Competition Law Overview

Questions and Answers

What constitutes a quorum for the Commission?

Three members

Who may not appear as counsel or agent for any matter pending before the Commission?

Spouse or relative by consanguinity or affinity within the fourth civil degree of any Commissioner, Chairperson, or Executive Director

What is the minimum relevant experience required for the Executive Director of the Commission?

Ten years

What degrees must members of the technical staff possess?

Bachelor’s Degree in Economics Signup and view all the answers

What powers does the PCC have regarding merger control?

Review proposed mergers and acquisitions and prohibit those that substantially prevent competition Signup and view all the answers

The PCC can impose criminal sanctions.

False Signup and view all the answers

Which of the following offices is the Executive Director responsible for?

Communications and Knowledge Management Signup and view all the answers

The Commission members' compensation is exempted from the ___________.

Salary Standardization Act Signup and view all the answers

What is the consequence of the Commission's powers to conduct inspections?

It allows the PCC to enforce compliance. Signup and view all the answers

What is the primary function of the Competition Enforcement Office?

Investigates and prosecutes violations of Sections 14 and 15 Signup and view all the answers

What does corporate control depend on?

All of the above Signup and view all the answers

What is referred to as the 'dominant position' in the context of competition law?

A position of economic strength enabling an entity to control the relevant market. Signup and view all the answers

The SSNIP test refers to a small but significant and non-________ increase in price.

transitory Signup and view all the answers

What constitutes the relevant geographic market?

The smallest area where supply and demand of goods and services can be maintained Signup and view all the answers

The Philippine Competition Commission (PCC) is an executive agency without any quasi-judicial powers.

False Signup and view all the answers

What is the term of office for the Chairperson of the PCC?

Seven years without reappointment. Signup and view all the answers

Which of the following is a qualification for members of the PCC?

All of the above Signup and view all the answers

What does R.A. No. 8180 pertain to?

Deregulating the Downstream Oil Industry and for Other Purposes. Signup and view all the answers

The term 'entity' can refer to which of the following?

All of the above Signup and view all the answers

What action is required for the adoption of any rule by the Commission?

A vote of three members is necessary. Signup and view all the answers

Commissioners of the PCC can hold other employment during their tenure.

False Signup and view all the answers

What is the legal standard for the issuance of an inspection order?

Reasonable suspicion that relevant books, tax records, or other documents which relate to any matter relevant to the investigation are kept in the business premises and other offices, land and vehicles. Signup and view all the answers

Where should applications for inspection orders be filed?

Special Commercial Courts. Signup and view all the answers

What is an inspection order?

An order in writing issued in the name of the Republic of the Philippines, signed by a judge, to search and inspect business premises for information. Signup and view all the answers

What is the duration of an inspection order?

Not to exceed fourteen (14) days, subject to extension. Signup and view all the answers

What are the powers granted to competition authorities during a dawn raid? (Select all that apply)

Enter premises of entities subject to the investigation Signup and view all the answers

What is the consequence of failure to comply with an inspection order?

Punishable with contempt of court under Rule 71 of the Rules of Court. Signup and view all the answers

What is the remedy of an entity whose premises were inspected against the inspection order?

File a written motion with the issuing court to quash the inspection order. Signup and view all the answers

Match the following terms with their definitions:

Divestiture = Requiring an entity to sell off a business unit Structural Remedies = Measures that directly alter market structure Behavioral Remedies = Ongoing measures that modify entity behaviors Inspection Order = Authority to search for relevant documents Signup and view all the answers

What is the standard of proof required in the proceedings before the PCC?

Substantial evidence. Signup and view all the answers

What are the types of remedies to address competition concerns? (Select all that apply)

Structural remedies Signup and view all the answers

What must an entity be able to do to be considered a potential competitor?

Enter the relevant market within a short period of time in response to a price increase. Signup and view all the answers

Which of the following is NOT an indication of bid-rigging?

Bidders offering significantly lower prices Signup and view all the answers

Bid allocation is a common practice in competitive bidding.

False Signup and view all the answers

A combination of horizontal and vertical agreements is known as a ______ arrangement.

hub and spoke Signup and view all the answers

What is required to establish a concerted practice?

Knowingly coordinated limitation of competition Signup and view all the answers

What are horizontal agreements that are prohibited per se considered?

Hardcore cartels Signup and view all the answers

What is the constitutional basis for regulating monopolies?

The State shall regulate or prohibit monopolies when the public interest so requires. Signup and view all the answers

Which of the following are considered the three pillars of competition law?

Abuse of dominant position Signup and view all the answers

Dynamic efficiency is achieved through innovation and technological progress.

True Signup and view all the answers

What does consumer surplus refer to?

