MANILA, Philippines – The newly-established anti-trust body on Friday, June 3, released more detailed implementing rules and regulations (IRR) for the Philippine Competition Act, adding joint ventures under its turf and relaxing rules on reporting for mergers and acquisitions (M&As).
The revised IRR was released 4 days after Globe Telecom, Incorporated and Philippine Long Distance Telephone Company (PLDT) announced the P69.1-billion deal to buy all of San Miguel Corporation’s telecommunication business.
This will guide the Philippine Competition Commission (PCC) on how to proceed with the case of San Miguel’s sale of telecommunication assets, which according to several researchers is an "anti-competitive deal."
In its revised IRR, the PCC retained the P1-billion threshold of reporting M&As and joint ventures.
But the PCC said in its IRR that publicly listed companies – which are set to acquire 20% of another company’s outstanding voting shares – will no longer have to report their proposed deal to the commission.
Now, the PCC only requires notification of transaction of more than P1-billion M&A deals if this would enable the acquiring entities, along with their affiliates, to hold more than the following percentages of the corporation’s outstanding voting shares.
The latest IRR states that "20% if any of the corporation’s voting shares are publicly traded; 35% if none of the corporation’s voting shares are publicly traded; or 50% if the person/s already owned more than the aforementioned percentages before the proposed acquisition."
Compared to the draft IRR released in May, the latest version adds a provision called "joint venture."
The PCC "refers to a business arrangement whereby an entity 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."
It is also "where each entity shall have the right to direct and govern the policies in connection therewith, with the intention to share both profits and risks and losses subject to agreement by the entities."
If companies fail to notify the PCC of transactions that meet the thresholds, their merger, acquisition or joint venture would be rendered void.
The companies will also face a fine equivalent to 1%-5% of the consideration.
‘Lower prices, improved quality’
Senator Paolo Benigno "Bam" Aquino IV said that the signing of the IRR will soon lead to lower prices and improved quality of goods and services for consumers.
"This will bring prices down while improving quality across goods like agricultural products and services like the Internet," said Aquino, co-author and principal sponsor of Republic Act 10667 or the Philippine Competition Act.
The IRR of the Philippine Competition Act was published in major dailies Friday, June 3, making the law effective after 15 days or on June 18, 2016.
Aquino lauded the signing of the IRR, calling it "another major milestone for everyone that worked on the passage of the Philippine Competition Act." (READ: San Miguel's sale of telco business: Will consumers benefit?)
It took 25 years for the Philippine Competition Act to be enacted into law.
Senator Aquino called the Philippine Competition Act a "historic, game-changing legislation for the economy" as it penalizes bad market behavior and abuse of dominant positions.
The Philippine Competition Act is expected to eliminate cartels, as well as penalize anti-competitive agreements and abuses of dominant players in the markets that lead to high prices of goods and services.
The senator earlier said that the Philippine Competition Act will be crucial to incoming President Rodrigo Duterte’s aim to improve the country’s Internet service as the law will encourage the entry of more players in the telecommunications industry. – Rappler.com