Philippines

Franchette M. AcostaBy Franchette M. Acosta, V&A Law
fm.acosta@thefirmva.com

The Philippine Competition Commission published its Rules on Merger Procedure on 23 November 2017. These Rules will take effect 15 days after publication. Significantly, the Rules revise the prescribed timing for filing the required transaction notice under the Philippine Competition Act. Under the law, mergers, acquisitions and joint ventures satisfying transaction thresholds must be notified prior to consummation. Relevant thresholds include the assets and revenues of the ultimate parent entity of the acquiring or acquired entity, the value of the transaction and percentage of the corporation acquired. The Rules require notification within 30 days from execution of the definitive agreement. Under regulations in place prior to the effectivity of the Rules, notification had to be given prior to the execution of the definitive agreements of the transaction.

Definitive agreements are defined by the Commission as those setting out the complete and final terms and conditions of the transaction, including rights and obligations between or among the transacting parties. Share Purchase Agreements, Asset Purchase Agreements, Joint Venture Agreements or other similar agreements are considered definitive agreements. Notification made beyond 30 days from execution of the definitive agreement even if prior to consummation of the transaction will result in the imposition of penalties on the parties. Failure to notify prior to full or partial consummation of the transaction will render the transaction void, and will also subject the parties to fines. A merger or acquisition is consummated where the parties have performed their obligations under the definitive agreement resulting in the transfer, conveyance, assignment or encumbrance of any right, title, interest, property or asset.

M&A review under the Rules follows a 2-phase process. Phase 1 review is conducted within a period of 30 days from complete notification and payment of filing fees. However, prior to the commencement of this period, the Commission is given an opportunity to review the submissions to determine completeness. Thus, within a period of 15 days from receiving the parties’ submission, the Commission will conduct a sufficiency check to verify if the parties have provided complete information and documentation. If the submission is complete, the parties will be directed to pay the filing fee. If the submission is determined to be incomplete, the period to conduct the sufficiency check will be effectively extended. The parties will be informed and will have 15 days respond and provide the needed information. In the meantime, 15-day Sufficiency Period is suspended.

The purpose of the Phase 1 review is to establish whether the notified transaction is likely to give rise to competition concerns, which must be subjected to further study. The Commission will clear the transaction for consummation if it determines that the transaction does not raise competition concerns. However, if he Commission is not convinced that the transaction does not raise competition concerns, review will proceed to Phase 2. For this purpose, the Commission will serve notice on the parties and request for additional information.

Phase 2 runs for a period of 60 days commencing on the day after service of Phase 2 notice. The transaction parties must respond to a Phase 2 request for information within 15 days from receipt. Failure to respond within the period shall result in the expiration of the parties’ notice, and the parties will have to re-file. However, if the Commission is in possession of alternative relevant information, it may decide to pursue Phase 2 review.

In the course of Phase 2 review, the Commission will evaluate whether the notified transaction will substantially prevent, restrict or lessen competition (SLC) in the relevant market. If it is concluded that the notified transaction is likely to result in SLC, the Commission will prohibit the transaction or impose conditions to address the anti-competitive effects. In the course of Phase 1 and Phase 2 Reviews, the transaction parties may volunteer commitments to remedy, mitigate or prevent competition concerns identified by the Commission. However, proposals for commitments will not be allowed after the PCC has rendered a decision.

This article is published for information purposes only, and should not be considered to be legal advice.

Sources:
Republic Act No. 10667 or the “Philippine Competition Act” and its Implementing Rules and Regulations
PCC Rules on Merger Procedure published on 23 November 2017

W http://www.thefirmva.com
E fm.acosta@thefirmva.com

Tags: Antitrust, Competition, M&A, Philippines, Regulatory
Articles by Lawyer
Law Passed Strengthening Consumer Protection in the Philippines
On December 19, 2017, the Gift Check Act of 2017 (Republic Act No. 10962) was signed into law ...
Joint Venture Agreements with Philippine Local Government Units as Public-Private Partnership Modality
The Duterte Administration is poised to fund its aggressive infrastructure program internally and through official development assistance ...
Update on Data Privacy Law Compliance in the Philippines
Automated Decision-Making Operations, Institutions Likely to Pose Threats to Data Subjects and Phase 1 and Phase 2 of Registration with the NPC ...
Philippine Competition Commission Merger Review Guidelines
On 23 March 2017 the The Philippine Competition Commission (PCC) released the Merger Review Guidelines ...
Related Articles by Firm
The Philippine Anti-Money Laundering Commission extends compliance requirement
Jewellery dealers, dealers in precious metals and dealers in precious stones are now deemed covered persons.
Updates on Data Privacy Law Compliance in the Philippines
Phase II Registration with National Privacy Commission ...
Philippines: Bureau of Internal Revenue Clarifies Taxes on Offshore Gaming
The Bureau of Internal Revenue (BIR) issued Revenue Circular No. 102-2017 clarifying the tax imposed on entities engaged in Philippine offshore gaming operations ...
Law Passed Strengthening Consumer Protection in the Philippines
On December 19, 2017, the Gift Check Act of 2017 (Republic Act No. 10962) was signed into law ...
Casino Covered by Philippine Anti-Money Laundering Laws
The Philippine government has expanded anti-money laundering laws to include casinos, including internet and ship-based casinos ...
Philippine rules on merger procedure
The Philippine Competition Commission issued the Rules on Merger Procedure which explain the timing for the filing of a notice for covered transactions, the procedure for notification, Phase 1 and Phase 2 review and other matters, including confidentiality claims ...
Joint Venture Agreements with Philippine Local Government Units as Public-Private Partnership Modality
The Duterte Administration is poised to fund its aggressive infrastructure program internally and through official development assistance ...
Update on Data Privacy Law Compliance in the Philippines
Automated Decision-Making Operations, Institutions Likely to Pose Threats to Data Subjects and Phase 1 and Phase 2 of Registration with the NPC ...
Philippine Competition Commission Merger Review Guidelines
On 23 March 2017 the The Philippine Competition Commission (PCC) released the Merger Review Guidelines ...
Related Articles
Understanding The Maharashtra Shops And Establishments Rules 2018
The Act regulates the employer–employee relationship and service conditions such as hours of work, payment of wages, overtime, leave, holidays, etc.
The UAE Federal Arbitration Law: A First Look
The approval of the long-awaited law by the Federal National Council was announced in March this year.
Does your non-competition clause really protect you?
Or does it merely offer the illusion of protection? What you need to know about the validity and enforceability of a non-competition clause.
Related Articles by Jurisdiction
The TRAIN in the eyes of the DOF and BIR
Government bodies diverge in their interpretation of the Tax Reform for Acceleration and Inclusion Act.
Update on Data Privacy Law Compliance in the Philippines
Automated Decision-Making Operations, Institutions Likely to Pose Threats to Data Subjects and Phase 1 and Phase 2 of Registration with the NPC ...
Department of Labor and Employment (DOLE) Department Order No. 18-A: The Rules and Regulations on Contracting
On December 4, 2011, Department of Labor and Employment (DOLE) Department Order No. 18-A (D.O. 18-A), the new Rules Implementing Articles 106 to 109 ...
Latest Articles
Understanding The Maharashtra Shops And Establishments Rules 2018
The Act regulates the employer–employee relationship and service conditions such as hours of work, payment of wages, overtime, leave, holidays, etc.
The UAE Federal Arbitration Law: A First Look
The approval of the long-awaited law by the Federal National Council was announced in March this year.
Does your non-competition clause really protect you?
Or does it merely offer the illusion of protection? What you need to know about the validity and enforceability of a non-competition clause.