Implementing Rules of Philippine Competition Act

Coverage and key definitions

These rules apply to any entity engaged in trade, industry or commerce in the Republic of the Philippines, and to international trade, industry or commerce with direct, substantial and reasonably foreseeable effects in the Philippines, including effects from acts done outside the Philippines.
These rules do not apply to combinations or activities of workers or employees, or agreements or arrangements with employers, when designed solely to facilitate collective bargaining regarding conditions of employment.
“Acquisition” means purchase or transfer of securities or assets to obtain control by (1) one entity over the whole or part of another; (2) two or more entities over another; or (3) one or more entities over one or more entities.
“Agreement” includes any contract, arrangement, understanding, collective recommendation, or concerted action, formal or informal, explicit or tacit, written or oral.
“Conduct” includes any undertaking, collective recommendation, independent or concerted action or practice, formal or informal.
“Commission” refers to the Philippine Competition Commission created under the Act.
“Confidential business information” covers specified non-public operational, production, sales, shipment, purchase/transfer, income and source, inventory, profit/loss/expenditure information that can cause serious harm or has economic value and is subject to reasonable secrecy measures.
“Control” means the ability to substantially influence or direct actions or decisions of an entity by contract, agency, or otherwise.
“Dominant position” means economic strength capable of controlling the relevant market independently from competitors, customers, suppliers, or consumers.
“Entity” includes any person, natural or juridical, sole proprietorship, partnership, combination or association in any form, incorporated or not, domestic or foreign, including those owned or controlled by the government, engaged directly or indirectly in any economic activity.
“Joint venture” means a business arrangement where entities contribute capital/services/assets (or a combination) to undertake an investment activity or specific project, with each entity able to direct and govern policies, and with intention to share profits, risks, and losses subject to agreement.
“Market” means the group of goods or services sufficiently interchangeable or substitutable that is the object of competition, and the geographic area where offered.
“Merger” means joining of two or more entities into an existing entity or to form a new entity, including joint ventures.
“Relevant market” is the combination of the relevant product market and relevant geographic market, with the product market defined by interchangeability/substitutability by consumer/customer based on characteristics, prices, and intended use, and the geographic market defined by sufficiently homogeneous competition conditions distinguishable from neighboring areas.
“Ultimate parent entity” is the juridical entity that directly or indirectly controls a party to the transaction and is not controlled by any other entity.

Prohibited competitive agreements

Section 1 prohibits certain anti-competitive agreements between or among competitors as per se prohibited.
Price-related per se prohibitions include restricting competition as to price, components thereof, or other terms of trade.
Auction and bidding manipulation is per se prohibited, including fixing prices at an auction or in any form of bidding, including cover bidding, bid suppression, bid rotation, and market allocation, and analogous bid manipulation practices.
Agreements between or among competitors that have the object or effect of substantially preventing, restricting, or lessening competition are prohibited.
Prohibited effects include setting, limiting, or controlling production, markets, technical development, or investment.
Prohibited effects include dividing or sharing the market, by volume of sales or purchases, territory, type of goods or services, buyers or sellers, or any other means.
Agreements other than those specifically listed that have the object or effect of substantially preventing, restricting, or lessening competition are also prohibited.
Efficiency and progress carve-out applies: agreements that improve production or distribution or promote technical or economic progress, while allowing consumers a fair share of resulting benefits, may not necessarily be deemed a violation.
Entities controlling, being controlled by, or under common control with one another, having common economic interests and not able to decide or act independently, are not considered competitors for purposes of the competitor-based agreement rules.

