Navigating Philippine M&A in the New Regulatory Era

The Philippine mergers and acquisitions (M&A) landscape is undergoing its most significant transformation in decades. With the implementation of the amended Implementing Rules and Regulations (IRR) of the Philippine Competition Act (PCA) and the recent streamlining of foreign investment negative lists, 2026 presents both unprecedented challenges and opportunities for dealmakers.

“In this new regulatory era, speed alone no longer wins deals—precision in compliance does. The PCC has made it clear: they will scrutinize not just the size of the transaction, but the depth of the due diligence behind it.”

Atty. Mark S. Gorriceta, Chairman

1. The New Competition Rules: Higher Thresholds, Stricter Scrutiny

The Philippine Competition Commission (PCC) introduced amendments to the M&A notification thresholds effective January 2026. The size-of-person (SOP) and size-of-transaction (SOT) values have been adjusted for inflation, meaning fewer transactions require mandatory notification. However, the PCC has also expanded its motu proprio review powers, allowing it to investigate deals that fall below thresholds if they raise substantial competition concerns.

Key threshold changes to note:

• SOP: Increased to ₱6.5 billion (from ₱6.0 billion) for the acquiring entity and ₱6.5 billion for the target.
• SOT: Raised to ₱2.5 billion (from ₱2.2 billion).
• Exemptions: Intra-group mergers and acquisitions involving related entities remain exempt, but the PCC now requires a more stringent “ordinary course of business” justification.

2. Foreign Investment Liberalization: The 12th Regular Foreign Investment Negative List

President Marcos Jr. signed Executive Order No. 98, adopting the 12th Regular Foreign Investment Negative List (RFINL). This list further opens sectors that were previously restricted. Notably:

• Renewable energy: Foreign ownership is now allowed up to 100% in solar, wind, and hydro projects (subject to specific technical conditions).
• Educational institutions: Foreign ownership cap remains at 40%, but the list now allows foreign-funded schools to operate in specific economic zones.
• Retail trade: The minimum paid-up capital requirement for foreign retailers has been reduced to ₱25 million, encouraging more international brands to enter via acquisition.

3. Tax Incentives and the CREATE Act Amendments

The Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act continues to shape M&A valuations. Recent amendments under CREATE More (pending congressional approval) propose:

• A 5% gross income tax (GIT) rate for export-oriented enterprises, down from the current 7%.
• Extended income tax holidays (ITH) of up to 17 years for projects in “lagging” regions.
• Clarified rules on the transfer of tax incentives in an acquisition – a major win for buyers because incentives can now be transferred without a gap period, provided the acquiring entity continues the same qualified activity.

4. Practical Due Diligence Shifts

From our experience advising clients through recent transactions, here are

“In this new regulatory era, speed alone no longer wins deals—precision in compliance does. The PCC has made it clear: they will scrutinize not just the size of the transaction, but the depth of the due diligence behind it.”

Atty. Mark S. Gorriceta, Chairman

the most critical due diligence areas to revisit:

a. Compliance with Data Privacy Act (DPA)

The National Privacy Commission (NPC) has ramped up enforcement. Targets with significant customer data must demonstrate DPA compliance – failure to do so can reduce valuation by 10-15% due to potential penalties and remediation costs.

b. Environmental Compliance Certificates (ECC)

For deals involving real estate, manufacturing, or energy, the Department of Environment and Natural Resources (DENR) now requires ECCs to be reviewed within the last two years. Lapsed ECCs are a red flag.

c. Beneficial Ownership Disclosure

The Securities and Exchange Commission (SEC) now mandates full disclosure of beneficial owners. Failure to identify all ultimate natural persons can stall PCC approval.

5. Timeline and Practical Tips for a Smooth 2026 M&A Process

Based on recent transactions we’ve handled, here’s a realistic timeline:

• Weeks 1-2: Initial due diligence and signing of confidentiality agreements.
• Weeks 3-6: Full legal, tax, and financial due diligence; preliminary PCC assessment.
• Week 7: Filing of notification with the PCC (if thresholds are met) – expect a 30-day review period, extendable to 60 days for complex deals.
• Weeks 8-12: SEC and other regulatory approvals (e.g., BOI, DOE, DENR).
• Week 13: Closing and post-closing integration.

Pro tip: Engage the PCC early through a “pre-notification” conference. This informal meeting can significantly reduce formal review time and surface potential concerns before they become deal-breakers.

6. Looking Ahead: What to Expect in 2027

The PCC is reportedly studying a merger control regime that would include a filing fee based on transaction value (similar to the EU model). Additionally, the SEC is pushing for a fully digital M&A filing system, which could cut approval times by up to 40%. For now, the message is clear: the Philippines is open for business, but deals must be executed with greater regulatory precision than ever before.

Conclusion

Navigating Philippine M&A in 2026 requires a dual focus: seizing the opportunities created by liberalized foreign investment rules while rigorously managing the expanded regulatory oversight of the PCC. Dealmakers who invest in robust due diligence, early regulator engagement, and flexible transaction structures will emerge as leaders in this new era.

Disclaimer: This post is for informational purposes only and does not constitute legal advice. For specific guidance, consult a qualified Philippine legal professional.