Republic Act No. 11494 or the Bayanihan to Recover as One Act became effective on 15 September 2020. Under Section 4(eee) of this law, “all mergers and acquisitions with transaction values below Fifty Billion Pesos (P50,000,000,000.00) shall be exempt from compulsory notification under Section 17 of Republic Act No. 10667 or the ‘Philippine Competition Act’ if entered into within a period of two (2) years from the effectivity of this Act, and further, shall be exempt from the Philippine Competition Commission’s power to review mergers and acquisitions motu proprio provided in Section 12 of Republic Act No. 10667 for a period of one (1) year from the effectivity of this Act.”
To recall, in order to promote competition in the Philippine marketplace, the Philippine Competition Act was approved by then Philippine President, Benigno S. Aquino, on 21 July 2015. Under the Philippine Competition Act, the Philippine Competition Commission (“PCC”), among others, has the power to conduct inquiries, investigate, hear, and decide cases involving any violation of the Philippine Competition Act motu proprio. The Philippine Competition Act, its Implementing Rules and Regulations (“IRR”), and relevant issuances of the PCC further provide that mergers and acquisitions with transaction values that exceed the following thresholds are subject to the compulsory notification requirement under the law:
|Size of the Transaction
|Size of the Parties
* To be computed in accordance with Rule 4, Section 3(b) and (d) of the IRR of the Philippine Competition Act.
** Refers to the aggregate annual gross revenues in, into, or from the Philippines, or value of the assets in the Philippines of the ultimate parent entity of at least one of the acquiring or acquired entities, including that of all entities that the ultimate parent entity controls, directly or indirectly.
A transaction that meets the above thresholds and does not comply with the compulsory notification requirement shall be considered void and will subject the parties to an administrative fine of one percent (1%) to five percent (5%) of the value of the transaction.
However, by virtue of Section 4(eee) of the Bayanihan to Recover as One Act and PCC Memorandum Circular No. 20-003, the compulsory notification requirement under the Philippine Competition Act for transactions that breach the above thresholds shall not apply if entered into within two (2) years from the effectivity of the Bayanihan to Recover as One Act. Neither will such transactions be subject to the power of the PCC to review mergers and acquisitions motu proprio if entered into within one (1) year from the effectivity of said law. On the other hand, mergers and acquisitions entered into prior to the effectivity of the Bayanihan to Recover as One Act which exceed the thresholds, including those that are now pending before the PCC for review, shall remain subject to the compulsory notification requirement and may still be subject to motu proprio review by the PCC.
The PCC will issue appropriate guidelines to implement Section 4(eee) of Bayanihan to Recover as One Act.
Senior Associate, Ocampo & Suralvo Law Offices
The information provided here is for information purposes only, and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations