Philippines: Merger Control (4th edition)

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This country-specific Q&A provides an overview to merger control laws and regulations that may occur in 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-4th-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. PhP5.6 billion and PhP2.2 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 notification compulsory or voluntary?

    Filing is mandatory once a transaction breaches the Size of the Party and Value of the Transaction Tests. The PCA and its implementing rules do not contain exceptions to the compulsory notification requirement. If parties to M&A transactions requiring compulsory notification fail to notify the PCC, the said transactions shall be considered void and the parties shall be sanctioned with an administrative fine.

    The PCC has imposed a multimillion 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).

  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 PCC recently promulgated last 2 July 2019 PCC Memorandum Circular No. 2019-001 exempting certain government projects and public-private partnership projects from the compulsory notification process. The PCC may further recognize additional derogations or carve outs in whenever appropriate in the future.

  4. What are the conditions of the test for control?

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

    1. 1. Mergers — the joining of two (2) or more entities into an existing entity or to form a new entity;[1]
    2. 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. 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. 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.[2] By way of example, the PCC recognizes that control can be exercised through acquisition of another entity’s assets, including goodwill, brand, or licenses.[3]

    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.

    [1] Rep. Act No. 10667 (2015), sec. 4 (j).
    [2] PCC Merger Review Guidelines (2017), par. 3.5.
    [3] PCC Merger Review Guidelines (2017), par. 3.6.

  5. What are the conditions on minority interest in your jurisdiction?

    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)?

    The thresholds for compulsory notification are based on revenue or asset value of the ultimate parent entity and the value of the transaction. The PCA IRR, as amended by PCC Memorandum Circular No. 18-001 and PCC Advisory 2019-001, effective 01 March 2019, provides that parties to a merger or acquisition are required to provide notification to the PCC when the following tests are satisfied:

    i. Size of the Party Test - 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 Six Hundred Million Pesos (PhP 5,600,000,000.00); and

    ii. Value of the Transaction Test - The value of the transaction exceeds Two Billion Two Hundred Million Pesos (PhP 2,200,000,000.00), as determined by the following factors:

    a. With respect to a proposed merger or acquisition of assets inside and/or outside the Philippines, if:

    i. The aggregate value of the assets in the Philippines (or of the acquiring entity in the Philippines) exceeds Two Billion Two Hundred Million Pesos (PhP 2,200,000,000.00); and
    ii. The aggregate gross revenues generated in or into the Philippines by the assets located within or outside the Philippines collectively exceed Two Billion Two Hundred Million Pesos (PhP 2,200,000,000.00).

    b. With respect to a proposed acquisition of (i) voting shares of a corporation or of (ii) an interest in a non-corporate entity (the “Target”):

    i. If the aggregate value of the assets in the Philippines owned by the Target including the entities it controls, other than assets that are shares of any of those corporations, exceed Two Billion Two Hundred Million Pesos (PhP 2,200,000,000.00); or

    ii. The gross revenues from sales in, into, or from the Philippines of the corporation or non-corporate entity including entities it controls, other than assets that are shares of any of those corporations, exceed Two Billion Two Hundred Million Pesos (PhP 2,200,000,000.00); and

    iii. If as a result of the proposed acquisition of the voting shares or interest, the acquiring entity would own at least Thirty-five percent (35%) voting shares or interest except when the acquiring entities already own Thirty-five percent (35%) in which case the proposed acquisition must result in the acquisition of Fifty percent (50%) of the voting shares or interest in the Target.

    c. With respect to a formation of a joint venture, the prospective joint venturers must notify if either:

    i. The aggregate value of the assets that will be combined in the Philippines or contributed into the proposed joint venture exceeds Two Billion Two Hundred Million Pesos (PhP 2,200,000,000.00) or

    ii. The gross revenues generated in the Philippines by assets to be combined in the Philippines or contributed into the proposed joint venture exceed Two Billion Two Hundred Million Pesos (PhP 2,200,000,000.00). In determining the assets of the joint venture, all potential and consummated contributions by the prospective joint venturers and any all kind of credit or obligations by the prospective joint venturers shall be included.

    The adjusted thresholds for notification shall not apply to:

    a) Mergers or acquisitions pending review by the Commission;
    b) Notifiable transactions consummated before 01 March 2019; and
    c) Transactions already subject of a decision by the Commission.

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

    • 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; and
    • the gross revenues from sales of an entity shall be the amount stated on the last regularly prepared annual statement of income and expense of that entity.

    Transactions falling below the foregoing thresholds that 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 that 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 for turnover thresholds 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. Do merger control rules apply to joint ventures (both new joint ventures and acquisitions of joint control over an existing business?

    The PCA IRR includes joint ventures in the definition of the term ‘merger’. Thus, the relevant provisions of the PCA that pertain to mergers also find application to joint ventures.

    There are two main types of joint ventures in the Philippines: (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; and (ii) an incorporated joint venture where a legal entity that is separate and distinct from the joint venture partners is created and registered with the Philippine Securities and Exchange Commission (SEC).

    Entities to a proposed JV that meet the Size of Party and Size of Transaction Thresholds 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. 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 (PhP5.6 billion and PhP2.2 billion, respectively).

  11. 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.

  12. 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?

    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.[4]

    The PCC has the discretion to adapt the SLC Test by considering relevant factors in the market. For example, in PCC Decision No. 022-M-039/2018 in the case entitled “In the Matter of the Proposed Acquisition by Chelsea Logistics Holdings Corporation of Shares in KGLI-NM Holdings, Inc. Chelsea Logistics Holdings Corporation, KGLI-NM Holdings, Inc.”, PCC Case No. M-2018-002, the Commission held that the transaction will result in substantial lessening of competition in the following geographic markets for passenger shipping because:

    a. The transaction eliminates a competitor that was previously a source of competitive constraint;
    b. There is a strong likelihood of price increases of a magnitude that adversely affects customers; and
    c. Barriers to entry are high.

    [4] PCC Merger Review Guidelines (2017), par. 4.2.

  13. Are non-competitive factors 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.

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

    While the PCA and its IRR do not contain any reference 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.

  15. 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).

  16. 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.

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

    There may be two phases of review with corresponding waiting periods:

    1. a Phase I review runs for a maximum period of thirty (30) days; and
    2. a Phase II review runs for a maximum period of sixty (60) days.

    [5]

    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.[6] 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.[7]

    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”.[8]

    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.[9] The PCC, in its discretion, may terminate a waiting period prior to its expiration.[10]

    [5] Merger Review Procedure (2017), sec. 2.7.
    [6] Merger Review Procedure (2017), sec. 2.7.
    [7] Rep. Act No. 10667 (2015), sec. 17, par. 3;
    [8] Rep. Act No. 10667 (2015), sec. 17, par. 3, in connection with sec. 20.
    [9] PCA IRR (2016), Rule 4, sec. 5 (j).
    [10] PCA IRR (2016), Rule 4, sec. 5 (l).

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

    Under Rule 4, Sec. 5(n) of the PCA IRR, 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.

  19. 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. Likewise, the review timetable can be shortened if it falls under the Expedited Merger Review.[11] Under the Section 1 of the PCC Rules on Expedited Merger Review, the following mergers and acquisitions are qualified for expedited review:

    • There are no actual or potential horizontal or vertical (including complementary) relationship in the Philippines between the acquiring entity, including its Notifying Group, and the acquired entity and the entities it controls.
    • The merger is a global transaction where the acquiring and acquired entities identified in the definitive agreement are foreign entities (“foreign parents”), and their subsidiaries in the Philippines act merely as manufacturers or assemblers of products exported to the foreign parents, subsidiaries, affiliates or third parties located outside the Philippines: Provided, That the remaining five percent (5%) product sales in a market in the Philippines is minimal in relation to the entirety of such Philippine product market.
    • The candidate relevant geographic market of the merger is global and the acquiring and acquired entities have negligible or limited presence in the Philippines.
    • Joint ventures, whether incorporated or not formed, purely for the construction and development of a residential and/or commercial real estate development project.

    [11] PCC Resolution No. 008-2019.

  20. Which party is responsible for submitting the filing? Who is responsible for filing in cases of acquisitions of joint control and the creation of new joint ventures?

    Under Rule 4, Section 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 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. 


