Following its establishment on 1 February, the Philippine Competition Commission issued two circulars, respectively on 12 and 16 February, setting out merger control procedures under the Philippine Competition Act. The two circulars provide transitory procedures which will apply pending the adoption of final implementing regulations by the Commission. Both circulars will become effective fifteen days after publication. The first circular is of general application while the second relates specifically to M&A transactions involving companies listed on the Philippine Stock Exchange.
The Act introduces a full merger control regime, with a mandatory notification requirement imposed on parties involved in transactions whose value exceeds P1 billion ($22 million). While the Act provides that additional thresholds may be specified in the implementing regulations, the Commission has decided not to do so in its transitional rules, retaining at this time the statutory notification threshold based on a transaction’s value.
The Act provides that transactions consummated in violation of the notification requirement shall be null and void. This led to some legal uncertainty following the entry into force of the Act last year, as notification procedures were not yet in place and the Philippine Competition Commission had yet to be established. The main effect of the two circulars is to bring legal certainty. In this respect, the Commission confirms that transactions concluded or otherwise implemented after the Act came into effect but before the circulars were issued are exempt from the notification requirement. As regards future transactions, and pending the adoption of final implementing rules, parties are required to notify and provide basic information. However, all notified transactions will be automatically cleared. Once notified, transactions may proceed to be executed and implemented.
Apart from rendering the transaction void, a failure to notify will subject the parties to, among other things, a fine between one per cent and five per cent of the transaction value, as set out under section 17 of the Competition Act.