Ricky Razon’s Controlling Stake in Ayala’s Manila Water Approved
The Philippine Competition Commission (PCC) has approved the acquisition of a controlling stake by Trident Water Holdings Company Inc. (Trident Water), the holding firm of Prime Metroline Holdings Inc. (PMHI), in Manila Water Inc. (Manila Water).
Trident Water, led by bilionaire Ricky Razon, acquired a 51 percent-voting interest in Ayala Group’s Manila Water via Trident's subscription to 820 million common shares of stock from the unissued authorized capital stock of Manila Water.
The PCC made the announcement in a news release.
“In its Commission Decision, the PCC finds that the transaction will not likely lead to substantial lessening of competition in the market of the supply of raw water to the East Zone Concession Area. This is because Manila Water, as the sole water distributor in the East Zone geographic market, has a captive customer base and no downstream competitors based on a concession agreement Manila Waterworks and Sewerage System (MWSS). As waterworks is a form of “natural monopoly” allowed by law through regulation, East Zone concessionaire Manila Water is subject to the extensive oversight and regulation by the MWSS in operating within 23 areas including Makati, Mandaluyong, Pasig, Pateros, San Juan, Taguig, Marikina, parts of Quezon City, Manila, and portions of Rizal.
“In the merger review by Mergers and Acquisitions Office (MAO), the merged entity will neither have incentive nor ability to engage in customer or input foreclosure in the said market.
“While PCC found that there is absence of horizontal overlaps between the parties and are not direct competitors, the PCC review noted that a vertical relationship exists between the parties’ notifying group within the water sector before this merger transaction. However, the PCC found that customer or input foreclosure is unlikely given that the arrangement is meant to service the East Zone even beyond the lifetime of Manila Water’s concession. Such foreclosure is deemed unlikely by PCC since operations—including the procurement, development, allocation, rate rebasing, and other supply-and-demand dynamics in the water sector—are highly regulated by MWSS.”
Here's a link to the decision: