The Philippine Competition Commission (PCC) has issued rules on review of mergers and acquisitions (M&As) under Bayanihan to Recover as One Act (Bayanihan 2). The new rules took  effect  yesterday.

The new rules detail the exemptions from compulsory notification and motu proprio review, computation of new thresholds, and the option for voluntary notification of M&A transactions while Section 4 (eee) of Bayanihan 2.

Section 4 of Bayanihan 2 (eee) exempts from compulsory notification M&As with transaction values below P 50 billion if entered into within 2 years from the effectivity of Bayanihan 2 on 15 September 2020. Additionally, it suspends PCC’s exercise of motu proprio review of these transactions for 1 year.

Under the rules, the following M&As are still subject to compulsory notification: transaction value is at least P 50 billion; or Entered into before the effectivity of Bayanihan 2 and exceed the applicable thresholds when the definitive agreement was signed.

In determining the transaction value, the rules apply P50 billion as the new size of person (SOP) and size of transaction (SOT) thresholds for compulsory notification. Prior to this, the thresholds were adjusted annually and set at P2.4 billion for SOT and P6 billion for SOP for 2020. To date, the PCC is reviewing 5 transactions notified before Bayanihan 2’s effectivity.

In terms of motu proprio review, the following M&As are not covered by Bayanihan 2’s exemption: entered into before the effectivity of Bayanihan 2 which have not yet been the subject of PCC review; or pending review by PCC before the effectivity of Bayanihan 2.

M&As that are likely to substantially lessen competition may be reviewed motu proprio after 1 year from Bayanihan 2’s effectivity.

Parties to M&As below the P50-billion threshold may choose to voluntarily notify their transaction to undergo merger review. In its discretion, the PCC may give due course to the voluntary notification, with review periods of 45 days for Phase 1 and 90 days for Phase 2.

“The PCC recognizes the need to strike a balance in implementing the policy objectives of promoting business continuity under the Bayanihan 2 and looking after market efficiency and consumer welfare under the Philippine Competition Act,” said PCC Chairperson Arsenio M. Balisacan.

“With fewer merger notifications expected, the PCC will intensify action in other areas of enforcing the competition law especially against anti-competitive agreements and abusive practices that harm consumers or unscrupulously take advantage of the crisis,” Balisacan added.