On 5 March 2018, the Philippine Competition Commission ("PCC") issued Memorandum Circular no. 18-01 ("MC 18-01"), which increases the thresholds for mandatory notification of M&A transactions from the previous PHP 1 billion threshold, to PHP 5 billion and PHP 2 billion, for the Size of Person Test and Size of Transaction Test, respectively. The new thresholds shall take effect on 20 March 2018, and shall apply to M&A transactions the definitive agreements (definition below) of which are executed after such date.
Under PCC Clarificatory Note no. 16-01 a 'definitive agreement' sets out the complete and final terms and conditions of a merger or acquisition, including the rights and obligations between or among the transacting parties. These would include share purchase agreements, asset purchase agreements, joint venture agreements and other similar agreements.
Implications for Business in the Philippines
M&A transactions the definitive agreements of which are executed after the effectivity of MC 18-01 on 20 March 2018, are subject to mandatory notification to the PCC only if they meet the PHP 5 billion Size of Person Test and the PHP 2 billion Size of Transaction Test.
Unless modified by the PCC, the thresholds for mandatory notification shall be automatically adjusted commencing on 1 March 2019, and on 1 March of every succeeding year based on the Philippine Statistics Authority's computations from the previous calendar year.
M&A transactions that meet the thresholds for mandatory notification must comply with the notification procedure, timelines and requirements under the Rules and Regulations of the Philippine Competition Act ("PCA") ("PCA-IRR") and the Rules on Merger Procedure ("Merger Rules").
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