The Philippine Competition Commission, the government’s anti-trust body, said Friday it approved the acquisition by port operator International Container Terminal Services Inc. of an additional 15.17-percent stake in Manila North Harbour Port Inc. from Harbour Centre Port Terminal Inc.
ICTSI proposed to acquire an additional 4.55 million shares in North Harbour for P910 million that would make the former the larger shareholder.
Following the proposed transaction, ICTSI would hold 50-percent shares in MNHPI, up from the current 34.83 percent. San Miguel Holdings Corp. would have 43.33 percent; IZ Investment Holdings Inc., 6.5 percent; and Petron Corp., 0.17 percent.
“The transaction approval was hinged on the concession agreements with the PPA [Philippine Ports Authority] and the current regulatory regime. The commission approved the transaction but noted that it may exercise the powers of the anti-trust law if there were changes in the circumstances relevant to the transaction,” said PCC chairman Arsenio Balisacan.
ICTSI is a Filipino company with stakes in port operations and related services for containerized and non-containerized cargoes worldwide.
The company’s subsidiaries currently operate nine ports and one inland container terminal. Its flagship project is the Manila International Container Terminal.
MNHPI, meanwhile, is another local company that operates North Harbour. Its largest shareholders are San Miguel Holdings and ICTSI.
PCC reviewed the transaction to check whether ICTSI’s acquisition would eliminate the potential entry of a provider of port operations services for foreign containerized cargoes in the Port of Manila.
PCC, in a decision on March 14, cleared the transaction after acknowledging the differences in the markets that MICT and North Harbour cater to.
It said that if not for the existing regulatory barriers to entry, the proposed transaction would likely result in a substantial lessening of competition in the relevant market for the provision of port operations services for foreign containerized cargoes in the Port of Manila.
“Were it not for the presence of these existing regulatory barriers to entry, the commission would have had a different conclusion on the proposed transaction,” the agency said.
PCC said that during the review, it found that containerized, bulk and break-bulk cargo handling were distinct markets.
ICTSI operates MICT as a foreign containerized cargo port terminal while MNHPI operates the North Harbour as a domestic multi-purpose cargo and passenger port terminal.
PCC cited the concession agreements entered into by MICT and North Harbour with the Philippine Ports Authority which restrict the type of cargo that may be coursed through MICT and North Harbour.
The PPA, through its memorandum order, reiterated MNHPI’s contractual limitations and prohibited it from providing terminal services to foreign vessels at North Harbour.
It said given the current regulatory regime where North Harbour can only cater to domestic vessels transporting domestic containerized, bulk and break-bulk cargo, the proposed transaction would not lead to a loss of potential competition.