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
Law passed promoting ease of doing business in the Philippines
A law promoting the ease of doing business and efficient delivery of government services took effect this June 2018.
Non-bank credit card issuers subject to new Bangko Sentral Regulations
To ensure that credit card issuers have the capacity to deliver services efficiently and securely, management must implement appropriate risk management and control systems.
Joint Venture Guidelines of the Philippine Reclamation Authority
The Guidelines govern all JVAs formed for the development and disposition of PRA’s existing properties and projects.
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
ADGM announces tech start-up licensing regime
The licence provides access to a Professional Services Support Programme aimed at allowing entrepreneurs entry to a community of businesses, financial services and professional advisers.
Further hurdles for regulatory approval of notifiable mergers in South Africa
On July 12, the Competition Amendment Bill was introduced in Parliament, substantially revising the earlier version of the Bill.
Lifting the veil on payments
Payments companies need to understand and comply with many complex laws and regulations.
Related Articles by Jurisdiction
Clarifying the role of contractors and subcontractors
Recent changes to labour laws in the Philippines attempt to clarify the status of contractors and subcontractors in certain industries ...
Green jobs: greening the Philippine labour sector
With the threat of climate change, the international community created the Paris Agreement which aims to stop global warming and preserve ...
Updates on Data Privacy Law Compliance in the Philippines
Phase II Registration with National Privacy Commission ...
Latest Articles
ADGM announces tech start-up licensing regime
The licence provides access to a Professional Services Support Programme aimed at allowing entrepreneurs entry to a community of businesses, financial services and professional advisers.
Further hurdles for regulatory approval of notifiable mergers in South Africa
On July 12, the Competition Amendment Bill was introduced in Parliament, substantially revising the earlier version of the Bill.