promoting fair market competition

5.0 Philippine Competition Act (RA 10667)

improve consumer protection

aims to:
help accelerate investment
help accelerate job creation in the country

Enhance economic efficiency

promote free and fair competition in trade, industry and all commercial economic activities
unduly stifle competition
Prevent economic concentration which will control the lessen, manipulate or
production, distribution, trade, or industry that will constrict the discipline of free markets
all forms of anti-competitive agreements
Penalize abuse of dominant position with the objective of protecting consumer welfare and advancing
domestic and international trade and economic development
anti-competitive mergers and acquisitions

5.1 Definition and scope of application

enforceable against any person or entity engaged in any trade, industry and commerce in the PH
Applicability international trade having direct, substantial, and reasonably foreseeable effects in trade, industry,
or commerce in the PH including those that result from acts done outside the PH

collective bargaining agreement conditions of employment

Except
trade associations deliberate
common interest without anti-competitive intent or effect
consequences of your action
Definition of Terms

Acquisition refers to the purchase of securities One (1) entity of the whole or part of another;
or assets, through contract or other means, for Two (2) or more entities over another; or
the purpose of obtaining control by One (1) or more entities over one (1) or more entities
Agreement - any type or form of contract, arrangement, understanding, collective recommendation, or concerted action,
whether formal or informal, explicit or tacit, written or oral;
Conduct - any type or form of undertaking, collective recommendation, independent or concerted action or practice,
whether formal or informal;
Commission - Philippine Competition Commission created under this Act;
Confidential business information - information which concerns or relates to the operations, production, sales, shipments,
purchases, transfers, identification of customers, inventories, or amount or source of any income, profits, losses,
expenditures;
Control - the ability to substantially influence or direct the actions or decisions of an entity, whether by contract,
agency or otherwise;
Dominant position - a position of economic strength that an entity or entities hold which makes it capable of controlling
the relevant market independently from any or a combination of the following: competitors, customers, suppliers, or
consumers;
Entity - any person, natural or juridical, sole proprietorship, partnership, combination or association in any form, whether
incorporated or not, domestic or foreign, including those owned or controlled by the government, engaged directly or
indirectly in any economic activity;
Market - group of goods or services that are sufficiently interchangeable or substitutable and the object of competition,
and the geographic area where said goods or services are offered;
Merger - joining of two (2) or more entities into an existing entity or to form a new entity;
Relevant market - the market in which a particular good or service is sold and which is a combination of the relevant
product market and the relevant geographic market, defined as follows:
(1) A relevant product market comprises all those goods and/or services which are regarded as interchangeable or
substitutable by the consumer or the customer, by reason of the goods and/or services’ characteristics, their
prices and their intended use; and
(2) The relevant geographic market comprises the area in which the entity concerned is involved in the supply and
demand of goods and services, in which the conditions of competition are sufficiently homogenous and which can
be distinguished from neighboring areas because the conditions of competition are different in those areas.
 5.2 Prohibited acts Anti-competitive agreements
Prohibited mergers and acquisitions
Abuse of dominant position

5.2.1 Anti-competitive agreements competitors collude with one another to fix prices of goods or services,
rather than allow prices to be determined by market forces.
price fixing
When competitors stop competing with each other to offer lower prices,
prohibited per se
- consumers end up paying more

bid rigging companies, who participate in a tender process, coordinate their bids rather
basta gawin mo, kahit ano
pa yung intention or
than submit independent bids
effect, automatic violation
competitors agree to limit production or set quotas, or else to
Output limitation coordinate investment plans.
Limiting production levels creates an artificial supply shortage,
substantially preventing,
which could result in higher prices for consumers
restricting or lessening
competition
Market share agree to restrict their sales to geographic areas, effectively
creating local monopolies for each them

improving the production or distribution of goods and services

Defense
promoting technical or economic progress, while allowing consumers a fair share of the resulting benefits

Excluded from competitors

An entity that controls, is controlled by, or is under common control with another entity or entities, have
common economic interests, and are not otherwise able to decide or act independently of each other
 it is not illegal to have a dominant position in the market
5.2.2 Abuse of dominant position the law does not punish being “big”
-

It is however, illegal abuse one’s dominance

prohibited to substantially prevent, restrict or lessen competition
a dominant firm deliberately incurs losses in the short term by setting
predatory pricing prices so low in order to force its competitors out of the market
limiting production, markets or technical development, to the detriment of consumers
restricts output
a dominant player illegitimately refuses to supply
restricts access to/use/development of a new technology
Others:
Selling goods or services below cost
Imposing barriers to entry or committing acts that prevent competitors from growing

