The Philippine Competition Commission (PCC) does not expect the proposed joint venture between Prime Infrastructure Capital Inc. and First Gen Corporation to reduce competition in the country’s energy sector.
In a press release, the PCC detailed the results of its Phase 1 review of the joint venture. The agency’s Mergers and Acquisitions Office assessed two horizontal markets and four vertical markets, concluding that the transaction is unlikely to cause a significant lessening of competition in any of these areas.
As part of the joint venture, Prime Infrastructure will acquire a majority stake in seven holding companies under Lopez-owned First Gen. These holdings include shares in several gas-fired power plants such as the Santa Rita, San Lorenzo, San Gabriel, Avion, and the planned Santa Maria facilities, as well as an LNG terminal facility in Batangas.
Prime Infrastructure, a holding and management company involved in infrastructure development and investment, is a subsidiary of Razon & Co. Inc. It also holds about 45% interest in the Service Contract 38 Consortium, which operates the Malampaya Gas Field through its subsidiaries, Prime Energy Resources Development B.V. and Prime Oil and Gas, Inc.
According to the PCC, while the joint venture will position the companies as the largest player in the renewable energy space post-transaction, this leadership is only by a small margin. The market will remain unconcentrated, with competition being maintained by numerous existing and potential market players.
The commission further noted that in the retail electricity supply market, the combined share of Prime Infrastructure and First Gen will remain well below that of major competitors, and the presence of multiple licensed suppliers, along with customer switching options, will preserve competition.
In the vertical markets, the PCC found no evidence to suggest that the joint venture would give the companies the ability or incentive to engage in anti-competitive foreclosure strategies.
PRIME INFRA PHOTO