Phil Competition Act
Phil Competition Act
Phil Competition Act
The PCA is the primary law in the Philippines enacted to promote and protect market
competition. The law defines, prohibits, and penalizes anti-competitive practices, with
the aim of enhancing economic efficiency and promoting free and fair competition in
trade, industry, and all commercial economic activities. Its key prohibitions include
entering into anti-competitive agreements, abusing a dominant market position, and
forming anti-competitive mergers and acquisitions (M&As).
The PCA covers any person or entity engaged in trade, industry, and commerce in the
Philippines. The law also applies to international trade that may impact trade, industry,
and commerce in the country. The law, however, does not apply to collective bargaining
agreements or arrangements between workers and employers and activities to facilitate
collective bargaining agreements in respect of conditions of employment.
For more information, see PCA Chapter 1, Section 3 and Chapter 8, Section 48
The OFC (Office for Competition) under the Department of Justice (DOJ-OFC) shall
only conduct preliminary investigation and undertake prosecution of all criminal offenses
arising under the PCA and other competition-related laws.
For more information, see PCA Chapter 2, Sections 5 & 13 and Chapter 7, Section 31
WHAT ARE THE POWERS AND FUNCTIONS OF THE PCC?
As the Philippines’ antitrust authority, the PCC is mandated to exercise the following
powers and functions, among others:
(a) Conduct inquiry, investigate, and hear and decide on cases involving any violation of
this Act and other existing competition laws:
a. motu proprio
b. upon receipt of a verified complaint from an interested party
c. upon referral by the concerned regulatory agency, and institute the appropriate civil or
criminal proceedings;
(b) Review proposed mergers and acquisitions, determine thresholds for notification,
determine the requirements and procedures for notification, and upon exercise of its
powers to review, prohibit mergers and acquisitions that will substantially prevent,
restrict, or lessen competition in the relevant market;
(c) Monitor and undertake consultation with stakeholders and affected agencies for the
purpose of understanding market behavior;
(d) Upon finding, based on substantial evidence, that an entity has entered into an anti-
competitive agreement or has abused its dominant position after due notice and
hearing, stop or redress the same, by applying remedies, such as, but not limited to,
issuance of injunctions, requirement of divestment, and disgorgement of excess profits
under such reasonable parameters that shall be prescribed by the rules and regulations
implementing this Act;
(e) Conduct administrative proceedings, impose sanctions, fines or penalties for any
noncompliance with or breach of this Act and its implementing rules and regulations
(IRR) and punish for contempt;
(f) Issue subpoena duces tecum and subpoena ad testificandum to require the
production of books, records, or other documents or data which relate to any matter
relevant to the investigation and personal appearance before the Commission, summon
witnesses, administer oaths, and issue interim orders such as show cause orders and
cease and desist orders after due notice and hearing in accordance with the rules and
regulations implementing this Act;
(g) Upon order of the court, undertake inspections of business premises and other
offices, land and vehicles, as used by the entity, where it reasonably suspects that
relevant books, tax records, or other documents which relate to any matter relevant to
the investigation are kept, in order to prevent the removal, concealment, tampering with,
or destruction of the books, records, or other documents;
(h) Issue adjustment or divestiture orders including orders for corporate reorganization
or divestment in the manner and under such terms and conditions as may be prescribed
in the rules and regulations implementing this Act. Adjustment or divestiture orders,
which are structural remedies, should only be imposed:
(2) Where any equally effective behavioral remedy would be more burdensome for the
enterprise concerned than the structural remedy. Changes to the structure of an
enterprise as it existed before the infringement was committed would only be
proportionate to the substantial risk of a lasting or repeated infringement that derives
from the very structure of the enterprise;
(i) Deputize any and all enforcement agencies of the government or enlist the aid and
support of any private institution, corporation, entity or association, in the
implementation of its powers and functions;
(j) Monitor compliance by the person or entities concerned with the cease and desist
order or consent judgment;
(k) Issue advisory opinions and guidelines on competition matters for the effective
enforcement of this Act and submit annual and special reports to Congress, including
proposed legislation for the regulation of commerce, trade, or industry;
(l) Monitor and analyze the practice of competition in markets that affect the Philippine
economy; implement and oversee measures to promote transparency and
accountability; and ensure that prohibitions and requirements of competition laws are
adhered to;
(m) Conduct, publish, and disseminate studies and reports on anti-competitive conduct
and agreements to inform and guide the industry and consumers;
(o) Assist the National Economic and Development Authority, in consultation with
relevant agencies and sectors, in the preparation and formulation of a national
competition policy;
(q) Promote capacity building and the sharing of best practices with other competition-
related bodies;
(r) Advocate pro-competitive policies of the government by:
(1) Reviewing economic and administrative regulations, motu proprio or upon request,
as to whether or not they adversely affect relevant market competition, and advising the
concerned agencies against such regulations; and
(s) Charging reasonable fees to defray the administrative cost of the services rendered.
