SMC: Holcim takeover is good for PH, consumers
By James A. Loyola
Diversified conglomerate San Miguel Corporation (SMC) assured stakeholders, particularly the Philippine Competition Commission (PCC), that its planned takeover of Holcim Philippines “will be beneficial to consumers, the industry, and our country’s development.”
A logo of San Miguel Corporation (SMC) is seen at a main office in Ortigas city. (REUTERS) MANILA BULLETIN)
In a statement, SMC said it is aware of the concerns raised by the PCC on the company’s proposed acquisition of Holcim Philippines, and it is “committed to achieving a favorable outcome of the review process.”
The PCC said earlier that SMC’s controlling shareholder Top Frontier Investment Holdings, Inc. and Holcim Philippines have proposed a set of voluntary commitments before the antitrust commission and these will be evaluated by the Commission to see if they sufficiently address the competition concerns identified by MAO.
SMC’s planned takeover of cement giant Holcim Philippines has been flagged by the Mergers and Acquisitions Office (MAO) of the PCC for competition concerns.
The PCC said in a statement that there may be a “monopoly, increased market power, and potential collusion arising from the merger.”
In its review, MAO determined that the buyout by SMC subsidiary First Stronghold Cement Industries, Inc. of Holcim Philippines will result in a substantial lessening of competition in the market for grey cement in four key areas in the Philippines.
“In Northwest Luzon, the merger eliminates Top Frontier’s only competitor in the area, resulting in a monopoly in the market for grey cement;
“In Greater Metro Manila, Central Luzon, and Northeast Luzon, the transaction results in high combined market shares, allowing Top Frontier to control a majority of the supply in these areas; and
“In Greater Metro Manila, Central Luzon, and Northeast Luzon, the transaction increases the likelihood of firms to engage in coordinated behavior,” the PCC said.
It also noted that, after the takeover, imports in the relevant markets are insufficient to constrain the merged parties; no new players are likely to or can timely counteract the parties’ market power in Northwest Luzon; and any entrant has little to no ability to constrain the exercise of market power of the parties in Greater Metro Manila, Central Luzon, and Northeast Luzon.
First Stronghold is planning to acquire 85.73 percent of Holcim Philippines which has eight cement facilities in the country. First Stronghold, a holding company created for this transaction, is wholly owned by San Miguel Equity Investments, Inc., which in turn is a subsidiary of SMC — all under Top Frontier .