Wednesday, July 28, 2021

Lawmakers want to keep ‘Bayanihan 2’ terms for mergers and acquisitions

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Legislators want to allow corporations to merge and buy other companies without being approved by the Philippine Competition Commission (PCC) as long as the merger and acquisition (M&A) does not involve more than P50 billion.

When asked by the PCC on the basis of this position, the chair of the House committee said she was offended and then dismissed the question.

The economic affairs committee of the House of Representatives approved on Wednesday the report of the committee and the substitute bill that would amend the country’s competition law, maintaining the threshold of 50,000 million pesos, which was 20 times the pre-pandemic requirement. , which was first introduced without proper consultation as a temporary measure in Bayanihan to recover as an act, or Bayanihan 2.

During Wednesday’s public hearing, PCC Commissioner Johannes Bernabe asked lawmakers on the basis of the 50 billion peso threshold, especially since, according to PCC data, problematic mergers and acquisitions barely reach that amount. Based on PCC’s experience, it said that settlements that raised competition concerns involved an average of just P3.5 billion, with the highest being P24 billion.

Problematic transactions

“We wonder where the P50 billion comes from, given all the data that would suggest that the range, where the problematic transactions occur, is now here close to P50 billion,” Bernabe said in a hearing via Zoom.

Responding to Bernabé, the representative of the Aambis-Owa party list, Sharon Garin, who chaired the committee, said that his logic should not even be questioned in the first place.

“I think that 75 percent of the TWG (technical working group) discussion was [about] the P50 billion. I will not underestimate the discussion that took place in the TWG. I would not even question how they have reached P50 billion (the proposed threshold), ”he replied.

“It offends me what questions [it]. You seem to be implying that there is no basis. But in defense of the TWG, it was really a long [discussion]. We did not solve it until … we arrived with a politically and economically correct figure, “he added, without offering any basis for his decision.

Under Bayanihan 2, the threshold was only supposed to hold for two years. For a year, the law prohibited the PCC from conducting a review of any agreement with a price lower than 50,000 million pesos. When Bayanihan 2 was approved in a bicameral committee last year, the Inquirer learned that the PCC was not consulted on the provision, especially since it did not exist in versions previously approved in the House of Representatives and the Senate.

Now lawmakers, including former PCC commissioner Rep. Stella Luz Quimbo, want to keep this threshold forever.

Quimbo said they are not stripping the PCC of any of its powers. She said the bill explicitly states that the PCC can review any merger on its own initiative, regardless of the amount, which is called a motu proprio review. He said the new threshold was actually a “compromise” to give companies the option to volunteer for review.

Commitment

“That became the compromise because my initial proposal was to remove the threshold [in its entirety] and at the same time make everything voluntary, ”he said in Filipino.

Bernabé, in a telephone interview with the Inquirer on Thursday, said that the alternate bill essentially adds nothing new to what was already the practice at the PCC. He said they could already do reviews on their own initiative, which is why the PCC managed to review the acquisition of Uber Philippines by Grab Philippines even though the latter did not meet notification thresholds at the time.

The only new provision in the bill, he said, is the threshold of 50,000 million pesos. INQ

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