Abuse of dominance rules

Section 2 prohibits one or more entities from abusing a dominant position by engaging in conduct that would substantially prevent, restrict, or lessen competition.
Abuse includes selling below cost with the object of driving competition out of the relevant market, subject to evaluation considering whether the entity had no such object and the price was established in good faith to meet or compete with a competitor’s lower price for the same or comparable product/service of like quality.
Abuse includes imposing barriers to entry or acts preventing competitors from growing within the market in an anti-competitive manner, except barriers that develop due to a superior product or process, business acumen, or legal rights or laws.
Abuse includes making a transaction conditional on acceptance of other obligations that have no connection with the transaction by nature or commercial usage.
Abuse includes setting discriminatory prices or other terms that discriminate unreasonably between customers or sellers of the same goods/services where they are contemporaneously trading on similar terms and conditions, with effect that may lessen competition substantially.
Certain price differentials are treated as permissible, including:
- Socialized pricing for the less fortunate sector of the economy.
- Differentials reflecting differences in cost of manufacture, sale, or delivery due to differing methods, technical conditions, or quantities.
- Differentials or sale terms offered in response to a competitor’s competitive price of payments/services or changes in facilities furnished.
- Price changes responding to changing market conditions, marketability, or volume.
Abuse includes imposing restrictions on where/to whom/in what forms goods or services may be sold or traded, including fixing prices, preferential discounts/rebates upon price, or conditions not to deal with competing entities, when the object or effect is to prevent, restrict, or lessen competition substantially.
Permissible conduct exceptions apply: nothing prohibits or renders unlawful permissible franchising, licensing, exclusive merchandising, or exclusive distributorship agreements that each party can unilaterally terminate unless found by the Commission to have substantial anti-competitive effect; and agreements protecting intellectual property rights, confidential information, or trade secrets.
Abuse includes making supply of particular goods/services dependent on purchase of other goods/services from the supplier that have no direct connection with the main goods/services.
Abuse includes directly or indirectly imposing unfairly low purchase prices for goods/services of marginalized agricultural producers, fisherfolk, micro-, small-, medium-scaled enterprises, and other marginalized service providers and producers.
Abuse includes imposing unfair purchase or selling prices on competitors, customers, suppliers, or consumers, except prices developing in the market due to superior product/process, business acumen, or legal rights or laws.
Abuse includes limiting production, markets, or technical development to the prejudice of consumers, except limitations that develop due to superior product/process, business acumen, or legal rights or laws.
A dominant position itself is not prohibited; acquiring, maintaining, and increasing market share through legitimate means that do not substantially prevent, restrict, or lessen competition is not prohibited.
Conduct that improves production or distribution or promotes technical and economic progress while allowing consumers a fair share of benefits may not necessarily be considered an abuse of dominant position.
The Commission and relevant regulators are not constrained from pursuing measures that promote fair competition or more competition as provided in the Act.

Exceptions and rebuttal standards

When invoking exceptions under Section 2(a)(2), (8), and (9), the concerned entity or entities must clearly establish to the Commission’s satisfaction that the barrier to entry or anti-competitive act is an indispensable and natural result of superior product or process, business acumen, or legal rights or laws.
For purposes of dominance exceptions, Section 5 requires the invoking entity/entities to clearly establish to the Commission’s satisfaction that barriers to entry or anti-competitive acts are an indispensable and natural result of superior product or process, business acumen, or legal rights or laws.
For dominance, the rules provide a rebuttable presumption when market share is at least 50%, unless a new market share threshold is determined by the Commission for a particular sector.