While it has original and primary jurisdiction in the enforcement and regulation of all
competition-related issues, the PCC works with relevant sector regulators on matters
where their expertise and knowledge on the sector are critical.
For more information, see PCA Chapter 2, Section 12 and Chapter 7, Section 32
Under the PCA, there are anti-competitive agreements that are per se prohibited
(Section 14[a]) and there are agreements that are prohibited for having an anti-
competitive object or effect (Section 14[b] and [c]).
These anti-competitive agreements that are inherently illegal and require no further
inquiry into their actual effect on the market or the intentions of the parties who engaged
in the illegal act or agreement. The Philippine Competition Act classifies price fixing and
bid rigging as per se violations.
PRICE FIXING
Illustrative case:
In 2007, the European Commission fined three Dutch brewers for price-fixing of beer in the
Netherlands. Heineken, Grolsch, and Bavaria paid a total of 273.7 million Euros while a fourth
brewer, InBev, did not receive a fine as it participated in the Commission’s leniency program.
The Commission found that between 1996 and 1999 at least, the four brewers held
numerous unofficial meetings, during which they coordinated prices and price increases
of beer in the Netherlands. Evidence adduced, including handwritten notes, confirmed
the dates and places of these unofficial meetings. The companies were determined to
have coordinated prices for both “on-trade” (consumption on the premises, such as bars
and pubs) and “off-trade” (sale through supermarkets and the like) segments of the beer
market in the Netherlands. They also coordinated occasionally on non-pricing aspects,
such as conditions offered to individual customers in the on-trade segment. The
Commission further found evidence that the brewers were aware that their actions were
illegal, as they tried to conceal their activity through the use of code names and
hotels/restaurants as venues for their meetings.
BID RIGGING
Bid-rigging involves fixing prices at an auction or any form of bidding, including cover
bidding, bid suppression, bid rotation, and market allocation, among others. Bid-rigging
usually occurs when parties participating in a tender coordinate their bids rather than
submit independent proposals.
Illustrative case:
In 2013, the Ontario Superior Court of Justice fined a Japanese automobile parts company
CAD5 million for conspiring with other suppliers to rig the bids for the supply of parts to the 2001
and 2006 Honda Civic models fabricated in Canada. Furukawa Electric Co., Ltd., a supplier of
electrical boxes (i.e., fuse boxes, relay boxes, and junction blocks) used in motor vehicles, was
among the pre-qualified suppliers of Honda Canada. When Honda called for supplier quotes,
Furukawa coordinated with its Japan-based competitors regarding their price quotations or bids.
These meetings resulted in an arrangement whereby Furukawa would earn the contract for the
tender. Consequently, Furukuwa was awarded the contract to supply the automobile parts of the
2001 and 2006 models of the Honda Civic. From 2000 to 2005, the estimated sales amounted
to CAD16.5 million. The Competition Bureau learned of the international bid-rigging conspiracy
through its Leniency Program, where Furukawa offered to help the Bureau in the investigation of
the case, which started in 2009.
For more information, see Canada’s Competition Bureau. April 4, 2013. CAD 5 million
Fine for a Japanese Supplier of Motor Vehicle Components. Court File No. 13086
Not per se violations are other anti-competitive agreements prohibited by the law which
have the object or effect of substantially preventing, restricting, or lessening
competition. Since these agreements are not per se illegal, the PCC needs to conduct
inquiries to determine whether they restrict competition and violate the PCA.
