The Philippine Competition Commission (PCC) has blocked the proposed merger between sugar millers Universal Robina Corporation (URC), Central Azucarera Don Pedro (CADPI) and Roxas Holdings (RHI) over monopoly concerns.

The anti-trust body said it found that URC’s acquisition of its only competitor in the sugarcane milling services market could lead to URC holding a monopoly in Southern Luzon.

PCC chairman Arsenio Balisacan said: “The prohibition prevents this deal from creating a monopoly in the relevant market that could harm the welfare of the sugar cane planters.

“It is the duty of the Commission to prevent the creation of monopolies when applying the merger control powers conferred on it by the Philippine Competition Act.”

“The URC takeover removes its only competitor, erodes the benefits of competition for the sugarcane planters and leaves market power at the hands of a single provider in an area.”

The PCC previously raised competition concerns on URC’s proposed acquisition of CADPI and RHI assets, as a result of which the parties’ voluntarily submitted commitments that failed to sufficiently address competition concerns.

Headquartered in Quezon City, Philippines, URC is engaged in a range of food-related businesses, including the production of packed foods and beverages, sugar, agro-industrial products and bioethanol.

The company’s mills are located in Batangas, Iloilo, Negros Oriental, Negros Occidental, and Cagayan, which produces raw sugar, refined sugar and molasses for supply to other URC business segments and third parties.

It was also noted that while the transaction mainly affects sugarcane farmers in Southern Luzon, the sugar processed from the facilities serve nationwide demand, including that of Metro Manila.

The PPC is concerned that the deal will create market power for URC and enable it to unilaterally reduce the planters’ share in the planter-miller sharing agreement, theoretical recovery rates quoted to planters, and incentives provided to planters.

Balisacan further added: “A merger-to-monopoly deal is among the most detrimental types of business transactions. The URC takeover removes its only competitor, erodes the benefits of competition for the sugarcane planters and leaves market power at the hands of a single provider in an area.”