PHILIPPINES

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Content last updated: 25-03-2020

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  • Merger Screening

1. What type of transactions are caught by the merger control regime?

1.1 Concentrations

1.1.1 Type of transactions that are caught by the merger control rules?

Mergers and amalgamations are caught by the merger control rules.

Acquisitions of shares or assets are caught by the merger control rules if the transaction through contract or other means brings a change of control by:

  • one entity of the whole or part of another;
  • two or more entities over another; or
  • one or more entities over one or more entities.

In addition, acquisitions of shares are caught only if as a result of the proposed transaction, the acquirer obtains ownership of at least 35% or 50%, as the case may be, of the voting shares or voting rights in target.

2. Establishing jurisdiction for notification of mergers

2.3 General thresholds

2.3.1 Threshold(s) for when a concentration must be notified under the general merger control regime?

Merger filing is needed if one of the following thresholds is met:

The general size of the parties test:

  • Either the acquirer or the target has a turnover or assets exceeding PHP 5,600,000,000 in the Philippines.

The transaction value test:

The transaction value exceeds PHP 2,200,000,000. The transaction value is measured as follows below:

For mergers and acquisition of assets inside the Philippines:

  • The value of the assets acquired or the turnover generated by the assets acquired exceeds PHP 2,200,000,000 in the Philippines.

For mergers and acquisition of assets outside, or partly in- and outside, the Philippines:

  • The value of the acquirer’s assets exceeds PHP 2,200,000,000 in the Philippines, and the turnover generated by the assets acquired exceeds PHP 2,200,000,000 in the Philippines.

For acquisition of shares:

  • The value of the target’s assets or the target’s turnover exceeds PHP 2,200,000,000 in the Philippines.

2.4 Other national thresholds for ex ante merger control (e.g. sector-specific rules)

2.4.1 Relevant thresholds for sector-specific or other ex ante merger control rules?

Generally, there are no limitations of foreign ownership in Philippine companies, but certain sectors have restrictions, e.g. financial institutions, real estate, public utilities and retail.

2.5 Foreign-to-foreign mergers

2.5.1 Do any exemptions, special thresholds etc. apply to foreign-to-foreign mergers, i.e. where none of the undertakings concerned is domiciled in the jurisdiction?

Foreign-to-foreign mergers are also fileable in the Philippines if they meet the thresholds.

3. Calculation and allocation of turnover, asset value, transaction value etc.

3.1 Relevant turnover

3.1.1 How is turnover defined (e.g. is income from other sources than "ordinary activities to be included, and how are rebates, taxes, internal turnover etc. treated)?

Relevant turnover is sales revenue generated in or sold into the Philippines.

3.2 Relevant period for calculation of turnover

3.2.1 Which financial year(s) is relevant for the calculation of turnover?

The turnover relevant for the thresholds is that stated in the last regularly prepared annual income statement.

3.3 Relevant undertakings for the calculation of turnover

3.3.2 The undertakings whose turnover is taken into account?

In the size of the parties test, the undertakings whose turnover is taken into account are the ultimate parent entities of the acquiring and the target entities, including that of the ultimate parent companies’ subsidiaries.

In the transaction value test, the following applies:

  • Mergers and acquisitions of asset: The turnover of the asset acquired is taken into account.
  • Acquisition of shares: The turnover of the target, including its subsidiaries, is taken into account.

3.3.3 Shall the turnover of the existing seller be included in the target's group turnover?

The seller’s turnover is taken into account in the size of the parties test.

The seller’s turnover is not taken into account in the transaction value test.

3.5 Valuation and allocation of assets

3.5.1 The principles for valuation and allocation of assets?

The asset value relevant for the thresholds is that stated in the last regularly prepared balance sheet or the most recent audited financial statements in which those assets are accounted for.

In the size of the parties test, the undertakings whose assets are taken into account are the ultimate parent entities of the acquiring and the target entities, including that of the ultimate parent companies’ subsidiaries.

In the transaction value test, the following applies:

  • Mergers and acquisitions of asset: The assets acquired are taken into account.
  • Acquisition of shares: The assets of the target, including its subsidiaries, are taken into account.
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and last updated on 25-03-2020 by

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