SUPPLY RESTRICTION
In 2010, the Builders’ Association of India filed a complaint against the Cement Manufacturers’
Association (CMA) and the cement manufacturing companies involved for engaging in a cartel
arrangement. Competitors were alleged to have discussed various confidential business
information through the CMA, such as prices and quantity of production, which led to an
agreement of controlling the supply of cement products in the region. After investigation, ten
cement manufacturing companies were found guilty of artificially restricting their output which
led to price hikes of cement products across India. The Competition Commission of India found
the parties guilty of breaching the 2002 Competition Act of India and imposed penalties
amounting to INR63.17 billion.
For more information, see Competition Commission of India. August 31, 2016. CCI
imposes penalties upon cement companies for cartelization. Case No. 29/2010.
MARKET SHARING
Illustrative case:
In 2011, two pharmaceutical companies admitted to dividing the market between them in
providing prescription medicines to care homes in England. From May to November 2011,
Tomms Pharmacy, a trading company under the subsidiaries of Hamsard 3149, and Lloyds
Pharmacy Limited, agreed to distribute medical products in their pre-assigned markets only,
resulting in limited choices of prescription medicines for consumers. The Office of Fair Trading
(OFT) found that the arrangement breached the 1998 Competition Act of England. The OFT
fined Hamsard the amount of GBP387,856; however, under its Leniency Program, OFT granted
100 percent reduction to Lloyds for disclosing the agreement.
For more information, see Decision of the Office of Fair Trading. Market sharing
agreement and/or concerted practice in relation to the supply of prescription medicines
to care homes in England. March 20, 2014. Case CE/9627/12.
WHAT ARE THE EXCEPTIONS TO THE COVERAGE OF ANTI-COMPETITIVE
AGREEMENTS?
Agreements not falling under Section 14(a) and 14(b) of the PCA that have an anti-
competitive object or effect, but nevertheless contribute to improving production or
distribution of goods or services within the relevant market, or promoting technical and
economic progress while allowing consumers a fair share of the resulting benefit may
not necessarily be considered anti-competitive. (Note: This only applies to Section 14
(c) of the PCA).
It is not illegal to have a dominant position in the market; however, it is illegal to abuse
one’s dominance.
In determining the control of an entity, the Commission may consider the following:
Control is presumed to exist when the parent owns directly or indirectly, through
subsidiaries, more than one half (1/2) of the voting power of an entity, unless in
exceptional circumstances, it can clearly be demonstrated that such ownership does not
constitute control. Control also exists even when an entity owns one half (1/2) or less of
the voting power of another entity when:
(a) There is power over more than one half (1/2) of the voting rights by virtue of an
agreement with investors;
(b) There is power to direct or govern the financial and operating policies of the entity
under a statute or agreement;
(c) There is power to appoint or remove the majority of the members of the board of
directors or equivalent governing body;
(d) There is power to cast the majority votes at meetings of the board of directors or
equivalent governing body;
(e) There exists ownership over or the right to use all or a significant part of the assets
of the entity;
(f) There exist rights or contracts which confer decisive influence on the decisions of the
entity
Dominance can exist either on the part of one firm (single dominance) or of two or more
firms (collective dominance). In determining whether a business has a market dominant
position, the Commission will consider the following factors:
The share of the entity in the relevant market and whether it can fix prices on its own or
restrict supply in the relevant market;
The competitors’ shares in the relevant market;
Existence of barriers to entry and the elements which could change both the barriers and
the supply from competitors;
Existence and power of competitors;
Credible threat of future expansion by competitors or entry by potential competitors;
Market exit of competitors;
Bargaining strength of customers;
Possibility of access by competitors or other enterprises to its sources of inputs;
Power of its customers to switch to other goods or services;
Recent market behavior;
Ownership, possession, or control of infrastructure which are not easily duplicated;
Technological advantages or superiority, compared to other competitors;
Access to capital markets or financial resources;
Economies of scale and scope;
Vertical integration; and
Existence of a highly developed distribution and sales network.
For more information, see PCA Chapter 1, Section 4(g); PCA Chapter 5, Section
27; and PCA Implementing Rules and Regulations, Rule 8
The PCA prohibits entities from abusing their dominant position in the relevant market
by engaging in conduct that would substantially prevent, restrict, or lessen competition.
