PCC greenlights Mitsui, KDDI merger

The government’s antitrust body, the Philippine Competition Commission (PCC) announced the greenlight of the proposed joint venture between the subsidiaries of Mitsui & Co., Ltd. (Mitsui) and KDDI Corporation (KDDI).

The proposed merger between Mitsui and KDDI involves amalgamating their subsidiaries Relia and KDDI Evolva.

The decision, promulgated on 13 April 2023, said that KDDI Evolva will be the surviving entity, which is aligned with Mitsui’s strategy to transform Relia into its wholly owned subsidiary.

“After a thorough assessment, it found that the transaction between Mitsui subsidiary Relia, Inc. and KDDI subsidiary KDDI Evolva will not likely result in a substantial lessening, restriction, or prevention of competition in the relevant market,” the PCC decision said.

Mitsui’s Relia specializes in business process outsourcing services, while KDDI is in the business of offering ICT solutions.

The joint venture aims to combine Mitsui’s strategic capabilities with KDDI’s telecommunications expertise, focusing on digital solutions and innovation in areas such as contact center services and IT solutions through KDDI Evolva, the resulting entity.

Key factors

In clearing the proposed joint venture, key considerations include competitive constraints, stating that there is significant competitive pressure from numerous competitors in the market; customer options, which the PCC said customers still have the option to switch to other competitors that can provide the same or similar services; and market entry and expansion, noting that there are low barriers to entry for new businesses seeking to enter the market, as well as low barriers to expansion for existing ones that plan to expand their business.

“The Commission identified the provision of Secure Access Service Edge (SASE) for integrated network solutions on a global scale as the relevant market is assessed in the transaction. As a modern way of keeping networks safe and connected, it uses security tools like firewalls and networking technology to let people access applications and data securely from anywhere on any device,” the PCC said.

Moreover, the PCC stated that while there is a vertical relationship between the parties involving the resale of SASE licenses, this relationship does not significantly impact competition due to the presence of alternative providers and services in the market.

“As mandated by the Philippine Competition Act, the PCC is committed to fostering a competitive business environment by ensuring that mergers and acquisitions contribute to efficient markets and consumer welfare,” according to the PCC.