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Whereas,  parties  to a merger  or acquisition  with  a transaction  value  that satisfies the thresholds under Section 17 of Republic Act No. 10667, otherwise known as the Philippine Competition Act (“Act”) and Rule 4, Section 3 of the Implementing  Rules  and  Regulations  of  Republic  Act  No.  10667  (“IRR”)  are required to notify the Commission within thirty (30) days from signing of definitive agreements relating to the merger or acquisition;

Whereas, Rule 4, Section 3 of the IRR provides that parties to a merger or acquisition  are required  to provide  notification  when:  (a) 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, exceeds One Billion Pesos (PhP1,000,000,000.00), and (b) the value of the transaction exceeds One Billion Pesos (PhP1,000,000,000.00),  as determined in subsections (1), (2), (3) or (4) thereof;

Whereas, One Billion Pesos (PHP1,000,000,000.00)  was an initial threshold (“Initial Threshold”) provided in the Act and the IRR;

Whereas,   Sections   12(b)   and   19   of   the   Act   respectively   grant   the Commission the power to determine thresholds for notification under Section 17 of the Act and adopt and publish regulations accordingly;

Whereas, the rationale for setting a threshold for notification is to ensure that mergers or acquisitions that are more likely to substantially lessen competition in the market for goods and services are subject to compulsory notification under Section  17  of  the  Act,  and  to  exclude  those  that  are  less  likely  to  pose competition concerns;

Whereas, the Commission recognizes the need to adjust the thresholds for notification to reflect inflation and economic growth;

Whereas, the Commission aims to set thresholds for notification that ensure the efficient use of its limited resources;

Whereas, based on the actual notifications to date, the Commission finds it reasonable to increase the Initial Threshold;

Now,  therefore,  pursuant  to  its  authority  under  the  Act,  the  Commission hereby amends the IRR as follows:

Section 1. Rule 4, Section 3 (a), (b), and (d) of the IRR is hereby amended to read as follows:

“SECTION 3. Thresholds for compulsory notification.

Parties to a merger or acquisition are required to provide notification when:

(a)  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, exceeds Five Billion Pesos (PHP5,000,000,000.00).

and

(b) The   value   of   the   transaction   exceeds   Two   Billion   Pesos (PHP2,000,000,000.00),  as determined in subsections (1), (2), (3) or (4), as the case may be.

(1)   With respect  to a proposed  merger  or acquisition  of assets  in the
Philippines, if either

i.     the  aggregate   value  of  the  assets  in  the  Philippines   being acquired   in  the  proposed   transaction   exceeds   Two  Billion Pesos (PHP2,000,000,000.00);  or

ii.   the  gross  revenues   generated   in  the  Philippines   by  assets acquired in the Philippines exceed Two Billion Pesos (PHP2,000,000,000.00).

(2)   With respect to a proposed merger or acquisition of assets outside the Philippines, if

i.     the  aggregate  value  of  the  assets  in  the  Philippines  of  the acquiring     entity     exceeds     Two     Billion     Pesos (PHP2,000,000,000.00);  and

ii.   the gross revenues generated in or into the Philippines by those assets  acquired  outside  the  Philippines  exceed  Two  Billion Pesos (PHP2,000,000,000.00).

(3)   With respect  to a proposed  merger  or acquisition  of assets  inside and outside the Philippines, if

i.     the  aggregate  value  of  the  assets  in  the  Philippines  of  the acquiring entity exceeds Two Billion Pesos (PHP2,000,000,000.00);  and

ii. the  aggregate  gross  revenues  generated  in  or  into  the Philippines by assets acquired in the Philippines and any assets acquired outside the Philippines collectively exceed Two Billion Pesos (PHP2,000,000,000.00).