The excess of social valuation of a product over the price actually paid. Signup and view all the answers

The condition of no excess supply or wasted output is considered _____ in the market.

efficient Signup and view all the answers

Under conditions of perfect competition, what types of efficiency are achieved?

Allocative efficiency Signup and view all the answers

Monopolies are absolutely prohibited by the Constitution.

False Signup and view all the answers

What are the characteristics of unfair competition?

Injury to a competitor and acts characterized as contrary to good conscience. Signup and view all the answers

What is a natural monopoly?

A situation where economies of scale are so great that competition is not viable. Signup and view all the answers

What constitutes economic concentration?

The extent to which market shares are concentrated among a small number of firms. Signup and view all the answers

Which of the following is NOT an objective under the PCA?

Prevent monopolies at all costs Signup and view all the answers

What does control refer to in competition law?

The ability to substantially influence or direct the actions or decisions of an entity. Signup and view all the answers

A merger refers to the joining of two (2) or more entities into _____ or to form a new entity.

an existing entity Signup and view all the answers

Which of the following describes a relevant market?

The market in which a particular good or service is sold. Signup and view all the answers

What is disgorgement in terms of competition law?

A remedy requiring the return of unlawful profits Signup and view all the answers

The Office for Competition (OFC) is responsible for filing criminal charges under the PCA.

False Signup and view all the answers

What does Section 12 of the PCA authorize?

The imposition of divestiture or the remedy of disgorgement of excess profits. Signup and view all the answers

Which of the following agreements is considered a 'per se prohibited' agreement?

All of the above Signup and view all the answers

The PCC is designated as the government's official representative in __________ matters.

competition Signup and view all the answers

What is the general rule (GR) regarding government entities under PCA?

Not applicable to government entities. Signup and view all the answers

Which of the following is a requirement for an agreement to be considered an anticompetitive agreement?

Two or more separate entities must exist Signup and view all the answers

What is the effect of anticompetitive agreements under Section 14?

They must have the object or effect of substantially preventing, restricting, or lessening competition. Signup and view all the answers

The exchange of commercially sensitive information among competitors is always illegal.

False Signup and view all the answers

Study Notes

Constitutional Basis

The State regulates or prohibits monopolies when public interest requires.
Restrictions on unfair competition and trade combinations are mandated.

General Provisions

Competition Law has three pillars: anticompetitive agreements, abuse of dominant position, and anticompetitive mergers/acquisitions.
Market dynamics involve firms independently striving for customers to achieve profit, sales, or market share.

Consumer Welfare and Market Concepts

Consumer welfare refers to benefits derived from the consumption of goods/services.
Market power is the ability to raise prices above competitive levels, impacting consumer surplus – social valuation exceeds actual price paid.
Equilibrium price ensures resources are efficiently allocated without surplus or shortages.

Competition Efficiency

Under perfect competition, allocative, productive, and dynamic efficiency is realized, maximizing consumer welfare.
Allocative efficiency occurs when resources cannot be reallocated to benefit one without harming another.

Fair vs. Unfair Competition

Fair competition ensures fairness between providers and consumers and among competitors.
Unfair competition involves harmful actions like deceit, leading to competitive injury and violations of ethical standards.

Monopoly and Regulation

Monopolies are not outright prohibited; they may be allowed if properly regulated.
Natural monopolies exist where economies of scale make competition unviable.

Oligopoly and Economic Concentration

Oligopolies consist of few sellers where each considers rivals' reactions in decision-making.
Economic concentration assesses market shares concentrated among few firms, implying reduced competition intensity.

Policy Objectives under the PCA

Enhance economic consumer welfare and promote free and fair competition.
Prevent undue economic concentration that stifles competition.

Scope and Application

The PCA applies to all entities engaged in trade in the Philippines and international trade affecting Philippine markets.
Collective bargaining among employees is exempt from PCA regulations regarding competition.

Conduct and Commission

Conduct includes any undertaking or action that may violate anti-competitive regulations; the Philippine Competition Commission oversees enforcement.

Definitions and Acquisition

Acquisition is the purchase of assets or securities to establish control over another entity.
Control refers to the ability to influence or direct another entity's decisions, presumed with ownership of over 50% voting power.

Relevant Market

Relevant market combining product and geographic market defines the competitive space for goods and services.
Products/services in the same market are interchangeable or substitutable based on characteristics, price, and intended use.

Dominant Position and SSNIP Test

A dominant position is held by an entity capable of controlling market independent of competitors.
SSNIP test determines if goods/services belong to the same market based on the hypothetical monopolist's pricing strategy.### Common Benchmark and Definition
A small but significant increase in market conditions is defined as a 5% to 10% change.
"Non-transitory" refers to a duration of one to three years, varying by market type.

Definition of Entity in Competition Law

Entity encompasses all forms of persons or organizations, whether natural or juristic.
Includes sole proprietorships, partnerships, combinations, or associations, domestic or foreign.
Entities can also be government-owned or controlled.

