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The Philippine Competition Commission approved the proposed joint venture between the Cavite provincial government and SPIA Development Consortium for the development of Sangley Point International Airport Project in Cavite
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In its decision, PCC determined the transaction is unlikely to result in a substantial restriction of competition in the relevant market
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PCC found the companies working together on the project do not have overlapping businesses, and that the presence of numerous companies in the market helps in sustaining competition
The Philippine Competition Commission (PCC) approved the proposed joint venture (JV) between the Cavite provincial government and SPIA Development Consortium (SDC) for the development of the Sangley Point International Airport (SPIA) Project in Cavite City.
In its decision, PCC determined that the proposed transaction is “not likely to result in a substantial lessening, restriction, or prevention of competition in the relevant market.”
In addition, “due to the limited scope of the SPIA and the respective roles of the Parties, it appears that the joint venture will not lead to changes in the structure nor dynamics of the relevant market,” the PCC decision said.
SDC and the Cavite provincial government on February 6, 2023 signed a JV and development agreement for the $11-billion SPIA Project. The public-private partnership (PPP) project will be implemented through a JV development agreement with the parties involved in SDC being House of Investments, Inc. (HOI), Cavitex Holdings Inc., Samsung C&T Corp., MacroAsia Corp., Munich Airport International GmbH, and Ove Arup & Partners Hongkong Ltd.
Last July, HOI disclosed that it received on July 23 the PCC resolution clearing the transaction.
READ: PCC clears Cavite, SDC deal to develop Sangley airport
In a statement, PCC said its decision focused on three key points: competition in the construction services market, the relationship between the parties as major players in the market, and the possibility of overlapping businesses.
PCC said it “found that competition between construction companies was robust due to the presence of numerous qualified contractors in the construction services market. Should the parties themselves decide to limit competition, consumers will still have the ability to explore other options in the market due to the numerous available choices.”
PCC also “examined the relationship between House of Investments and EEI Corporation (EEI), a major construction company. Despite House of Investments owning a majority stake in EEI, the Commission decided that EEI does not have enough market power to block other companies from getting what they need or finding customers. Additionally, having Samsung C&T Corp. as the main contractor for the airport project helps ensure fair competition.”
Finally, PCC “found that the companies working together on this project do not have overlapping businesses, and that the presence of numerous companies in the market helps in sustaining competition.”
PCC “noted that even if the companies involved wanted to limit their suppliers’ options, they would not have enough market power to do so. Additionally, the presence of strong competitors like Megawide Construction Corp. and Makati Development Corp. helps to prevent any unfair competitive practices by the joint venture.”
SPIA is envisioned as a two-runway airport with annual capacity of 80 million passengers, expandable to four runways that can handle as many as 130 million passengers a year.
The airport project aims to provide a premium gateway that will initially serve as an alternative to Ninoy Aquino International Airport (NAIA) and is designed to meet an expected increase in demand for air transport in the next 30-40 years.
The project includes the construction of a four-kilometer connector road with provisions for rail connectivity, as well as fully-integrated logistics and aviation support facilities.
With the development of the first runway, SPIA can operate as a satellite runway to immediately relieve the extreme congestion of the runway at NAIA.
The consortium said the SPIA development is expected to create 50,000 jobs and be a catalyst project to bring in foreign direct investment that will promote trade and economic development.
SDC on September 14, 2022, was officially awarded the contract after no firm challenged the consortium’s unsolicited proposal. SDC submitted its unsolicited proposal for a JV with the Cavite provincial government to develop SPIA in 2021, after the latter declared as failed the second bidding for the project in October 2021.
