Course Code: BAM 242

Module #21

Name: ________________________________________ Class number: __________________

Section: _________ Schedule: _____________________ Date: _________________________

Lesson Title: PHILIPPINE COMPETITION ACT Part 2 Materials:

Lesson Objectives: Student Activity Sheet
At the end of this module, I can:
1. State the covered transactions.
2. Explain the thresholds for compulsory notification and the References:
notifying entity. R.A. No. 10667
3. State the period of notification. Implementing Rules and
Regulations of R.A. No. 10667

Productivity Tip:
Marathon cram sessions is not healthy. Keep study sessions short. You’ll retain more
information studying in short sessions, fitting those sessions around your other daily
activities. Happy learning!

A. LESSON PREVIEW/REVIEW

1) Introduction (2 mins)

Healthy competition among businesses that offers different goods and services is favorable to
consumers. It will promote reasonableness in the price of goods and services being offered in a
relevant market and it will also encourage businesses to offer more options and alternatives.

In the previous module, we discuss about the scope of application of R.A. No. 10667 and the prohibited acts
under this law. In this module, prepare to learn more about the covered transactions as well as the notification
threshold, notifying entity and period of notification.

2) Activity 1: What I Know Chart, part 1 (3 mins)

Try answering the questions below by writing your ideas under the first column What I Know.

What I Know Questions: What I Learned

1. Briefly explain the concept of
competition.

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Name: ________________________________________ Class number: __________________

Section: _________ Schedule: _____________________ Date: _________________________

2. Give at least 3 covered

transactions.

3. Define merger and acquisition.

B. MAIN LESSON

1) Activity 2: Pre-Printed Content

Notes (13 mins)

The Philippine Competition Act prohibits

anti-competitive agreements between and

among competitors
abuse of dominant position
mergers and acquisitions that substantially
prevent, restrict or lessen competition in the
Philippines.

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Name: ________________________________________ Class number: __________________

Section: _________ Schedule: _____________________ Date: _________________________

In our previous module, we discussed all of the above-mentioned prohibited acts in details.

For review purposes, anti -competitive agreements between and among competitors are prohibited
because it has significant unfavorable effects to the consumers. Example is when competitors agreed on
the price of a commodity which is way higher than the normal because they can control the supply.
Imagine the suffering it can bring to the consumers!

Abuse of dominant position is a scenario where because of economic strength that the entity or entities
hold, like when they are actually capable of controlling the relevant market, decide to manipulate certain
aspects of the market so that they can get rid of possible competitions.

Mergers and acquisitions are generally not prohibited. It is not wrong if two or more businesses decided
to merge to expand its operation. However, there are certain mergers and acquisitions which are
considered as prohibited because they substantially prevent, restrict or lessen the competition.

Review of Mergers and Acquisitions:

The Commission has the power to initiate the review of mergers and
acquisitions which has direct, substantial and reasonably
foreseeable effect on trade, industry or commerce in the Philippines.

In conducting this review, the Commission shall assess whether a

proposed merger or acquisition is likely to substantially prevent,
restrict or lessen competition in the relevant market.

The Commission must compare the competitive conditions that

would likely result from the merger or acquisition. Of course, the
Commission may consider a case-to-case basis, because effects varies in different transactions.

You might want to ask. “How does the merger or acquisition come to the knowledge of the Commission?”

Notifying Entities:

Parties to a merger or acquisition that satisfy the thresholds in Section 3 of the

Implementing Rules and Regulations of R.A. 10667 are required to notify the
Commission before the execution of the definitive agreements relating to the
transaction.
o Simply put, notification is required when the merger or acquisition
satisfy the threshold set by law.

If for instance, the notice is required, the ultimate parent entity shall submit a Notification Form and comply
with the procedure set forth in Section 5 of the IRR.

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 Course Code: BAM 242
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Name: ________________________________________ Class number: __________________

Section: _________ Schedule: _____________________ Date: _________________________

Thresholds for Compulsory Notification:

According to Section 3 Rule 4 of R.A. No. 10667, 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

and

b. The value of the transaction exceeds One Billion Pesos, 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 One Billion Pesos; or
ii. The gross revenues generated in the Philippines by assets acquired in the Philippines
exceeds One Billion Pesos.

2. With respect to proposed merger or acquisition of assets outside the Philippines, if

i. The aggregate value of the assets in the Philippines of the acquiring entity exceed One
Billion Pesos: and
ii. The gross revenues generated in or into the Philippines by those assets acquired outside
the Philippines exceeds One Billion Pesos.

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 One
Billion Pesos.
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 One Billion
Pesos.

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 the corporation or
non-corporate entity or by entities it controls, other than assets that are shares of any of those
corporations, exceed One Billion Pesos.

