UPE
    6. Description of worldwide operations of Filing Entity/UPE
    7. Diagram/Chart showing relationship between Filing Entity/UPE, the Acquiring Entity and Acquired Entity
    8. Nature of Transaction
    9. Size of Parties to Proposed Transaction
    10. Value of Proposed Transaction
    11. Details of Operations of Parties in the Philippines
      a. List all domestic and foreign entities within the Notifying Group that have assets in the Philippines or generate revenues from sales in, from or into the Philippines
      b. List of entities that hold ten percent (10%) or more of the outstanding voting shares or non-corporate interests of the entities listed
      c. Diagram or chart describing the relationships between the Filing Entity/UPE, the Acquiring Entity, Acquired Entity, and each entity listed above
    12. Horizontal or Vertical Relationships
  24. Which supporting documents, if any, must be filed with the authority?

    Supporting documents for the Notification are, as follows:

    1. Executed or draft legal document to be used to implement the transaction
    2. All studies, surveys, analyses and reports that were prepared or received by an officer or director of any of the entities in the Filing Entity/UPE
    3. Confidential information memoranda, bankers’ books and other third party consultant materials and synergy documents related to the sale of the acquired entity or assets
    4. Most recent Annual Report of the Filing UPE
    5. Original affidavit attesting to the fact that a definitive agreement has been signed and that each party has an intention of completing the proposed transaction in good faith (for transactions with signed definitive agreements)
    6. Certification signed by authorized signatory stating that the contents of the Notification are true and accurate of their own personal knowledge and/or based on authentic records
  25. Is there a filing fee?

    PCC Memorandum Circular No. 16-003 issued in December 2016 provides a two-phased payment scheme: a) PhP250,000.00 upon submission of the notification form, and b) 1% of 1% of the value of the transaction but not less than PhP1,000,000.00 or more than PhP5,000,000.00, once the application proceeds to a Phase 2 review. The Phase 2 review fees are based on the same values considered in determining the Two Billion Peso (PhP2,000,000,000.00) threshold for purposes of the compulsory notification requirement.

  26. Is there a public announcement that a notification has been filed?

    Sec. 7, Rule 4 of the PCA IRR provides for the publication of a notification summary through the PCC’s website of certain information relating to the M&A subject of a compulsory notification. The notification summary shall contain:

    (1) the name of the involved entities;

    (2) the type of the transaction;

    (3) the markets covered or lines of businesses by the proposed merger or acquisition; and

    (4) the date when the complete notification was received.

  27. Does the authority seek or invite the views of third parties?

    Yes, Section 17 of the PCA provides that the PCC may seek a favorable recommendation by a governmental agency with a competition mandate which shall give rise to a disputable presumption that the proposed merger or acquisition is not violative of the PCA. Moreover, the PCC may seek amicus curiae or equivalent measures consistent with Philippine legal principles that the PCC is authorized to utilize all reasonable means in fulfilling its regulatory and enforcement mandate provided it does not gravely abuse its discretion.

  28. What information may be published by the authority or made available to third parties?

    Under Section 34 of the PCA, all information disclosed to the PCC shall be generally considered confidential. Exceptions to this rule are:

    1. Information necessary for the issuance of notices, bulletins, rulings and other documents;
    2. Information the publication of which is consented to by the notifying entity;
    3. Documents/information mandatorily required to be disclosed by law; and
    4. Information ordered published by valid order of a court of competent jurisdiction or of a government or regulatory agency, including an exchange.
  29. Does the authority cooperate with antitrust authorities in other jurisdictions?

    Considering that the PCC is a young competition authority, there is no official policy yet on this matter. However, future cooperation by the PCC with foreign antitrust authorities is highly likely.

  30. What kind of remedies are acceptable to the authority?

    The PCA provides the PCC can impose a broad range of punitive and remedial administrative sanctions that it may impose, such as but not limited to behavioral remedies, injunction, fines, divestiture, and disgorgement of profits.

    In the PCC’s recent clearance decision in In re: Acquisition by Grab Holdings, Inc. and MyTaxi.PH Inc., of Assets of Uber B.V. and Uber Systems, Inc., Commission Decision No. 26-M-12/2018, PCC Case No. M-2018-001, 10 August 2018, the PCC authorized the takeover of Uber’s operations in the Philippines by its competitors. The approval was conditioned on behavioral undertakings by Grab Holdings, Inc. (“Grab”) and MyTaxi.PH Inc. to increase efficiencies in service which included, among others, undertaking of non-exclusivity commitments, implementation of service quality metrics, an imposition of a range of allowable rates, and regular compliance monitoring by the PCC.

