Competition Commission to further investigate the purchase of San Miguel-Holcim

San Miguel Corporation

On Saturday, the Philippine Competition Commission (PCC) said it would further review the takeover of Holcim Philippines by San Miguel Corporation (SMC), stating the agreement could lead to “cartel-like cooperation between cement companies” in several regions.

PCC concluded its 30-day evaluation of the agreement last month, but chose to continue with Phase 2 to “require a more thorough assessment of the transaction using extra data from the parties and stakeholders,” the committee said in a declaration.

“The Phase 2 evaluation will also evaluate whether the probability of cartel-like cooperation among cement companies operating in the defined geographic regions will increase,” he read.

The market concentration of gray cement, clinker, ready-mix concrete and aggregates may be impacted in the following areas, according to the original evaluation of the PCC:

Ilocos, Cordillera Administrative Region, Central Luzon, National Capital Region,  Calabarzon, Mimaropa, Bicol, Zamboanga, Northern Mindanao, Caraga, Bangsamoro,  Autonomous Region in Muslim Mindanao, Davao del Norte and Soccsksargen.

Cement is a commodity with low product differentiation where products are subject to the same quality norms. ‘ While the transaction is national in scope, the original analysis demonstrates that geographic markets by region have different effects on distributors and customers in terms of manufacturing, distribution and cost.

The Ramon Ang-led firm purchased 85.7 percent of Holcim Philippines in May 2019 for $2.15 billion, following a decision by the Swiss cement manufacturer to decrease its stakes in Southeast Asia.

The agency observed that SMC also has stakes in other cement manufacturing companies such as Northern Cement Corporation, Oro Cemento and Eagle Cement through its First Stronghold Cement Industries Inc. subsidiary.

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