Relevant Geographic Market

The SSNIP test is employed to ascertain the relevant geographic market.
The relevant geographic market is the smallest area satisfying the SSNIP criteria.

Republic Act No. 8180

Challenges to Republic Act No. 8180 claimed it favors existing oil refineries with a 3%-7% tariff differential.
Tariffs: 3% on crude oil, 7% on refined petroleum, with a planned equalization by 2004.

Market Analysis and Ruling

The ruling identified Petron, Shell, and Caltex as dominant players (an oligopoly) in the oil industry.
The 4% tariff differential creates a barrier to entry, harming potential new competitors who lack refineries.
New entrants face disproportionately high costs increasing competition difficulty.

Philippine Competition Commission (PCC)

Established to implement national competition policy and ensure fair market practices.
Operates as an independent, quasi-judicial body with investigatory and prosecutorial powers.

Composition of the PCC

Comprises a Chairperson and four Commissioners, all citizens and residents of the Philippines.
Members must have a clean moral record and at least ten years of professional experience in relevant fields.
At least one Commissioner must be a lawyer and one an economist.

Appointment and Terms

Chairperson and Commissioners appointed by the President; Chairs serve a seven-year term.
Commissioners must not hold any office or employment during their term and not run for office immediately afterward.

Prohibitions and Disqualifications

Members cannot practice law, engage in businesses, or have financial interests in government contracts.
They must avoid conflicts of interest and cannot appear as counsel in matters before the PCC for two years post-tenure.

Quorum and Voting Requirements

A quorum for the PCC comprises three members; three affirmative votes are required for decisions.
Presence of three is essential, even if there are existing vacancies.

Compensation Framework

Members are exempt from the Salary Standardization Act; compensation based on performance and responsibilities.
Salaries for PCC members must be submitted for Presidential approval.

Administrative Structure

The Executive Director oversees key offices:
- Mergers and Acquisition Office (MAO): Reviews and investigates transactions.
- Competition Enforcement Office (CEO): Prosecutes violations.
- Economics Office: Conducts economic analyses relevant to cases.### Powers and Functions of the Philippine Competition Commission (PCC)
A quorum to conduct merger and enforcement cases consists of three members.
The PCC leads advocacy functions through the Communications and Knowledge Management Office.
Finance and Administration provide essential support for PCC operations.

Technical Staff Qualifications

Technical staff members require at least a Bachelor's degree in economics, law, finance, commerce, engineering, accounting, or management.

Jurisdiction and Enforcement

The PCC holds original and primary jurisdiction over enforcement and implementation of the Philippine Competition Act (PCA).
The Department of Justice (DOJ) retains prosecution powers for criminal actions arising from PCA violations.
The PCC can review proposed mergers and acquisitions to prevent anti-competitive practices.

Jurisdiction Doctrine

Original jurisdiction allows the PCC to hear cases first, while primary jurisdiction recognizes the PCC's expertise in competition matters.

Investigative and Adjudicative Powers

The PCC can investigate violations of the PCA and other competition laws, either motu proprio or upon verified complaints.
Powers include issuing subpoenas, conducting inquiries, and issuing cease and desist orders.

Policy Advisory and Advocacy

The PCC issues advisory opinions and guidelines on competition matters.
It participates in regulatory proceedings, assists in formulating a national competition policy, and promotes pro-competitive government policies.
The PCC can publish studies on anti-competitive behavior to educate the industry and consumers.

Market Surveillance Capabilities

The PCC monitors market practices and conducts consultations with stakeholders to understand competition behavior.

Administrative Functions

The PCC can charge reasonable fees for administrative costs related to merger reviews and has the authority to punish for contempt and impose administrative fines for non-compliance.

Inspection Powers

Subject to court order, the PCC conducts inspections of business premises and can seize relevant documents.
Inspections can include dawn raids to prevent evidence destruction.

Compliance Monitoring

The PCC has authority to monitor compliance with cease and desist orders and consent judgments.
Non-compliance can result in administrative fines and penalties.

Interim Measures in Investigations

Interim measures may include ordering cessation of activities that threaten competition or consumer interests during investigations.

Special Courts

Special Commercial Courts designated by the Supreme Court hear competition law cases and issue inspection orders for PCC investigations.

Legal Standards for Inspections

Courts require reasonable suspicion of relevant documents being kept at specified locations before granting inspection orders.

Consequences of Non-Compliance

Entities failing to comply with inspection orders may face penalties, and ongoing investigations can invoke cooperation with other regulatory bodies for comprehensive enforcement.

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Description

This quiz explores the fundamental principles of competition law, focusing on its constitutional basis and the regulation of monopolies. It provides insights into how competition law affects consumers and markets.