Selling goods or services below cost to drive competition out of the market;
Imposing barriers to entry or committing acts that prevent competitors from growing
within the market;
Making a transaction subject to acceptance by other parties who have no connection to
the transaction;
Setting prices or other terms or conditions that discriminate unreasonably between
customers or sellers of the same goods or services;
Imposing restrictions on the lease or contract for sale or trade of goods or services
concerning where, to whom, or in what form a good or service may be sold or traded;
Making supply of particular goods or services dependent upon the purchase of other
goods or services from the supplier;
Imposing unfairly low purchase prices for the goods or services of marginalized service
providers and producers, such as farmers, fisherfolk, and micro, small, and medium
enterprises (MSMEs);
Imposing unfair purchase or selling price on competitors, customers, suppliers or
consumers; and
Limiting production, markets or technical development to the prejudice of consumers.
Illustrative case:
In a Statement of Objections filed in March 2019, the PCC Enforcement Office charged Urban
Deca Homes (UDH) Manila Condominium Corporation and 8990 Holdings, Inc. with abuse of
dominance. This was due to UDH’s imposition of a sole internet service provider (ISP) on its
residents, preventing them from availing themselves of alternative fixed-line ISPs. The
Enforcement Office, the PCC’s investigative and prosecutorial arm, found that UDH’s exclusive
partnership with Itech Rar Solutions prevented the entry and access of other providers in UDH
Manila. It also found that UDH Manila’s property manager blocked other ISPs from installing
fixed-line internet on units and from marketing their services to interested residents. The probe
was triggered by numerous complaints posted by unit owners and tenants of UDH Manila in
PCC’s Facebook account. The complainants claimed they were prevented from getting other
ISPs even if the in-house Fiber to Deca Homes service was slow, expensive, and unreliable.
For more information, see PCA Chapter 3, Section 15 (a), (d), (e) and (i)
Illustrative case:
The PCC blocked the merger of two sugar millers in Southern Luzon—Universal Robina
Corporation (URC) and Central Azucarera Don Pedro, Inc. (CADPI)-Roxas Holdings, Inc. (RHI).
In a Commission decision issued in January 2019, the PCC found that URC’s buyout of its only
competitor in the sugarcane milling services market leads to a monopoly in Southern Luzon.
The PCC’s Mergers and Acquisitions Office earlier raised competition concerns on URC’s
proposed acquisition of CADPI and RHI assets. In response, the merging parties submitted their
proposed voluntary commitments, but failed to sufficiently address competition concerns raised
by PCC. URC’s sugar mill is in Balayan while CADPI-RHI’s milling facilities are in Nasugbu.
While both mill operators are in Batangas, the monopoly to be created by the merger will
substantially lessen competition in the sugar milling services market not only in Batangas, but
also in Cavite, Laguna, and Quezon. The PCC’s market investigation earlier showed that
farmers stand to lose the benefits of competition due to the merger, especially in terms of
planters’ cut in sharing agreements, sugar recovery rates, and incentives.
Illustrative case:
In 2017, Alipay Singapore Holding Pte. (Alipay) proposed to acquire Globe Fintech
Innovations, Inc. (Mynt). After its Phase 1 review, the PCC flagged a potential
competition concern in the non-bank electronic money market. However, following a
Phase 2 review, Mynt was found to have no incentive to block entry or expansion of
other players in the market. Also, other payment options (e.g., cash) limit the market
power which Mynt may exercise. Alipay is owned by Ant Financial Group, which
provides a digital platform for financial services. Mynt operates G-Xchange Inc., which
handles the “G-cash,” a micropayment service making the mobile phone into a virtual
wallet; and Fuse Lending Inc, which is a tech-based lending company.
Parties to a merger or acquisition agreement where the size of transaction and size of
person/party exceed the thresholds set annually by the PCC are required to notify the
Commission of such agreement before consummating the transaction. The annual
adjustment of thresholds for compulsory notification is based on the Philippine Statistics
Authority’s official estimate of the nominal gross domestic product (GDP) of the previous
year.
For more information, see PCA Chapter 4, Sections 17 and 19 (a); PCC Rules of
Merger Procedure; PCC Memorandum Circular No 18-001; and PCC Commission
Resolution No. 02-2020
Under the Implementing Rules and Regulations of the PCA (IRR), the notifying
entity/entities refer to the following parties:
The acquiring and acquired parties to the notifiable M&A and their ultimate parent
entities.
