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PCC Comment: SMC-Holcim Transaction

2020, Philippines, Mergers & Acquisitions

SMC-Holcim Transaction
12 May 2020


The Philippine Competition Commission (PCC) received information that San Miguel Corporation’s subsidiary, First Stronghold Cement Industries, Inc. (FSCII), shall no longer proceed in acquiring Holcim Philippines, Inc. (HPI) upon the lapse of the parties’ agreement on Sunday, 10 May 2020. The PCC, however, has yet to receive formal notice from the parties withdrawing the transaction from the Commission’s review.

SMC’s disclosure to the Philippine Stock Exchange was made close to the end of PCC’s Phase 2 review of the transaction, which was suspended by Administrative Order No. 30 rendering all proceedings interrupted until the end of the community quarantine.

The Commission notes that the 10 May 2020 deadline was internally agreed upon by the transacting parties and was within their prerogative to extend as needed. The PCC, as antitrust authority, acts in accordance with its statutory timelines.

SMC’s decision not to proceed with the acquisition of HPI comes after the Commission rejected the parties’ several proposals for voluntary commitments, and after the parties requested several extensions to file their required comment to the Statement of Concerns (SOC) submitted by the PCC’s Mergers and Acquisitions Office (MAO) to the Commission.

To recall, PCC’s MAO flagged competition concerns arising from the merger such as monopoly in Northwest Luzon, and increased market power and potential collusion among inter-related cement companies controlled by FSCII in the Northeast LuzonCentral Luzon, and Greater Metro Manila areas. (See Statement of Concerns here.)

The Phase 2 review of the transaction was suspended upon the parties’ submission of voluntary commitments. PCC rejected the proposed commitments after they were found insufficient to address the competition concerns, reverting the transaction to Phase 2 review. The parties, however, have yet to file their respective comments to answer the competition concerns raised in the SOC.

The PCC is cognizant of the changes in market conditions during these extraordinary times, and as such, supports the promotion of business and their respective re-calibration of decisions in response to these conditions.