I
making a transaction subject to acceptance by the other parties of other obligations which, by their nature or
according to commercial usage, have no connection with the transaction
Setting prices or other terms or conditions that discriminate unreasonably
permissible price differentials:
Socialized pricing for the less fortunate sector of the economy
Price differential which reasonably or approximately reflect differences in the cost of manufacture, sale, or delivery
resulting from differing methods, technical conditions, or quantities in which the goods or services are sold or delivered
to the buyers or sellers;
Price differential or terms of sale offered in response to the competitive price of payments, services or changes in the
facilities furnished by a competitor
Price changes in response to changing market conditions, marketability of goods or services, or volume
Imposing restrictions on the lease or contract for sale or trade of goods or services concerning where, to whom, or
in what forms goods or services may be sold or traded, such as fixing prices, giving preferential discounts or
rebate upon such price, or imposing conditions not to deal with competing entities
 the following are not prohibited or unalwaful
permissible franchising, licensing, exclusive merchandising or exclusive distributorship agreements such as
those which give each party the right to unilaterally terminate the agreement; or
Agreements protecting intellectual property rights, confidential information, or trade secrets
Making supply of particular goods or services dependent upon the purchase of other goods or services
from the supplier which have no direct connection with the main goods or services to be supplied
Directly or indirectly imposing unfairly low purchase prices for the goods or services of, among others,
marginalized agricultural producers, fisherfolk, micro-, small-, medium-scale enterprises, and other
marginalized service providers and producers
Directly or indirectly imposing unfair purchase or selling price on their competitors, customers, suppliers
or consumers, provided that prices that develop in the market as a result of or due to a superior
product or process, business acumen or legal rights or laws shall not be considered unfair prices

5.2.3 Prohibited mergers and acquisitions

Philippine Competition Commission (PCC) shall have the power to review mergers and acquisitions
substantially prevent, restrict or lessen competition in the relevant market or in the market of goods & services

5.2.4 Exceptions

1. when the parties establish either

bring about gains in efficiencies that are greater than the effects of any limitation on competition
faced with actual or imminent financial failure, and the agreement represents the least anti-competitive
arrangement among the known alternative uses for the failing entity’s assets
2. acquired prior to the approval of PCA
3. solely for investment and not used for voting or exercising control
 Burden of Proof
W
The burden of proof for exemptions above lies with the parties seeking the exemption

Finality of Ridings on Mergers and Acquisitions

Merger or acquisition agreements that have received a favorable ruling from the Commission, except when
such ruling was obtained on the basis of fraud or false material information, may not be challenged under PCA
5.3 Covered transactions

5.3.1 Thresholds for compulsory notification

prohibited from consummating their agreement until thirty
(30) days after providing notification to the Commission
Transactions that exceeds P1,000,000,000 (One Billion)

agreement is void and

Effect of no notice administrative fine of 1% to 5% of the value of the transaction

5.3.2 Notifying entity

Parties to a merger or acquisition that satisfy the thresholds are required to notify the Commission before the
execution of the definitive agreements relating to the transaction.
If notice to the Commission is required for a merger or acquisition, then all acquiring and acquired pre-
acquisition ultimate parent entities or any entity authorized by the ultimate parent entity to file notification on
its behalf must each submit a Notification Form (the “Form”) and comply with the procedure set forth The
parties shall not consummate the transaction before the expiration of the relevant periods

In the formation of a joint venture (other than in connection with a merger or consolidation), the contributing
entities shall be deemed acquiring entities, and the joint venture shall be deemed the acquired entity.
 5.3.3 Period of notifications

30 days after providing notification

Request for further information

additional 60 days, beginning of the day the request for information is received by the parties
but not exceeding 90 days from initial notification

“When the periods have expired and no decision has been promulgated for whatever reason, the merger or
acquisition shall be deemed approved and the parties may proceed to implement or consummate it”
Effect of Notification if agreement is prohibited and does not qualify for exemption, the Commission may:
-

1. Prohibit the implementation of the agreement;

2. Prohibit the implementation of the agreement unless and until it is modified by changes specified by the Commission.
3. Prohibit the implementation of the agreement unless and until the pertinent party or parties enter into legally
enforceable agreements specified by the Commission.
Notification Threshold
The Commission shall, from time to time, adopt and publish regulations stipulating:
The transaction value threshold and such other criteria subject to the notification requirement
The information that must be supplied for notified merger or acquisition
Exceptions or exemptions from the notification requirement
Other rules relating to the notification procedures
 Fines and Penalties

Administrative Penalties First Offense - up to P100,000,000

a. Administrative Fines Second Offense - not less than P100,000,000 but not more than P250,000,000

Anti-Competitive Agreements
“In fixing the amount of the fine, the
Abuse of Dominant Position
Commission shall have regard to both the
Compulsory Notification on Mergers and Acquisitions
gravity and the duration of the violation.”
Prohibited Mergers and Acquisitions
b. Failure to Comply With an Order of the Commission
not less than P50,000 up to P2,000,000 for each violation and
similar amount of penalty for each day thereafter until the said entity fully complies
shall only accrue daily beginning 45 days from the time that the said decision, order or ruling was received
c. Supply of Incorrect or Misleading Information

intentionally or negligently, supply incorrect or misleading information in any document, application or other paper
P1,000,000
supply incorrect or misleading information in an application for a binding ruling, a proposal for a consent judgment,
proceedings relating to a show cause order, or application for modification of the Commission’s ruling, order or approval

d. Others not less than P50,000 up to two million pesos P2,000,000

“Schedule of fines shall be increased by the Commission every five (5) years to maintain their real value from the time it was set”

Imprisonment - 2 to 7 years
Criminal Penalties
Fine - not less than P50,000 up to two million pesos P2,000,000