Law Summary
Declaration of Policy
- Market competition is recognized as an efficient mechanism for resource allocation.
- The State supports liberalization reinforced by competition safeguards.
- Equal opportunities promote entrepreneurship, investments, technology, and productivity.
- Free market competition protects consumer choice.
- Constitutional mandate: regulate/prohibit monopolies, disallow restraint of trade and unfair competition.
- Objectives:
- Enhance economic efficiency and establish a National Competition Policy.
- Prevent economic concentration that stifles competition.
- Penalize anti-competitive agreements, abuses, and mergers injurious to competition.
Scope and Application
- Applies to all persons and entities engaged in trade, industry, and commerce in the Philippines.
- Extends to international trade affecting national markets.
- Excludes workers’ combinations and collective bargaining agreements on employment conditions.
Definitions
- Key definitions include Acquisition, Agreement, Conduct, Commission, Confidential Business Information, Control, Dominant Position, Entity, Market, Merger, and Relevant Market.
- Acquisition: purchase to obtain control.
- Agreement: any contract or concerted action.
- Dominant position: market strength enabling independent control.
- Relevant market: combination of relevant product and geographic markets.
Philippine Competition Commission (PCC)
- An independent quasi-judicial body established to enforce the Act.
- Organized within 60 days of the Act’s effectivity.
- Attached to the Office of the President.
Composition of the Commission
- Composed of one Chairperson and four Commissioners.
- Members must be Filipino citizens, residents, with integrity, and professional distinction.
- At least one must be a lawyer and one an economist.
- Appointed by the President.
Term of Office
- Each has a fixed seven-year, non-renewable term.
- Security of tenure, removal only for just cause.
Prohibitions and Disqualifications
- Commissioners cannot hold other jobs, practice professions (except teaching), or engage in businesses with government contracts.
- Avoid conflicts of interest.
- Restricted from political candidacy immediately after tenure.
- Restrictions on post-tenure appearance or representation before the Commission.
Compensation
- Salaries exempt from the Salary Standardization Act.
- Set by objective classification approved by the President.
Quorum and Staff
- Three members constitute a quorum.
- Staff appointed by the Commission, with required qualifications.
Powers and Functions of the Commission
- Exercise primary jurisdiction to enforce the Act.
- Investigate violations, conduct hearings, and institute proceedings.
- Review and prohibit anticompetitive mergers and agreements.
- Monitor markets and consult stakeholders.
- Issue injunctions, divestment, fines, and subpoena powers.
- Conduct inspections with court orders.
- Deputize enforcement agencies and solicit private sector support.
- Issue advisory opinions and policy recommendations.
- Represent the Philippines in international competition matters.
- Promote pro-competitive government policies.
Office for Competition
- DOJ Office for Competition focuses on preliminary investigation and criminal prosecution.
Prohibited Acts: Anti-Competitive Agreements
- Per se prohibited agreements include price fixing, bid rigging, and market allocation.
- Other agreements with substantial effect to lessen competition are also prohibited unless they promote efficiencies benefiting consumers.
- Entities under common control are not competitors.
Abuse of Dominant Position
- Prohibited behaviors include:
- Predatory pricing below cost.
- Barriers to market entry.
- Imposing unrelated obligations in transactions.
- Unreasonable price discrimination.
- Imposing anti-competitive restrictions on sales or leases.
- Tying arrangements.
- Imposing unfair prices on marginalized sectors.
- Limiting production or technical development to consumer prejudice.
- Legitimate dominance and efficiency justified conducts are allowed.
Mergers and Acquisitions
- Commission reviews mergers exceeding thresholds (P1 billion and others set by sector).
- Notification to the Commission is mandatory before consummation.
- Violation of notification is void and penalized.
- Review period is 30 to 90 days, with possible extension.
- Commission can prohibit, modify, or condition mergers.
- Exemptions possible if efficiency gains outweigh competition loss or failing company scenarios.
- Burden of proof for exemptions lies with the parties.
- Favorable rulings are final unless based on fraud.
Determination Criteria
- Relevant market defined by substitutability and geography.
- Control determined by ownership, voting power, policy direction, and influence.
- Anti-competitive conduct assessed by market impact, efficiencies, and economic context.
- Dominance presumed with 50% or more market share, with rebuttal possible.
Forbearance
- Commission may temporarily exempt entities if enforcement is unnecessary, no impediment to competition, and public interest served.
- Public hearings mandatory for such exemptions.
Penalties
- Administrative fines up to P100 million first offense, higher for repeat.
- Fines for failure to comply with orders, submitting false information, and other violations.
- Criminal penalties: imprisonment (2-7 years) and fines (P50 million to P250 million) for serious offenses.
Enforcement
- Commission has exclusive authority for fact-finding, inquiries, and investigations.
- Powers include issuing subpoenas, administering oaths, and punishing contempt.
- Sector regulators consulted but Commission has primary jurisdiction.
Confidentiality
- Business information is confidential, except with consent or legal requirement.
- Violations attract fines.
Leniency Program
- Immunity or fine reduction for voluntary disclosure of anti-competitive conduct.
- Conditions apply, including no leadership or coercion participation.
- False reports penalized.
Non-Adversarial Remedies
- Binding rulings, show cause orders, consent orders, and monitoring promote voluntary compliance.
- Evidence from such proceedings inadmissible in criminal cases.
Contempt Sanctions
- Summarily punishable by imprisonment or fines for misconduct during proceedings.
Appeals and Execution
- Decisions appealable to Court of Appeals.
- Orders enforceable by writ of execution.
Special Provisions
- Fines tripled for violations involving basic necessities and prime commodities.
- Immunity and indemnity for Commission members acting in good faith.
- Regional Trial Courts have jurisdiction over criminal and civil cases.
- Private damages actions allowed post preliminary inquiry.
Other Provisions
- Five-year statute of limitations applies.
- Restrictions on court-issued restraining orders on the Commission.
- Trade associations allowed if not anti-competitive.
- Congressional Oversight Committee created for implementation oversight.
- Implementing rules to be promulgated within 180 days.
- Appropriations and fund management specified.
- Transparency of decisions required.
- Transitional period of two years before enforcement of existing violations.
- Severability and repealing clauses covering inconsistent laws.
- Effectivity 15 days after publication with no retroactivity.