  21. 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. The Proposed Transaction Subject to the Notification – Summary of Proposed Transaction
      1. Nature of Transaction

      2. Size of Parties to Proposed Transaction

      3. Value of Proposed Transaction

      4. Details of Operations of Parties in the Philippines
      i. 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
      ii. List of entities that hold ten percent (10%) or more of the outstanding voting shares or non-corporate interests of the entities listed
      iii. Diagram or chart describing the relationships between the Filing Entity/UPE, the Acquiring Entity, Acquired Entity, and each entity listed above

    9. Horizontal or Vertical Relationships
  22. Which supporting documents, if any, must be filed with the authority?

    PCC Mergers and Acquisition Revised Notification Form 09 July 2019-1 provides a list of supporting documents for the Notification, as follows:

    • A copy of the signed binding preliminary agreement or definitive agreement. Should no signed definitive agreement be available as of the date of filing, submit a copy of the most recent draft of the definitive agreement. If a draft definitive agreement was submitted, provide an undertaking to submit the signed definitive agreement within two (2) days from signing, identifying changes made to the draft agreement that were implemented in the signed agreement, if any.
    • Copies of all non-compete agreements.
    • The Articles of Incorporation, By-laws, and the General Information Sheet or equivalent document in its jurisdiction, of the filing UPE and the Acquiring or Acquired Entity.
    • Secretary’s Certificate that the proposed transaction has been approved by (majority) shareholders of the Notifying Entity.
    • Studies, surveys, analyses and reports that were prepared or received by an officer or director of any of the entities in the Notifying Group—or in the case of an unincorporated entity, an individual who serves in a similar capacity—for the purpose of evaluating or analyzing the proposed transaction with respect to market shares, competition, competitors, markets, potential for sales growth or expansion into new products/services or geographic regions. For each document, provide the date on which the document was prepared.
    • Confidential information memoranda, bankers’ books and other third-party consultant materials and synergy documents related to the sale of the target or assets. For each document, provide the date on which the document was prepared.
    • Ordinary course documents (e.g. board presentations, memorandum to the board or key officers, email correspondences, and other similar documents) relating to or discussing market position, competition, competitors, potential for sales or revenue growth or expansion, in the identified markets in Section 7, in the most recent year.
    • A copy of the most recent annual report for the filing UPE, the Acquired or Acquired entity (if different from UPE), and each entity identified in 7.1 and 7.2 (or, if the annual report is not available or if the financial statements are different from those contained in the report, audited financial statements relating to the principal businesses of the entity for its most recently completed fiscal year).

    • 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.
    • Where applicable, an 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).
  23. Is there a filing fee? If so, please specify the amount in local currency.

    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 Five Billion Six Hundred Million Pesos (PhP5,600,000.00), 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 Two Hundred Million Peso (PhP2,200,000,000.00) threshold for purposes of the compulsory notification requirement.

  24. 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.
  25. 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.

  26. 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.
  27. 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.

  28. What kind of remedies are acceptable to the authority? How often are behavioural remedies accepted in comparison with major merger control jurisdictions, such as the EU or US?

    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 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.

  29. 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.

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

    PCC Memorandum Circular No. 17-001 provides for guidelines in the determination of fines for failure to comply with Merger Notification Requirements and Waiting Periods. The basic amount of the fine (“basic fine”) shall be 3% of the value of the transaction.

    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”.

  31. 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.

  32. Can the authority’s decision be appealed to a court? In particular, can third parties who are not involved in the transaction appeal the decision?

    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.

  33. 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 Six Hundred Million Pesos (PhP5,600,000,000.00) (the “Size of the Party Threshold”);

      - The value of the transaction exceeds Two Billion Two Hundred Million Pesos (PhP2,200,000,000.00) 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 Two Hundred Million Pesos (PhP2,200,000,000.00); or
      b. The Target Corporation’s gross revenues from sales in, into, or from the Philippines exceed Two Billion Two Hundred Million Pesos (PhP2,200,000,000.00); 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.

  34. 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.

    Likewise, the PCC has executed various Memoranda of Agreement with several government agencies in relation to the possible exemption from filing of notification requirements for isolated transactions.[12]

    [12] PCC Memorandum Circular 19-001, Process for Exemption from Compulsory Notification in Solicited Public-Private Partnership (PPP) Projects.