The Philippine Competition Commission (PCC) has returned to lower mandatory thresholds for of mergers and acquisitions for mandatory review following the expiry of the temporary P50 billion thresholds under the Bayanihan to Recover as One Act (Bayanihan 2).

Starting Friday, Sept. 16, 2022, M&As that reach a Size of Party (SoP) of P6.1 billion and a Size of Transaction (SoT) of P2.5 billion will have to be notified to the PCC for mandatory merger review, PCC said in a statement.

The new provisional thresholds are slightly lower than the P6 billion for SoP and P2.4 billion for SoT before the Bayanihan 2 intervention in 2020. Bayanihan 2, which sets a high M&A threshold for mandatory review at P50 billion for both SoP and SoT over a two-year period, expired on Sept. 15, 2022.

In a statement, the anti-trust body explained that the new provisional thresholds were based on the country’s nominal gross domestic product (GDP) growth in the past two years, reflecting the contraction of the economy by 8.09 percent in 2020 and subsequent growth of 8.13 percent in 2021. Originally set at P1 billion in 2015 under the Philippine Competition Act, the initial merger thresholds have since been subject to adjustment under PCC Memorandum Circular 2018-001.

If mergers and acquisitions meet the thresholds for compulsory notification, these transactions will be subject to review by the PCC before they can be consummated.

PCC further advised parties seeking confirmation that they are not subject to compulsory notification under the previous P50 billion thresholds to submit definitive agreements signed before September 16 with their Letter of Non-Coverage (LNC) to the PCC’s Mergers and Acquisitions Office.

Under the two-year effectivity of the thresholds under Bayanihan 2, the PCC received notifications of nine transactions, six of which were approved, and 3 withdrawn.

During this period, the PCC also processed 55 LNCs for transactions that did not breach the Bayanihan 2-prescribed thresholds, involved internal restructuring or consolidation of ownership without change in control, and referred to the acquisition of lands.

SoP refers to the aggregate value of assets or revenues in the Philippines of the ultimate parent entity of one of the parties to a transaction, while the SoT refers to the value of assets or revenues of the acquired entity and the entities it controls. These thresholds will remain effective until the approval of the Commission en banc of new thresholds for compulsory notification.

To date, the PCC has received a total of 227 notifications and has approved 205 transactions with a combined value of P4.63 trillion. It has blocked 1 harmful transaction and conditionally approved 2 transactions on account of the parties’ commitments to address competition concerns.