Mergers and acquisitions review framework

Section 1 authorizes the Commission to review mergers and acquisitions with a direct, substantial and reasonably foreseeable effect on trade, industry, or commerce in the Philippines, motu proprio or upon notification.
The Commission assesses whether a proposed transaction is likely to substantially prevent, restrict, or lessen competition in the relevant market (as determined by the Commission).
The Commission considers substantiated efficiencies that are likely to arise from the transaction.
The Commission evaluates competitive effects by comparing likely post-transaction conditions with conditions that would likely have prevailed without the transaction.
In case-by-case evaluation, the Commission may consider market structure, the parties’ market positions, actual or potential competition, alternatives available to suppliers/users and access to supplies/markets, and legal or other barriers to entry.
Parties that satisfy thresholds must notify the Commission before execution of definitive agreements.
Notification must be filed through a Notification Form (the “Forma”) by all acquiring and acquired pre-acquisition ultimate parent entities, or an entity authorized by the ultimate parent to file on their behalf.
Parties must not consummate a notifiable transaction before the expiration of relevant waiting periods.
In forming a joint venture (other than in connection with a merger or consolidation), contributing entities are treated as acquiring entities, and the joint venture is treated as acquired.
Compulsory notification applies where both of the following are met:
- The aggregate annual gross revenues in, into or from the Philippines, or value of assets in the Philippines of the ultimate parent entity of at least one acquiring or acquired entity (including all entities the ultimate parent controls, directly or indirectly) exceed PHP 1,000,000,000.00.
- The transaction value exceeds PHP 1,000,000,000.00 as determined under specified asset/revenue and share/profit-threshold formulas.
Transaction value calculations include:
- Assets in the Philippines acquired exceed PHP 1,000,000,000.00, or gross revenues generated in the Philippines by acquired assets exceed PHP 1,000,000,000.00 (assets in the Philippines).
- Acquiring entity’s assets in the Philippines exceed PHP 1,000,000,000.00 and gross revenues in or into the Philippines generated by assets acquired outside the Philippines exceed PHP 1,000,000,000.00 (assets outside).
- Acquiring entity’s assets in the Philippines exceed PHP 1,000,000,000.00 and aggregate gross revenues in or into the Philippines from assets acquired in and outside the Philippines collectively exceed PHP 1,000,000,000.00 (inside and outside).
Voting share acquisitions require notification if:
- Assets in the Philippines owned by the corporation/non-corporate entity (excluding shares) exceed PHP 1,000,000,000.00 or gross revenues from sales in/into/from the Philippines exceed PHP 1,000,000,000.00 (excluding share assets), and
- As a result of the acquisition, the acquiring entities and affiliates would own voting shares carrying more than 35% of votes attached to all outstanding voting shares, or 50% if already owning more than 35% before the acquisition.
Non-corporate interest acquisitions require notification if:
- Assets in the Philippines owned by the non-corporate entity (excluding shares) exceed PHP 1,000,000,000.00 or gross revenues from sales in/into/from the Philippines exceed PHP 1,000,000,000.00, and
- As a result, the acquiring entities and affiliates would hold an aggregate interest entitling them to receive more than 35% of profits on dissolution, or 50% if already entitled to receive more than 35% before the acquisition.
If an entity already exceeded the 35% threshold for voting shares or for non-corporate interest acquisitions, another notification is required when the entity exceeds the 50% threshold after further acquisition.
Notifiable joint ventures trigger notification if either (i) aggregate value of assets to be combined in the Philippines or contributed into the joint venture exceeds PHP 1,000,000,000.00, or (ii) gross revenues generated in the Philippines by assets to be combined or contributed exceeds PHP 1,000,000,000.00.
Joint venture asset calculations include all assets any contributing entity agreed to transfer, or for which agreements are secured for the joint venture to obtain at any time (whether or not subject to the Act), and any credit or obligations the contributing entity agreed to extend or guarantee at any time.
Successive transactions between the same parties or among controlled/common-controlled entities within a one-year period are treated as one transaction; notification is based on a binding preliminary agreement if there is one, or otherwise upon the agreement for the last transaction that collectively meets thresholds.
For threshold computation:
- Aggregate assets in the Philippines are based on the last regularly prepared balance sheet or most recent audited financial statements where those assets are accounted for.
- Gross revenues from sales are based on the last regularly prepared annual statement of income and expense.
A transaction that meets thresholds but fails to comply with notification and waiting periods under Section 5 is treated as void and subjects the parties to an administrative fine of 1% to 5% of the value of the transaction.
For mergers/acquisitions of banks, banking institutions, building and loan associations, trust companies, insurance companies, public utilities, educational institutions, and other special corporations governed by special laws, a favorable or no-objection Commission ruling does not dispense with the requirement for a favorable recommendation by the appropriate government agency under Section 79 of the Corporation Code of the Philippines.
A favorable recommendation by a governmental agency with a competition mandate creates a disputable presumption that the proposed transaction is not violative of the Act or these rules, provided the recommendation arises directly from the agency’s exercise of its mandate to determine anti-competitive effects.
Parties may request a pre-notification consultation by informing the Commission and requesting a meeting; they must provide names and business contact information of entities concerned, the type of transaction, and the markets covered or lines of business.
Pre-notification consultations allow seeking non-binding advice on specific information required to be in the notification.
The notification process requires:
- Each notifying party to submit the Notification Form and pay applicable fees determined by the Commission.
- Simultaneous submission of an electronic copy of the Form and a scanned copy of the certification contained in a secure electronic storage device with the hard copy.
The Notification Form must be signed by a general partner (partnership), or an officer/director (corporation), or (for a natural person) the natural person or legal representative, and must be certified true and accurate based on personal knowledge and/or authentic records; the certifying individual must have actual authority.
Parties may notify based on a binding preliminary agreement; each acquired and acquiring entity must submit an affidavit attesting that a binding preliminary agreement exists and that each party intends to complete the transaction in good faith.
Certification and affidavits must be notarized or otherwise authenticated.
The waiting period begins only after the Commission determines the notification is completed in accordance with applicable rules and guidelines and notifies parties the Forms are complete for Phase I.
For voting securities acquisitions (including tender offers and open-market transactions where acquiring proposes to buy voting securities from shareholders):
- The acquiring entity must serve notice on the issuer to ensure the acquired entity is aware of reporting obligations.
- Only the acquiring entity submits an affidavit; it must state good-faith intention to complete and that notice was served (and in tender offers, that the intention to tender offer has been publicly announced).
- The waiting period begins after the acquiring entity files a complete Form.
The Commission must determine within 15 days whether the Forms and relevant requirements are complete and either inform parties of missing information/documents or issue notice sufficient for commencing Phase I.
Within 30 days from commencing Phase I, the Commission informs parties if a more comprehensive Phase II analysis is needed and requests relevant information/documents.
Issuing the Phase II request extends the period during which the agreement may not be consummated by an additional 60 days, counted starting the day after receipt of the request.
The total review period by the Commission shall not exceed 90 days from the time the initial notification is deemed complete.
If requested information is not provided within 15 days from receipt of the Phase II request, the notification is deemed expired and parties must refile.
Parties may request an extension to comply beyond the 15 days, and the review period is correspondingly extended.
Parties must inform the Commission of any substantial modifications to the transaction; the Commission determines if a new notification is required.
If notification is not required, the waiting periods for Commission conclusion do not apply.
The Commission may terminate a waiting period in its discretion prior to expiration.
Waiting periods extend to the next business day if they end on a Saturday, Sunday, or holiday.
If waiting periods expire without a decision being promulgated, the merger or acquisition is deemed approved and parties may proceed to implement or consummate.
All notices, documents, and information provided to or emanating from the Commission under the merger notification rules are treated as confidential under Section 34 of the Act and Section 13 of these rules, subject to disclosure for enforcement, consent of notifying entity, or mandatory disclosure by law or valid court/order, or for government/regulatory agency exchange including exchange entities.
If the Commission determines within the relevant periods that the merger or acquisition is prohibited under Section 20 of the Act and Section 9 of these rules and does not qualify for exemption under Section 21 of the Act and Section 10, it may:
- Prohibit implementation outright.
- Prohibit implementation unless modified by changes specified by the Commission.
- Prohibit implementation unless legally enforceable agreements specified by the Commission are entered into by pertinent parties.
For Phase II review, when additional requested information/documents are submitted, the Commission publishes on its website:
- The name of involved entities.
- The type of transaction.
- Markets covered or lines of business.
- The date complete notification was received.
Publishing must account for legitimate interests in protection of trade secrets and other confidential information.
The Commission must publish from time to time regulations adopting, modifying, rescinding, or changing transaction value thresholds and other notification criteria, the information required to be supplied, exceptions/exemptions to notification, and other notification procedure rules.

