THE Philippine Competition Commission (PCC) has given the green light to the proposed acquisition by Ayala Corp. unit AC Logistics Holdings Corp. of the controlling stake in Air 21 Holdings, Inc.
The agency said in a statement on Wednesday that its mergers and acquisitions (M&A) office deemed that the merging parties would not create a dominant market position and substantial lessening of competition.
In its decision dated May 31, the PCC said it “found that the proposed acquisition does not result in substantial lessening of competition in relevant markets within the logistics sector. This is due to substantial competitive constraints exerted by other market players in this sector nationwide.”
It said customers of the services offered by AC Logistics and Air 21 were determined to also engage with multiple service providers, indicating competition in the industry in terms of price and service quality.
In reaching its decision, the PCC looked into the merger’s effects in the national markets of domestic courier and messengerial services; domestic air, sea, and road freight forwarding; nationwide or regional market for trucking services; general warehousing and storage services in Luzon, and cold storage services in Metro Manila and Southern Luzon, since the operations of AC Logistics and Air 21 overlap in some markets.
The PCC said that its M&A office “found that the merging parties would not result in dominant market position given its resulting market shares in the relevant markets.”
It added that the two parties were deemed to have no increased ability nor incentive to engage in anti-competitive foreclosure such as exclusively supplying its own downstream customers or limiting its services to other downstream markets or players.
The PCC said it “deemed it was unlikely for the transaction to effectively limit access of other players to a significant customer base in the same relevant markets.”
In November last year, AC Logistics’ parent firm Ayala Corp. announced the proposed merger in which its unit entered into an exchange note agreement for conversion shares with Air 21, its owner — former Customs chief Alberto D. Lina, and the eight companies in the network.
The conversion shares will result in at least a 60% stake in Air 21, which in turn controls Airfreight 2100, Inc., Air 2100, Inc., LGC Logistics, Inc., Cargohaus, Inc., U-Freight Phils., Inc., U-Ocean, Inc., Waste & Resources Management, Inc., and Integrated Waste Management, Inc.
The merger is the first transaction submitted for voluntary review by the parties under the Bayanihan To Recover As One Act (Bayanihan II) period with the increased threshold of P50 billion, the PCC said.
“The transaction, however, would have also qualified for regular review under pre-Bayanihan threshold conditions,” it added.
Once the Bayanihan II law expires in September this year, firms whose parent company assets exceed P6 billion and whose M&A transactions exceed P2.4 billion will once again be required to notify the PCC. — Revin Mikhael D. Ochave