The Philippine Competition Commission (PCC) will no longer take further action on Chelsea Logistics Holdings Corp.’s (CLHC) proposed acquisition of 2 million common shares of Trans-Asia Shipping Lines, Inc.
In a regulatory disclosure, CLHC said PCC in a decision dated January 11, 2019 stated that, based on the conditions provided in the undertaking submitted by CLHC, the commission will no longer take further action on the proposed takeover.
Among the conditions, CLHC said, is its agreement to a price monitoring of passenger and cargo rates by PCC. CLHC also agrees to submit semi-annual reports on all trips of passenger and cargo services in the critical routes; explain all extraordinary rate increases on the critical routes; and maintain the service quality of passenger and cargo routes based on a customer satisfaction index developed by a third-party monitor.
PCC last year nullified CLHC’s takeover of Trans-Asia after determining that the parties failed to file a notification of the acquisition. CLHC and its parent company, Udenna Corp., asked the competition commission to reconsider its decision, and in October 2018, PCC started phase one of its review of the acquisition after CLHC submitted its notification.
Based on PCC’s previous review, it found CLHC’s control of both Trans-Asia and 2Go Group, Inc. (whose mother company, KGLI-NM Holdings, Inc. has also been acquired by CLHC), would substantially lessen competition, affecting roll-on/roll-off passenger (RoPax) shipping services on six legs, namely, the Cebu-Cagayan de Oro, Cagayan de Oro-Cebu, Cebu-Ozamis, Ozamis-Cebu, Cebu-Iligan, and Iligan-Cebu legs.
The same transaction would also undermine competition in cargo shipping services on the same routes, as well as on the Cebu-Zamboanga leg. On these legs, 2Go and Trans-Asia overlap or compete directly with each other.
A wholly owned subsidiary of Udenna and engaged in maritime trade and shipping transport business, CLHC counts among its subsidiaries Chelsea Shipping Corporation, which is engaged in petroleum hauling; Starlite Ferries Inc., involved in domestic shipping; and Worklink Services, Inc., involved in domestic logistics solutions for various local industries.
On the other hand, Trans-Asia is mainly engaged in transporting passengers and cargo.