Prohibited and exempt mergers

Section 9 prohibits merger or acquisition agreements that substantially prevent, restrict, or lessen competition in the Philippines in the relevant market or in the market for goods or services as determined by the Commission.
Section 10 allows exemption from prohibition when parties establish either:
- Efficiencies gains brought about or likely to be brought about are greater than the effects of any limitation on competition resulting or likely to result from the agreement; or
- A party facing actual or imminent financial failure and the agreement represents the least anti-competitive arrangement among known alternative uses for the failing entity’s assets.
No prohibition applies to continuing to own and hold stock or other share capital or assets of another corporation acquired prior to approval of the Act, or to acquiring/maintaining market share through such means without violating the Act and these rules.
Sole investment acquisitions of stock or other share capital not used for voting or exercising control and not aimed at preventing, restricting, or lessening competition are not prohibited.
The burden of proof for exemption lies with the parties seeking exemption.
A party relying on the efficiencies exemption must demonstrate that, absent implementation, significant efficiency gains would not be realized.
A merger or acquisition agreement that received a favorable Commission ruling cannot be challenged under the Act or these rules except where the ruling was obtained through fraud or false material information.

Confidentiality and market determinations

The Commission does not communicate or make accessible information containing trade secrets or other confidential information when disclosure is not necessary for review.
Entities supplying information to the Commission must clearly identify material they consider confidential, justify confidential treatment, state the period requested, and provide a separate non-confidential version by the date set by the Commission.
The Commission may require parties and interested parties to identify parts of a decision or case summary adopted by the Commission that contain trade secrets or other confidential information; affected parties must justify confidential treatment and provide a separate non-confidential version by the date set.
If the Commission deems confidential treatment justifications insufficient or not grounded, it informs the interested party it will make the information accessible.
Where a merger or acquisition is reviewed in multiple jurisdictions, parties may waive confidentiality protections so the Commission can exchange otherwise protected information with other competition authorities.

