PCC clarifies SMC decision on Holcim acquisition

Published May 12, 2020, 12:00 AM

by manilabulletin_admin

The Philippine Competition Commission (PCC) yesterday said the Phase 2 review of San Miguel Corporation’s subsidiary, First Stronghold Cement Industries, Inc. (FSCII), acquisition of cement firm Holcim Philippines Inc., was suspended under Administrative Order No. 30 following the implementation of the Enhanced Community Quarantine (ECQ) in Luzon.

Philippine Competition Commission
Philippine Competition Commission

PCC issued this statement after SMC disclosed before the Philippine Stock Exchange that it was no longer proceeding its acquisition of Holcim Philippines upon the lapse of the parties’ agreement on Sunday, 10 May 2020. The PCC, however, has yet to receive formal notice from the parties withdrawing the transaction from the Commission’s review.

“SMC’s disclosure to the Philippine Stock Exchange was made close to the end of PCC’s Phase 2 review of the transaction, which was suspended by Administrative Order No. 30 rendering all proceedings interrupted until the end of the community quarantine,” PCC clarified.

The Commission noted that the 10 May 2020 deadline was internally agreed upon by the transacting parties and was within their prerogative to extend as needed. The PCC, as antitrust authority, acts in accordance with its statutory timelines.

The SMC’s decision not to proceed with the acquisition of Holcim Philippines comes after the Commission rejected the parties’ several proposals for voluntary commitments, and after the parties had requested several extensions to file their required comment to the Statement of Concerns (SOC) submitted by the PCC’s Mergers and Acquisitions Office (MAO) to the Commission.

To recall, PCC’s MAO flagged competition concerns arising from the merger such as monopoly in Northwest Luzon, and increased market power and potential collusion among inter-related cement companies controlled by FSCII in the Northeast Luzon, Central Luzon, and Greater Metro Manila areas.

The Phase 2 review of the transaction was suspended upon the parties’ submission of voluntary commitments. PCC rejected the proposed commitments after they were found insufficient to address the competition concerns, reverting the transaction to Phase 2 review. The parties, however, have yet to file their respective comments to answer the competition concerns raised in the SOC.

The PCC is cognizant of the changes in market conditions during these extraordinary times, and as such, supports the promotion of business and their respective re-calibration of decisions in response to these conditions.