Law Summary
Definition of Key Terms
- Acquisition: Purchase or transfer intending to obtain control.
- Agreement: Any contract or arrangement, formal or informal.
- Conduct: Undertakings or collective actions.
- Commission: Philippine Competition Commission.
- Confidential Business Information: Non-public, economically valuable information with reasonable efforts to keep secret.
- Control: Ability to influence or direct actions of an entity.
- Dominant Position: Economic strength enabling market control independently from competitors or consumers.
- Entity: Any natural or juridical person engaged in economic activity.
- Joint Venture: Business arrangement contributing capital/assets to a specific project.
- Market: Interchangeable goods/services and geographic area of competition.
- Merger: Joining of entities into existing or new entities.
- Relevant Market: Combination of product market and geographic market.
- Ultimate Parent Entity: Juridical entity controlling a party, not controlled by others.
Prohibited Acts - Anti-Competitive Agreements
- Per se prohibited agreements between competitors include: price fixing, bid rigging, market allocation.
- Agreements substantially lessening competition include limiting production, dividing markets.
- Other anti-competitive agreements prohibited unless they improve production/distribution and benefit consumers.
- Entities under common control are not considered competitors.
Abuse of Dominant Position
- Prohibited acts include:
- Below cost selling aimed to eliminate competition.
- Anti-competitive barriers to entry.
- Unrelated transaction conditions.
- Unreasonable price discrimination.
- Restrictions preventing competition (except permissible exclusivities/licensing).
- Tying goods/services purchase.
- Imposing unfair low purchase prices on marginalized sectors.
- Imposing unfair prices on competitors or consumers.
- Limiting production or technical development unfairly.
- Dominant position itself is not prohibited; abuse must be established.
- Legitimate improvements benefiting consumers are not abuses.
- The Commission may promote fair competition measures notwithstanding.
Exceptions and Determinations
- Entities must establish that barriers or anti-competitive acts naturally result from superior products, business acumen, or legal rights.
Mergers and Acquisitions Review
- Commission reviews mergers/acquisitions with substantial effect on Philippine commerce.
- Reviews consider potential to lessen competition and efficiency gains.
- Competitive assessment compares scenarios with and without merger.
- Considers market structure, positions, competition, alternatives, and barriers.
Notification Requirements
- Parties must notify the Commission before executing agreements if thresholds are met:
- At least PhP1 billion in annual revenues or asset value.
- Transaction value over PhP1 billion under specific asset/gross revenue criteria.
- Notification Forms and certifications are required; transactions consummated post waiting periods.
- Joint ventures contributing significant assets or revenues are also notifiable.
- Successive related transactions within a year treated as one.
- Violations of notification lead to void transactions and fines.
- Special corporations remain subject to other specialized approvals.
Notification Procedure
- Pre-notification consultations available.
- Submission requires detailed certifications, affidavits, and notarization.
- Waiting periods generally 15 days for completeness check, 30 days Phase I review, extendable by 60 days Phase II.
- Parties must inform Commission of modifications; non-notifiable transactions exempt from waiting periods.
- Confidentiality rules apply to shared information.
Commission Actions on Notifications
- The Commission may:
- Prohibit the transaction.
- Allow with modifications.
- Impose enforceable conditions.
Public Disclosure and Threshold Adjustments
- Commission publishes summaries of notifications during Phase II review.
- Modifications to thresholds and procedures may be issued periodically.
Prohibited Mergers and Exemptions
- Prohibited if substantially diminishing competition.
- Exemptions allowed if:
- Efficiency gains outweigh competitive harm.
- Financial failure necessitates least anti-competitive transaction.
- Prior acquisitions before the Act are not prohibited, nor solely investment stock acquisitions without control intent.
Burden of Proof and Finality
- Parties seeking exemptions bear burden to prove efficiency or necessity.
- Favorable rulings are final unless based on fraud or false information.
Confidential Information Handling
- Confidential information protected unless necessary for enforcement or legally mandated disclosure.
- Parties must identify and justify confidentiality; non-confidential versions required.
- Cross-jurisdictional waivers of confidentiality possible.
Determination of Relevant Market
- Factors include substitutability, distribution costs, consumer access, and legal restrictions.
Determination of Control
- Control presumed with majority ownership; may exist with minority if supported by agreements or influence.
Determination of Anti-Competitive Agreement/Conduct
- Requires analysis of market impact, efficiency trade-offs, future developments, and commercial purpose.
Determination of Dominance
- Dominance may be single or collective.
- Factors for dominance include market share, pricing power, barriers, competitors, entry threats, infrastructure, technology, financial resources, and more.
- Market share of 50% or more creates rebuttable presumption of dominance.
- Commission may set specific thresholds per sector.
- Legitimate means of increasing market share excluded from abuse.
Forbearance by Commission
- Commission may temporarily exempt entities or cases if enforcement is unnecessary, non-impeding, justified economically, and beneficial to consumers.
- Forbearance granted up to one year and may be extended.
- Public hearings conducted; exemptions published and subject to revocation if basis ceases.
Final Provisions
- Rules subject to revision after stakeholder consultation.
- Invalid provisions severable.
- Rules effective 15 days post-publication in major newspapers.