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.
The PCC has the authority to review or investigate, motu proprio or on its own initiative,
any transaction that may result in substantial lessening or restriction of competition in a
market. Motu proprio means that, even without notification, the PCC may commence a
review of the proposed transaction.
In April 2018, the PCC began a motu proprio review of the acquisition by ride-hailing
service provider Grab Holdings, Inc. (GHI) and MyTaxi.PH, Inc. (MTPH) of its
competitor, Uber B.V. (UBV) and Uber Systems, Inc. (USI). The PCC’s Mergers and
Acquisitions Office issued a Statement of Concerns (SOC) in May. The competition
concerns flagged by the SOC included price increases and service deterioration arising
from the merger of the country’s two biggest ride-hailing apps. Amid the review, Grab
offered to address the competition concerns, which was the basis of the PCC’s
subsequent decision clearing the merger subject to conditions.
Joint ventures of private entities formed for both solicited and unsolicited public-private
partnership (PPP) projects may be exempted from compulsory notification. The PCC
however can modify or rescind, among others, the transaction value threshold and other
criteria subject to compulsory notification and the exceptions or exemptions from the
notification requirement.
For more information, see PCA Chapter 4, Section 19, PCC Memorandum Circular No.
19-001and PCC Memorandum Circular No. 20-002
A land acquisition not for the purpose of obtaining control by one (1) or more entities through
contract or other means is not subject to the compulsory notification requirement under the PCA
and its IRR. A land acquisition is not for the purpose of obtaining control when the following
requisites are present:
1. The acquiring entity will not obtain control over an acquired entity as a result of the
acquisition; or
2. The acquiring entity will not obtain control over a part of an acquired entity as a result of
the acquisition:
(i) The land to be acquired does not contain improvements that constitute an operating
segment as defined under Section 6 that will result in a horizontal or vertical relationship
between the Notifying Group of the acquiring and acquired entities; and
(ii) The land to be acquired does not contain improvements that may be considered as
an essential facility, as defined under Section 7.
If there are other shareholders who own or control shares in the holding company which
will have the ability to control the combined entities after the consummation of the
transaction, the transaction will be covered by the compulsory notification requirement.
The relevant market refers to the market in which a particular good or service is sold
and which comprises two dimensions: the relevant product market and the relevant
geographic market. Each aspect is 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.
Possibilities of substituting goods and services with other domestic or foreign products,
considering technological possibilities, availability of substitute products to consumers,
and the time required for such substitution;
Cost of distribution of goods and services, along with its raw materials, and supplements
and substitutes from other areas and abroad, considering freight, insurance, import
duties, and non-tariff restrictions; the restrictions imposed by economic agents or by their
associations; and the time required to supply the market from those areas;
Cost and probability of users or consumers seeking other markets; and
National, local or international restrictions which limit the access by users or consumers
to alternate suppliers, or the access by suppliers to alternate consumers.
See PCA Chapter 1, Section 4; Chapter 5, Section 24; and PCA Implementing Rules
and Regulations, Rule 5
For more information, see PCA Chapter 5, Section 26 and PCA Implementing Rules
and Regulations, Rule 7
VIII. FORBEARANCE (the act of delaying from enforcing a right, obligation or
debt)
The Commission, motu proprio or upon application, prior to its initiation of an inquiry,
may forbear from applying the provisions of the PCA and its IRR, for a limited time, in
whole or in part, in all or specific cases, on an entity or group of entities, if in its
determination:
Enforcement is not necessary to the attainment of the policy objectives of the PCA;
Forbearance will neither impede competition in the market where the entity or group of
entities seeking exemption operates nor in related markets;
Forbearance is consistent with public interest and the benefit and welfare of the
consumers; and
Forbearance is justified in economic terms.
Provided, that forbearance will be granted for a maximum period of one year. Any
extension to the period will have to be expressly approved by the Commission. Any
extension of the duration of an exemption shall not be longer than one year.
For more information, see PCA Chapter 5, Section 28 and PCA Implementing Rules
and Regulations, Rule 9