Manuel V. Pangilinan-led Metro Pacific Agro Ventures Inc. (MPAV) is officially expanding its presence in the export market after securing the government’s nod for its proposed acquisition of prominent coconut exporter Franklin Baker Co. of the Philippines (Franklin Baker).

In a decision dated Oct. 23 and made public on Dec. 19, the Philippine Competition Commission (PCC) said it had cleared MPAV’s buyout of all outstanding shares of Franklin Baker after finding that the deal was unlikely to harm competition.

The decision followed a comprehensive review by PCC’s mergers and acquisitions office (MAO) to evaluate the proposed transaction.

The antirust watchdog’s MAO assessed the deal’s potential impact on the global markets for desiccated coconuts, coconut water, coconut cream, and coconut milk, as well as on the supply of mature raw coconuts in Mindanao.

The transaction did not conclude at the first phase of review after concerns were raised about potential monopsony effects in raw coconut sourcing.

In particular, the merger was flagged for potentially creating a situation where a single buyer could exert undue control over the market, prompting a second-phase review.

During this phase, MAO conducted data analysis and field missions in northern Mindanao and Davao Region to verify the potential threat of monopsony.

MAO subsequently found that the presence of alternative purchasers, particularly copra manufacturers, establishes countervailing demand.

It noted that copra makers are the largest buyers of coconuts in Mindanao, which would mitigate the risk of MPAV exercising buyer dominance.

“[This] ensures that coconut farmers continue to have multiple viable outlets for their produce,” PCC said.

The Commission also said the merger is unlikely to result in a substantial lessening of competition in the relevant markets, given the presence of numerous competing global suppliers.

These markets include desiccated coconuts, coconut water, coconut cream, and coconut milk.

In addition, the price sensitivity of buyers abroad further limits the ability or incentive of the parties to unilaterally raise prices or reduce product quality.

PCC said its investigation into the deal demonstrates the government’s commitment to ensuring that mergers in the agri-food sector do not harm competition.

“The Commission remains steadfast in safeguarding consumer welfare and promoting a level playing field across both domestic and global markets,” it said.

With the takeover of Franklin Baker, MPAV now controls about 70 percent of the country’s food-grade coconut exports.

MPAV, a subsidiary of Metro Pacific Investments Corp. (MPIC), earlier acquired Axelum Resources Corp., another major exporter of coconut products.

Franklin Baker primarily sells value-added coconut products such as desiccated coconuts, coconut water, coconut cream, and coconut milk to foreign markets.

The company has production facilities in San Pablo City, Laguna, and Santa Cruz, Davao del Sur.