pca

• Philippine Competition Act (PCA)


  The primary law in the Philippines enacted to promote and protect market competition. It 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.
• Key prohibitions under the PCA

  • Entering into anti-competitive agreements
  • Abusing a dominant market position
  • Forming anti-competitive mergers and acquisitions (M&As)
• Entities covered by the PCA

  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 PCA 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.
• Philippine Competition Commission (PCC)


  An independent quasi-judicial government agency mandated to implement the national competition policy and enforce the PCA. It has original and primary jurisdiction over the enforcement and implementation of the PCA and its Implementing Rules and Regulations (IRR).
• Department of Justice Office for Competition (DOJ-OFC)

  Shall only conduct preliminary investigation and undertake prosecution of all criminal offenses arising under the PCA and other competition-related laws.
• Powers and functions of the PCC

  • Conduct inquiry, investigate, and hear and decide on cases involving any violation of the PCA
  • Review proposed mergers and acquisitions, determine thresholds for notification, and prohibit mergers and acquisitions that will substantially prevent, restrict, or lessen competition
  • Monitor and undertake consultation with stakeholders and affected agencies
  • Stop or redress anti-competitive agreements or abuse of dominant position
  • Conduct administrative proceedings, impose sanctions, fines or penalties
  • Issue subpoena duces tecum and subpoena ad testificandum
  • Upon order of the court, undertake inspections of business premises and other offices
  • Issue adjustment or divestiture orders
  • Deputize any and all enforcement agencies of the government or enlist the aid and support of any private institution, corporation, entity or association
  • Monitor compliance with cease and desist order or consent judgment
  • Issue advisory opinions and guidelines on competition matters
  • Monitor and analyze the practice of competition in markets
  • Conduct, publish, and disseminate studies and reports on anti-competitive conduct and agreements
  • Intervene or participate in administrative and regulatory proceedings
  • Assist the National Economic and Development Authority in the preparation and formulation of a national competition policy
  • Act as the official representative of the Philippine government in international competition matters
  • Promote capacity building and the sharing of best practices with other competition-related bodies
  • Advocate pro-competitive policies of the government
  • Charge reasonable fees to defray the administrative cost of the services rendered
• Anti-competitive agreements


  Agreements between or among competitors that substantially prevent, restrict or lessen competition. Such agreements may be in the form of a contract, arrangement, understanding, collective recommendation, or concerted action, whether formal or informal, explicit or tacit, written or oral.
• Cartels


  Anti-competitive agreements between or among competitors that involve collusive conduct to fix prices, rig bids, limit output, or allocate the market.
• Types of anti-competitive agreements under the PCA

  • Per se prohibited (Section 14[a])
  • Prohibited for having an anti-competitive object or effect (Section 14[b] and [c])
• Per se violations


  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.
• Examples of per se violations

  • Price fixing
  • Bid rigging
• Price fixing


  Restricting competition as to price, or components thereof, or other terms of trade. This happens when competitors agree on the price of goods or services, rather than independently setting their respective prices.
• Bid rigging


  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.
• Not per se violations


  Other anti-competitive agreements prohibited by the law which have the object or effect of substantially preventing, restricting, or lessening competition. The PCC needs to conduct inquiries to determine whether they restrict competition and violate the PCA.
• Examples of not per se violations

  • Supply restriction
  • Market sharing
• Supply restriction


  An agreement by two or more competitors which sets or limits production levels and create an artificial supply shortage, thereby raising prices. Similar forms of anti-competitive agreements include restrictions in markets, technical development, or investment.
• Market sharing


  A collusive agreement by two or more competitors which divides or allocates the market. Market sharing not only includes territories, but also customers, volume of sales or purchases, and type of goods or services, among other considerations.
• 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.
• Abuse of dominant position


  It is not illegal to have a dominant position in the market; however, it is illegal to abuse one's dominance.
• Factors considered in determining control or dominance of market

  • Ownership of more than one half (1/2) of the voting power of an entity
  • Power over more than one half (1/2) of the voting rights by virtue of an agreement with investors
  • Power to direct or govern the financial and operating policies of the entity under a statute or agreement
  • Power to appoint or remove the majority of the members of the board of directors or equivalent governing body
  • Power to cast the majority votes at meetings of the board of directors or equivalent governing body
  • Ownership over or the right to use all or a significant part of the assets of the entity
  • Rights or contracts which confer decisive influence on the decisions of the entity
• 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.
• Factors considered in determining if a business has a market dominant position

  • The share of the entity in the relevant market and whether it can fix prices on its own or restrict supply
  • 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
• Dominant position


  • Share of the entity in the relevant market and whether it can fix prices on its own or restrict supply
  • 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
  • Existence of a highly developed distribution and sales network
• Abuse of dominant position

  Conduct that would substantially prevent, restrict, or lessen competition
• Conduct constituting abuse of dominant position

  • 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
  • Limiting production, markets or technical development to the prejudice of consumers
• Exceptions to abuse of dominance

  Conduct which contributes 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
• Acquisition, maintenance, and increase of market share


  Does not violate the PCA if it is acquired through legitimate means and does not substantially prevent, restrict, or lessen competition in the market
• Anti-competitive mergers and acquisitions (M&As)

  Transactions that substantially lessen, restrict, or prevent competition in the relevant market
• Exceptions to prohibition of anti-competitive M&As

  M&A agreements may be allowed if the parties are able to prove that (a) the concentration has brought about or is likely to bring about gains in efficiencies that are greater than the effects of any limitation on competition that result or are likely to result from the merger or acquisition agreement; or (b) a party is faced with actual or imminent financial failure and the agreement represents the least anti-competitive arrangement among the known alternative uses of its assets
• Thresholds for compulsory notification of mergers and acquisitions

  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
• Exemption from compulsory notification

  Mergers or acquisitions with transaction values below PHP 50 billion if entered into within two (2) years from the effectivity of the Bayanihan to Recover as One Act
• Notifying entity/entities


  The acquiring and acquired parties to the notifiable M&A and their ultimate parent entities, or the contributing entities in the formation of a joint venture
• PCC's authority to review transactions


  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
• Recourse if a proposed M&A is found to be anti-competitive

  The PCC can prohibit the transaction or impose conditions before the transaction can be consummated, or the merging parties can propose voluntary commitments meant to curtail the anti-competitive effects of the transaction
• Relevant market


  The market in which a particular good or service is sold, comprising the relevant product market and the relevant geographic market
• Determining anti-competitive business conduct

  The PCC shall define the relevant market, determine the actual or potential adverse impact on competition, adopt a broad and forward-looking perspective, balance the need to ensure competition and the risk of deterring efficiency/productivity/innovation, and assess the totality of evidence
• PCC's forbearance


  The PCC may forbear from applying the PCA provisions for a limited time if enforcement is not necessary, forbearance will not impede competition, forbearance is consistent with public interest and consumer welfare, and forbearance is justified in economic terms