(4)   With  respect  to  a  proposed  acquisition  of  (i)  voting  shares  of  a corporation or of (ii) an interest in a non-corporate entity

i.     If the aggregate  value of the assets in the Philippines  that are owned by corporation or non-corporate entity or by entities it controls, other than assets that are shares of any of those corporations,  exceed  Two  Billion  Pesos (PHP2,000,000,000.00);  or

ii.   The gross revenues from sales in, into, or from the Philippines of the corporation or non-corporate entity or by entities it controls, exceed Two Billion Pesos (PhP2,000,000,000.00);

and iii.  If

A.     as a result of the proposed acquisition of the voting shares of a corporation, the entity or entities acquiring the shares, together with their affiliates, would own voting shares of the corporation that, in the aggregate, carry more than the following percentages of the votes attached to all the corporation's outstanding voting shares:

I.   Thirty-five percent (35%), or

II.  Fifty percent (50%), if the entity or entities already own more than the percentage set out in subsection I above, as the case may be, before the proposed acquisition;

or

B.     as a result of the proposed  acquisition  of an interest  in a non-corporate   entity,  the  entity  or  entities  acquiring  the interest,  together  with  their  affiliates,  would  hold  an aggregate  interest  in the non-corporate  entity  that entitles the entity or entities to receive more than the following percentages  of  the  profits  of  the  noncorporate  entity  or assets of that non-corporate entity on its dissolution:

I.   Thirty-five percent (35%), or

II.  Fifty percent (50%), if the entity or entities acquiring the interest are already entitled to receive more than the percentage set out in subsection I immediately above before the proposed acquisition.

xxx

(d)  In  a  notifiable  joint  venture  transaction,  an  acquiring  entity  shall  be subject to the notification requirements if either

(i)    the  aggregate  value  of  the  assets  that  will  be  combined  in  the Philippines  or contributed  into the proposed  joint venture  exceeds Two Billion Pesos (PhP2,000,000,000.00),  or

(ii)  the gross revenues generated in the Philippines by assets to be combined in the Philippines or contributed into the proposed joint venture exceed Two Billion Pesos (PhP2,000,000,000.00).

In determining the assets of the joint venture, the following shall be included:

1)   All  assets  which  any  entity  contributing  to  the  formation  of  the  joint venture  has  agreed  to  transfer,  or  for  which  agreements  have  been secured for the joint venture to obtain at any time, whether or not such entity is subject to the requirements of the act;

and

2)   Any amount  of credit or any obligations  of the joint venture  which any entity contributing to the formation has agreed to extend or guarantee, at any time.”

Section  2. The revised  thresholds  for notification  under Section  1 hereof shall apply to mergers or acquisitions the definitive agreements of which are executed after the effectivity of this Memorandum Circular.

The revised thresholds shall not apply to mergers or acquisitions pending review by the Commission; notifiable transactions consummated before the effectivity of this Memorandum Circular; and transactions already subject of a decision by the Commission.

Section  3.  Unless  otherwise  modified  or  repealed  by  the  Commission,  the thresholds set out in Rule 4, Section 3 (a), (b) and (d) of the IRR as amended in Section 1 hereof shall be automatically adjusted commencing on March 1, 2019 and  on  March  1st  of  every  succeeding  year,  using  as  index  the  Philippine Statistics  Authority's  official  estimate  of  the  nominal  Gross  Domestic  Product growth of the previous calendar year rounded up to the nearest hundred millions (e.g., PhP 2.14 B shall be rounded up to PhP 2.2B).

All mergers or acquisitions the definitive agreements of which are executed prior to the annual adjustment of thresholds contemplated herein are subject to the thresholds for notification that are applicable prior to the adjustment.

Section  4.  This  Memorandum  Circular  may  be  modified,  amended, supplemented, or repealed, as may be deemed necessary and proper by the Commission.

Section 5. If any part or provision of this Memorandum Circular is declared unconstitutional or illegal, the other parts or provisions shall remain valid.

Section 6. This Memorandum Circular shall take effect fifteen (15) days from publication in a newspaper of general circulation.

Pasig City, Philippines, 1 March 2018.

(SGD) ARSENIO M. BALISACAN Chairman
(SGD) STELLA LUZ A. QUIMBO Commissioner	(SGD) JOHANNES BENJAMIN R. BERNABE Commissioner
(SGD) AMABELLE C. ASUNCION Commissioner