Competition body flags possible monopoly in cement industry with San Miguel-Holcim merger

enablePagination: false
maxItemsPerPage: 10
maxPaginationLinks: 10

The Philippine Competition Commission flags San Miguel Corporation's planned buyout of Holcim Philippines, saying it could potentially lead to a monopoly in the cement industry. (FILE PHOTO)

Metro Manila (CNN Philippines, January 31) — The anti-trust body has flagged a planned cement company buyout, saying it could potentially lead to an industry monopoly.

In a Friday statement, the Philippine Competition Commission's (PCC) Merger and Acquisitions Office (MAO) said San Miguel Corporation's (SMC) planned takeover of Holcim Philippines could lead to "monopoly, increased market power, and potential collusion" in the sector, particularly for four big markets.

San Miguel unit First Stronghold Cement Industries, Inc. first revealed its plan to buy 5.5 billion shares in Holcim for $2.15 billion (about ₱127 billion) in May 2019, which triggered the PCC review of the transaction. This would give the cement maker an 85.73 percent stake in Holcim, making it the controlling shareholder.

Holcim Philippines, a unit of global giant LafargeHolcim Ltd., manufactures and distributes grey cement and its aggregates in eight facilities.

SMC President and Chief Operating Officer Ramon Ang also serves as chairman of Eagle Cement Corporation, the PCC said. All these companies fall under the umbrella firm Top Frontier Investment Holdings, Inc.

The competition body said the SMC-Holcim merger would eliminate Top Frontier's only competitor in Northwest Luzon and will make it very hard for any new player to enter the cement distribution market in Greater Metro Manila, Central Luzon, and Northeast Luzon.

"Top Frontier and Northern Cement were reported to have coordinated marketing strategies and exert influence on the board of directors of each other," the PCC said, adding that the holding company "has access to sensitive corporate information of Northern Cement."

CNN Philippines has sought for SMC's comment on the issue.

The MAO also said that Top Frontier "exercises control and influence" over Northern Cement's policies and operations," even if the company owns a 35 percent stake on paper.

PCC has put the deal under a more thorough review since September 2019, citing the need for a more detailed analysis of market implications should the deal push through. It added that Top Frontier and Holcim Philippines have proposed a set of "voluntary commitments" to diffuse monopoly concerns, but these will still be reviewed by the regulator.