Relevant market, control, dominance, and evidence

In determining the relevant market, the Commission considers substitutability and geographic boundaries using factors including:
- Substitution possibilities with domestic or foreign goods/services considering technological possibilities, availability to consumers, and time required for substitution.
- Distribution costs, raw materials, supplements and substitutes from other areas and abroad considering freight, insurance, import duties, non-tariff restrictions, restrictions by economic agents or associations, and time required to supply the market.
- Costs and probability of users/consumers seeking other markets.
- National, local, or international restrictions limiting access by users/consumers to alternate sources of supply or access of suppliers to alternate consumers.
Control is determined as ability to substantially influence or direct actions/decisions, and the Commission may consider:
- Presumption of control when the parent owns directly or indirectly, through subsidiaries, more than one half (1/2) of voting power, unless exceptional circumstances clearly show ownership does not constitute control.
- Control even with ownership of one half (1/2) or less where there is power over more than one half (1/2) of voting rights by agreement; power to govern financial and operating policies by statute or agreement; power to appoint/remove majority board members; power to cast majority votes at board meetings; ownership/right to use all or significant part of assets; or rights/contracts conferring decisive influence.
In determining whether an anti-competitive agreement or conduct substantially prevents, restricts, or lessens competition, the Commission uses an approach including:
- Defining the relevant market using principles in the Act and the relevant-market rule.
- Determining actual or potential adverse impact on competition and whether it is substantial and outweighs actual/potential efficiency gains.
- Taking a broad, forward-looking perspective including future developments, need to make goods/services available to consumers, infrastructure investment needs, legal requirements, and the economy’s response to international competition, while considering past behavior and prevailing market conditions.
- Balancing ensuring competition is not prevented/substantially restricted against risk that efficiency/productivity/innovation or development in priority areas is deterred by overzealous intervention.
- Assessing totality of evidence using a “more likely than not” approach, including whether conduct had reasonable commercial purpose such as phasing out a product or closure, or was a reasonable commercial response to competitor entry or conduct.
Dominance can be single (one entity) or collective (two or more entities).
In assessing dominance, the Commission considers illustrative and non-exhaustive criteria including market share and ability to fix prices or restrict supply; shares of other participants; barriers to entry and factors altering them; competitor existence and power; credible future expansion/entry; market exit; customer bargaining strength; access to inputs; customer switching power; recent conduct; infrastructure ownership/control not easily duplicated; technological advantages; privileged capital access; economies of scale/scope; vertical integration; and distribution/sales network development.
Dominance includes a rebuttable presumption of market dominance where market share is at least 50%, unless the Commission sets a new threshold for a particular sector.
The Commission determines and publishes dominance thresholds/mimimum share that triggers the presumption, considering relevant market structure, degree of integration, access to end-users, technology/financial resources, and other control factors.
The dominance exception requires that acquisition/maintenance/increase of market share through legitimate means not substantially prevent, restrict, or lessen competition, such as superior skills, superior service, producing/distributing quality products, business acumen, and use of protected intellectual property rights, subject to the indispensable and natural result standard when invoking barriers/anti-competitive act exceptions.

Forbearance and final rules

The Commission may forbear from applying the Act or these rules for a limited time in whole or part for all or specific cases on an entity or group, motu proprio or upon application, before initiating an inquiry.
Forbearance applies only if the Commission determines that enforcement is not necessary to attain policy objectives; forbearance will neither impede competition in the relevant market nor related markets; forbearance is consistent with public interest and consumer welfare; and forbearance is justified economically.
Forbearance is granted for a maximum period of one year, and any extension must be expressly approved and cannot exceed one year per extension.
The Commission holds a public hearing to assist its forbearance determination.
The Commission’s order exempting the entity/group is made public and may attach conditions to protect long-term consumer interests.
If the basis for the forbearance order ceases to be valid, the Commission may withdraw the order.
These rules may be revised by the Commission whenever necessary after due consultation with affected stakeholders.
If any provision is declared unconstitutional, remaining provisions remain valid.
The rules’ effectivity is governed by the 15-day publication rule stated above.