The Philippine Competition Commission ("PCC") has issued the Merger Review Guidelines (the "Guidelines"), which outline the principal analytical techniques, practices, and the enforcement policy of the PCC with respect to mergers and acquisitions that may have a direct, substantial and reasonably foreseeable effect on trade, industry, or commerce in the Philippines. The Guidelines were adapted from the International Competition Network ("ICN") Recommended Practices for Merger Analysis, which were derived from the ICN Merger Guidelines Workbook and common practices across member jurisdictions, and tailored to apply to Philippine commercial and legal practices and made consistent with the Philippine Competition Act ("PCA") and the Implementing Rules and Regulations ("IRR").
The PCC's purpose for issuing the Guidelines is to increase the transparency of the analytical process undertaken by the PCC and, in so doing, assist the business community and competition law practitioners in assessing proposed transactions. The Guidelines may also assist the courts in developing an appropriate framework for interpreting and applying the PCA, the IRR and other regulations relating to mergers.
Prior to the issuance of the Guidelines, the PCC also issued Clarificatory Note No. 17-001 on February 23, 2017, which clarified that, although the waiting period in voting securities acquisitions (e.g., tender offers, third party and open market transactions, in which the acquiring entity proposed to buy securities from shareholders of the acquired entity) begins after the acquiring entity files a complete Merger Notification Form (the "Form"), the acquired entity is nevertheless required to submit its Form no later than ten (10) calendar days from the day the acquiring entity files its Form. Failure of the acquired entity to submit its own Form within such period may lead to insufficient information for the review of the transaction within the 30-day Phase 1 review period and may constrain the PCC to initiate a Phase II review of the transaction.
Finally, on February 13, 2017, the PCC issued PCC Memorandum Circular No. 17-001 setting out the guidelines for the imposition of fines for failure to comply with the merger notification requirements and waiting periods under the PCA and the IRR.
Under the circular:
- Basis of the fine. The fine is based on the value of the transaction, which shall be the higher of (i) the aggregate value of the assets in the Philippines subject of the proposed transaction or owned by the acquired corporation, including entities it controls; or (ii) the gross revenues generated by assets subject of the proposed transaction or from sales in, into or from the Philippines of the acquired corporation, including entities it controls.
- Basic Fine. The basic fine shall be three percent (3%) of the value of the transaction, subject to adjustment depending on the gravity and duration of the violation, taking into account all the relevant circumstances of the case. The circular enumerates aggravating and mitigating circumstances that the PCC may take into consideration. In no case, however, shall the imposable fine for each violation exceed five percent (5%) of the value of the transaction nor shall the fine be less than one percent (1%) of the value of the transaction.
- Solidary Liability. The covered entities, their pre-acquisition ultimate parent entities and their successors or assigns shall be liable for the payment of the fines under the said circular.