PCC Case No. M-2018-002 (MOA Case No.

M-39-2017)

In the Matter of the Proposed Acquisition by Chelsea Logistics Holdings Corporation of

Shares in KGLI-NM Holdings, Inc.

Chelsea Logistics Holdings Corporation, KGLI-NM Holdings, Inc.

Facts:

Chelsea, a wholly owned subsidiary of Udenna Corporation, a corporation organized and

registered with the Philippine SEC. Chelsea, through subsidiaries, is engaged in the shipping
transport business. Udenna is Chelsea’s UPE which is a domestic holding company with office
located in Davao City. It has a total fleet of 52 vessels.
KGLI-NM Holdings, Inc. is a domestic corporation borne out of partnership between Negros
Holdings and Management Corp (UPE) and KGL Investment BV (KGLI-BV), a private liability
company organized under the laws of The Netherlands. KGLI-NM was created to won shares in
Negros Navigation Company, Inc., a holding company engaged in passenger and cargo
shipping and support services. One of the subsidiaries of Negros Navigation is 2GO Group, Inc.
which has a fleet of 26 vessels.
The respondents notified MAO of the proposed acquisition.
The MAO identified competition concerns arising from the transaction during the Phase 1
Review. During the Phase 2 Review, Chelsea negotiates to voluntary address the competition
concerns.

MAO argued that:

a. Transaction eliminates existing competition in the market
b. The market for domestic shipping is conducive for anti-competitive coordinated conduct
c. Barriers to entry are high

Issue: WON the transaction is likely to prevent, lessen or restrict competition in the relevant
market.

Held:

1. Merger refers to the joining of two (2) or more entities into an existing entity or to form a new
entity. Section 4 of PCA provides that Acquisition refers to the purchase of securities or assets,
through contract or other means, for the purpose of obtaining control by:
(1) One (1) entity of the whole or part of another;
(2) Two (2) or more entities over another; or
(3) One (1) or more entities over one (1) or more entities;
The transaction qualifies as a merger under the law.
2. Control refers to the ability to substantially influence or direct the actions or decisions of an
entity, whether by contract, agency or otherwise. Udenna will have the power, post-transaction,
to direct the operating policies of 2GO Group.

3. The significant increase in market concentration will result post-transaction. There will be
merger monopoly. The removal of the competitive constraint that the respondent exercise
against each other would lead to substantial lessening of competition in the relevant markets.

4. Competitive constraint from new entrants or from the expansion of existing market
participants is unlikely.

5. Respondents claim of efficiencies are unsubstantiated.