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Name: ________________________________________ Class number: __________________

Section: _________ Schedule: _____________________ Date: _________________________

ii. The gross revenues from sales in, into or from the Philippines of the corporation or non-
corporate entity or by entities it controls, other than assets that are shares of any of those
corporations, exceed One Billion Pesos.

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 that the following percentages of the
votes attached to all the corporations’s outstanding voting shares:
I. 35% or
II. 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 that
the following percentages of the profits of the non-corporate entity or assets of that non-
corporate entity on its dissolution:
I. 35% or
II. 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.

Requiring 2nd Notification:

Where an entity has already exceeded the 35% threshold for an acquisition of voting shares, or the 35%
threshold for an acquisition of an interest in a non-corporate entity, another notification will be required if
the same entity will exceed 50% threshold after making a further acquisition of either voting shares or an
interest in a non-corporate entity.

Threshold for Joint Ventures:

In a notifiable joint venture transaction, an acquiring entity shall be subject to the notification requirements
if either:
o the aggregate value of the assets that will be combined in the Philippines or contributed into the
proposed joint venture exceed One Billion Pesos or
o the gross revenues generated in the Philippines by assets to be combined in the Philippines or
contributed into the proposed joint venture exceed One Billion Pesos.

Threshold for Acquisition in Parts:

A merger or acquisition consisting of successive transactions, or acquisition of parts of one or more

entities, which shall take place within a 1 year period between the same parties, or any entity they control

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Name: ________________________________________ Class number: __________________

Section: _________ Schedule: _____________________ Date: _________________________

or are controlled by or are under common control with another entity or entities, shall be treated as one
transaction.

If there is no agreement for successive transactions or acquisition of parts, the notification shall be made
when the parties execute the agreement relating to the last transaction which, when taken together
exceeds One Billion Pesos.

Effect of Failure to Comply with the Notification Requirements:

A transaction that meets the threshold and does not comply with the notification requirements and waiting
period set out in Section 5 shall be considered as void and will be subject the parties to an administrative
fine of 1% to 5% of the value of the transaction.

2) Activity 3: Skill-building Activities (with answer key) (18 mins + 2 mins checking)

Exercise I

1. Explain the purpose of notifying the Commission about the merger or consolidation.
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________

2. Explain the threshold with respect to a proposed acquisition of voting shares of a corporation.

________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________

3. Explain the effect of failure to comply with the notification requirement.

________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
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 Course Code: BAM 242
Module #21

Name: ________________________________________ Class number: __________________

Section: _________ Schedule: _____________________ Date: _________________________

3) Activity 4: What I Know Chart, part 2 (2 mins)

It’s time to answer the questions in the What I know chart in Activity 1. Log in your answers in the table.

4) Activity 5: Check for Understanding (5 mins)

Exercise I. TRUE or FALSE

The following mergers or acquisitions require notification to the Commission:

__________1. 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 all of the acquiring or acquired entities, including that of
all entities that the ultimate parent entity controls, directly or indirectly, exceeds One Billion Pesos.

__________2. 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
One Billion Pesos; or (ii.) The gross revenues generated in the Philippines by assets acquired in the
Philippines exceeds One Billion Pesos.

__________3. With respect to proposed merger or acquisition of assets outside the Philippines, if (i.) The
aggregate value of the assets in the Philippines of the acquiring entity exceed One Billion Pesos: and (ii.)
The gross revenues generated in or into the Philippines by those assets acquired inside the Philippines
exceeds One Billion Pesos.

__________4. 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 One
Billion Pesos. (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 One Billion Pesos.

__________5. 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 the corporation or non-corporate entity or by entities it controls, other than assets that are shares of
any of those corporations, exceed One Billion Pesos. (ii.) The gross revenues from sales in, into or from
the Philippines of the corporation or non-corporate entity or by entities it controls, other than assets that
are shares of any of those corporations, exceed One Billion Pesos.

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 Course Code: BAM 242
Module #21

Name: ________________________________________ Class number: __________________

Section: _________ Schedule: _____________________ Date: _________________________

A. LESSON WRAP-UP

Activity 6: Thinking about Learning

Congratulations for finishing this module! Shade the number of the module that you finished

Did you have challenges learning the concepts in this module? If none, which parts of the module
helped you learn the concepts?
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________.

Some question/s I want to ask my teacher about this module is/are:

__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________.

Learning Scores Action Plan

Date
Target/Topic

What module# did you What contributed to the quality of your

What were your
What’s the do? What were the performance today? What will you do next
scores in the
date today? learning targets? What session to maintain your performance or
activities?
activities did you do? improve it?

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