  31. What procedure applies in the event that remedies are required in order to secure clearance?

    The general procedure for securing clearances is provided by the PCC’s Merger Review Guidelines. In cases, however, of full administrative investigations conducted by the PCC involving the implementation and enforcement of the PCA, the PCC promulgated through Commission Resolution No. 20-2017 the 2017 PCC Rules of Procedure.

  32. What are the penalties for failure to notify, late notification and breaches of a prohibition on closing?

    If the thresholds for compulsory notification are satisfied and the parties implement closing before clearance from the PCC is obtained, the transaction shall be considered void, and the parties shall be subject to an administrative fine of 1% to 5% of the transaction value.

    In the case of In Re: Udenna Corporation, PCC Case No. M-2017-001, the PCC voided a Philippine conglomerate’s acquisition of shares in a foreign corporation which has Philippine subsidiaries that hold substantial assets for non-compliance with the compulsory notification requirement under the PCA. The PCC also imposed a fine of around Twenty Million Pesos (PhP20,000,000.00). The PCC held for the purposes of the Value of the Transaction Test that the Target Corporation’s shares in “entities it controls are excluded” but the “assets of the controlled corporations are still included in the valuation”.

  33. What are the penalties for incomplete or misleading information in the notification or in response to the authority’s questions?

    An entity found to have supplied, whether intentionally or negligently, incorrect or misleading information to the PCC shall be subject to a fine of up to One Million Pesos (PhP1,000,000.00) in accordance with Section 29 of the PCA.

  34. Can the authority’s decision be appealed to a court?

    Yes, Section 39 of the PCA provides for a direct appeal to the Court of Appeals from any decision of the PCC. However, parties have procedural recourses (by way of a petition for certiorari to the Court of Appeals) from any order or directive rendered by the PCC during the course of the review process.

  35. What are the recent trends in the approach of the relevant authority to enforcement, procedure and substantive assessment?

    Change in Size of the Party and Size of the Transaction Thresholds:

    • The aggregate annual gross revenues in, into or from the Philippines, or value of the assets in the Philippines of the ultimate parent entity of at least one of the acquiring or acquired entities, including that of all entities that the ultimate parent entity controls, directly or indirectly, exceeds Five Billion Pesos (PhP5,000,000,000.00) (the “Size of the Party Threshold”);
    • The value of the transaction exceeds Two Billion Pesos (PhP2,000,000,000.00) as determined by the following factors (the “Size of the Transaction Threshold”):


      a. The aggregate assets in the Philippines owned by the corporation whose voting shares are to be acquired or by entities it controls (the “Target Corporation”) exceed Two Billion Pesos (PhP2,000,000,000.00); or

      b. The Target Corporation’s gross revenues from sales in, into, or from the Philippines exceed Two Billion Pesos (PhP2,000,000,000.00); and

      c. As a result of the proposed acquisition of the voting shares, the acquiring entity would own Thirty Five Percent (35%) or more of the Target Corporation’s outstanding shares.

    Udenna Corporation, PCC Case No. M-2017-001:

    • The PCC voided a Philippine conglomerate’s acquisition of shares in a foreign corporation which has Philippine subsidiaries that hold substantial assets for non-compliance with the compulsory notification requirement under the PCA. The PCC also imposed a fine of around Twenty Million Pesos (PhP20,000,000.00). The PCC held for the purposes of the Size of the Transaction Test that the Target Corporation’s shares in “entities it controls are excluded” but the “assets of the controlled corporations are still included in the valuation”.
    • The PCC has imposed a multi-million peso fine on a Philippine conglomerate that did not comply with the compulsory notification requirement.

    In re: AXA SA, Camelot Holdings Ltd., and XL Group Ltd., PCC Case No. M-2018-004, Decision No. 30-M-03/2018, 30 August 2018

    • The PCC imposed a fine of “1/2 of 1% of 1% of the value of the Subject Transaction” for the filing of compulsory notification one hundred twelve (112) days after the execution of the definitive agreement. The fine was imposed even though the merger was later on approved by the PCC.
    • The PCC emphasized that compulsory notification may be complied with by filing within thirty (30) days after execution of the definitive agreement and before consummating the merger.
  36. Are there any future developments or planned reforms of the merger control regime in your jurisdiction?

    Yes, the PCC is taking a proactive role in ensuring competition policies are upheld in the Philippines. The PCC recently invited stakeholders to submit comments in a current pending merger review. The PCC has also published its comments to the Philippine Government’s Terms of Reference for the selection of a private entity that will serve as the Third Telecommunications Company in the Philippines. These measures are not yet institutional and time will tell if the PCC will decide to formalize these measures as part of its rules of procedure.