Philippine Competition Act

• Republic Act No. 10667 is also known as the "Philippine Competition Act".
• Market competition efficiency is deemed a mechanism for allocating goods and services.
• The State aims to reinforce past liberalization measures with safeguards for competitive conditions.
• Equal opportunities promote entrepreneurial spirit, private investments, tech advancement, and resource productivity.
• Market competition benefits consumers by enabling choice over goods/services.
• The State should regulate/prohibit monopolies when public interest requires, disallowing trade restraint or unfair competition.

State Objectives

• Enhance economic efficiency and promote fair competition.
• Establish a National Competition Policy for the Philippines.
• Prevent economic concentration that stifles free markets.
• Penalize anti-competitive practices to protect consumers and advance trade.

Scope and Enforcement

• Applies to anyone in trade, industry, and commerce in the Philippines.
• Covers international trade with direct, substantial, and foreseeable effects in the Philippines.
• Includes actions outside the Philippines that affect trade within.
• Does not apply to collective bargaining by workers/employees.

Definition of Terms

• Acquisition: Buying securities/assets to gain control of an entity.
• Agreement: Any contract, arrangement, or understanding, formal or informal.
• Conduct: Any undertaking or practice, whether formal or informal.
• Commission: The Philippine Competition Commission.
• Confidential business information: Data related to operations, production, sales, etc.
• Control: Ability to influence an entity's decisions.
• Dominant position: Economic strength enabling market control, independently.
• Entity: Any person or organization engaged in economic activity.
• Market: Interchangeable goods/services and the area where they are offered
• Merger: Joining of two or more entities.
• Relevant market: Market of a particular good/service, combining product and geographic markets.
• Relevant product market: Interchangeable or substitutable goods/services based on characteristics, prices, and use.
• Relevant geographic market: Area where conditions of competition are homogenous.

Anti-Competitive Agreements: Prohibited Acts

• Restricting price competition or trade terms.
• Fixing prices at auctions, including bid manipulation.
• Agreements substantially preventing or lessening competition are prohibited.
• This includes controlling production, markets, technical development, or investment.
• Also includes dividing or sharing markets by sales volume, territory, or type of goods/services.
• Agreements that improve production/distribution or promote progress while benefiting consumers fairly may not be violations.
• Entities under common control with shared economic interests are not considered competitors.

Abuse of Dominant Position: Prohibited Acts

• Selling below cost to eliminate competition.
• Barriers to entry that prevent competitors from growing, excluding those from superior products/processes, acumen, or legal rights.
• Making transactions conditional to unrelated obligations.
• Setting discriminatory prices/terms that lessen competition substantially.
• Permissible price differentials include socialized pricing, differing costs, competitive responses, and changing market conditions.
• Restrictions on sales/leases that prevent or lessen competition substantially.
• Permissible agreements include franchising, licensing, exclusive merchandising, and protection of intellectual property.
• Supplying goods/services conditional on buying unrelated items.
• Imposing unfairly low purchase prices on marginalized producers.
• Imposing unfair purchase/selling prices, excluding prices from superior products/processes, acumen, or legal rights.
• Limiting production/markets to prejudice consumers, excluding limitations from superior products/processes, acumen, or legal rights.
• The Act does not prohibit having/acquiring a dominant market share through legitimate means.
• Conduct that improves production/distribution or promotes progress while benefiting consumers fairly may be considered.
• The Commission can still promote fair competition.

Mergers and Acquisitions

• The Commission can review mergers/acquisitions based on relevant factors.
• Parties with transactions exceeding one billion pesos (₱1,000,000,000.00) must notify the Commission 30 days before consummation.
• The Commission can set other notification criteria, like increased market share.
• Consummating an agreement without notification results in a void agreement and a fine of 1-5% of the transaction value.
• The Commission can request more information, extending the review period by 60 days.
• The total review period shall not exceed 90 days from initial notification.
• Mergers/acquisitions are approved if no decision is made after the review periods.
• Information provided to the Commission is confidential unless disclosure is mandatory or consented to.
• Favorable rulings for mergers/acquisitions of certain institutions require a favorable recommendation under the Corporation Code of the Philippines.
• A favorable recommendation from a governmental agency creates a presumption that the merger/acquisition is not a violation.
• The Commission may prohibit the implementation of the agreement, or require modifications to the agreement.

Notification Threshold

• The Commission will adopt and publish regulations about this.
• This includes transaction value and more criteria subject to notification.
• Information supplied for notified merger/acquisition.
• Any relevant exceptions or exemptions to notification.
• Any other rules about notification procedures.

Mergers and Acquisitions: Prohibited Acts

• Merger/acquisition agreements that substantially prevent, restrict, or lessen competition.

Mergers and Acquisitions: Exemptions

• Concentrations with efficiency gains outweighing competition limits.
• Parties facing financial failure where the agreement is the least anti-competitive option.
• Entities are allowed to continue owning stock acquired before the Act's approval, as long as it doesn't violate the provisions.
• Also, the stock acquisition is solely for investment.
• Parties seeking exemption bear the burden of proof, demonstrating significant efficiency gains.
• Favorable rulings from the Commission on mergers/acquisitions cannot be challenged unless obtained via fraud or false information.

Relevant Market: Disposition of Cases

• Factors affecting substitutability among goods/services and geographic boundaries:
• Possibilities of substituting goods/services, domestic or foreign, technological possibilities etc.
• Costs of distribution, raw materials, freight, insurance, import duties, non-tariff restrictions etc.
• Costs and probability of users/consumers seeking other markets.
• National, local, or international restrictions that limit access to supply or consumers.

Control of an Entity: Disposition of Cases

• Control is presumed when a parent owns over 50% of voting power.
• Control exists even with 50% or less voting power when:
• There is powers more than half of voting rights.
• There is power to direct or govern financial and operating policies.
• There is power over the board of directors.
• There is ownership over the assets of the entity.
• There is existence of rights or contracts.

Anti-Competitive Agreement or Conduct: Disposition of Cases

• In determining whether anti-competitive agreement or conduct has been committed, the Commission shall:
• Define the relevant market that is allegedly affected.
• Determining is there is an actual or potential adverse impact.
• Adopt a broad and forward looking perspective, for future market developments.
• Ensuring competition is not substantially restricted.
• Assessing the totality of evidence.

Market Dominant Position: Disposition of Cases

• The Commission shall determine if an entity has market dominant position.
• This includes share of entity in the market.
• The existence of barriers to entry.
• The existence and power of its competitors.
• Is possibilities of access of competitors.
• Is there power of its customers to switch to other goods.
• Recent conducts.
• Regulations of the Act.
• There shall be a rebuttable presumption of market dominant position if the market share of an entity in the relevant market is at least 50%.
• The acquiring, maintaining and increasing of market share shall not considered a violation of the act.