By Krista A. M. Montealegre
THE PHILIPPINE Competition Commission (PCC) has revised rules on merger procedures, giving stakeholders a clearer guide on the mergers and acquisitions (M&A) process even as it raised concerns on confidentiality while deals are under review.
The competition body, in a notice published on Nov. 23, unveiled the updated rules to guide the agency and its stakeholders on the M&A notification process, remedies, adjudication, confidentiality, as well as fines and penalties.
“As a comprehensive guide for stakeholders, the rules on merger procedure will help our stakeholders understand our processes and be more efficient in their submissions,” Atty. Kristal T. Uy, director of the commission’s Mergers and Acquisitions Office, said in a mobile phone message.
“This in turn contributes to the long-term goal of achieving a culture of compliance among stakeholders.”
The new version includes recommendations and inputs from stakeholders after engaging the private sector and representatives of legal firms in several public consultations in Manila, Cebu and Davao, the PCC said.
The PCC, which requires notification on M&A transactions worth more than P1 billion, has been criticized for delays in closing deals because of the additional layer of bureaucratic work involved.
One of the changes in the rules is the notification period that allows merger parties to inform the PCC of the deal “within 30 days from signing of definitive agreements” — a revision that drew mixed reactions from stakeholders. Under the old provision, parties that meet the threshold should notify the commission of the merger “before execution of the definitive agreements.”
“M&As are usually confidential in nature especially for publicly listed companies. A longer notification period may have implications on the confidentiality of the transaction,” RCBC Capital Corp. President Jose Luis F. Gomez said in a mobile phone message.
“I think requiring the notification within 30 days after signing of definitive agreement is a welcome change in my opinion. Doing it before is preempting a very sensitive and important decisions,” Mary Jade Roxas-Divinagracia, managing partner for deals and corporate finance at PwC Philippines, said in an e-mail.
The PCC also retained provisions that presume none of submitted information is confidential unless there is claim of confidentiality.
Ms. Divinagracia cited a provision in the competition rules in the United States that “all information provided to, or obtained by, the agencies in a merger investigation is confidential, and the agencies have very strict rules against disclosing it.”
“M&A transactions are often confidential because of the effect it will have on employees, customers, suppliers, bankers and other stakeholders,” she said.
Overall, the PwC official noted that the new rules provide “clearer” guidelines about the approval process.
“I hope it will make it simpler rather than add procedures and make it more complicated,” BDO Capital and Investment Corp. President Eduardo V. Francisco said when asked for comment.
The PCC was organized under Republic Act No. 10667 or the Philippine Competition Act of 2015. Signed into law on July 21, 2015, the measure prohibits abuse of dominant position and anti-competitive M&A, among others.