ii. Prohibited Mergers and Acquisitions; Exemptions

Prohibited Mergers and Acquisitions and Their Exemptions

Under the Philippine Competition Act, merger or acquisition agreements that substantially prevent, restrict, or lessen competition in the relevant market, or in the market for goods or services as determined by the Philippine Competition Commission, are prohibited¹. This enforcement supports the State policy to enhance economic efficiency and promote free and fair competition in all commercial economic activities².

Nonetheless, the Commission may exempt an otherwise prohibited merger or acquisition agreement when the parties establish either of the following grounds:

• The concentration has brought about or is likely to bring about gains in efficiencies that are greater than the effects of any limitation on competition that result or are likely to result from the merger or acquisition agreement³; or
• A party to the merger or acquisition agreement is faced with actual or imminent financial failure, and the agreement represents the least anti-competitive arrangement among the known alternative uses for the failing entity’s assets³.

Additionally, the law clarifies that an entity is not prohibited from continuing to own and hold the stock, share capital, or assets of another corporation acquired prior to the approval of the Act³. Likewise, the acquisition of stock or share capital of one or more corporations solely for investment is not prohibited, provided it is not used for voting or exercising control and is not used to otherwise bring about, or attempt to bring about, the prevention, restriction, or lessening of competition in the relevant market³.