By Bernie Cahiles-Magkilat
The pending probe on the alleged cartel-like operation of the domestic cement industry will have no bearing on the review over the acquisition of Holcim cement by San Miguel Corp., the Philippine Competition Commission said.
This was assured by the PCC Mergers and Acquisitions Office in its reply to questions raised by consumer group Laban ng Konsyumer Inc. (LKI), which complaint filed two years ago has remained pending for resolution by PCC.
LKI President Victorio Mario Dimagiba filed the cartel complaint of cement on August 22, 2016 and the case was given an FAI (full administrative investigation) status in January 2017. PCC Commissioner Johannes Benjamin R. Bernabe also confirmed the PCC MAO decision.
MAO, however, also stressed that despite its decision that both cases are treated independently from each other this does not preclude them from considering the pre-merger activities of the parties and inputs from various stakeholders within the industry.
“The Philippine Competition Commission’s (“PCC”) review of the proposed acquisition of First Stronghold Cement Industries Inc., (“First Stronghold”) of shares in Holcim Philippines Inc. (“Holcim”) (collectively, “the proposed transaction”), through the Mergers and Acquisitions Office (“MAO”), will be conducted independently from the Section 14 investigation of the PCC of the cement industry,” the PCC said in a reply to Dimagiba.
“The review of the transaction will be independent from the Section 14 investigation of the PCC. As a result, ‘clearance’ from one case will not affect the other,” the PCC reiterated.
PCC also said that it will not require any clearance to Holcim from any suspicion of wrongdoing prior to the approval of deal.
Bernabe also added that “Holcim need not necessarily be cleared of wrongdoing or participation in the cartel investigation before the merger is cleared by PCC. As mentioned, the two processes – Merger Review and enforcement action against possible anti-competitive acts – are separate and independent of one another.”
Bernabe further stressed that the two cases have no connection stressing that the acquisition is the subject of Merger Review rules and procedures, while the cartel complaint is subject of enforcement proceedings, where alleged acts of multiple cement companies are being investigated.
In the Merger Review, he said, what the PCC is examining is simply the acquisition by SMC of Holcim, and whether this is likely to lead to substantial lessening of competition, given the relevant market structure and conditions. In the cement investigation, the PCC is looking into whether a group of cement companies have agreed to fix prices, limit output, divide the market among themselves or commit other collusive anti-competitive acts.
According to Bernabe, the cement cartel investigation is still ongoing with the PCC’s Enforcement Office, which is in charge of the investigation.
The enforcement unit, he said, continues to conduct monitoring, surveillance and investigative efforts to determine whether or not there is sufficient basis to file a formal complaint against certain cement companies for anti-competitive acts or conduct.