Philippine Competition Act (RA No. 10667) Flashcards
Applicability of RA No. 10667
- It shall be enforceable against any person or entity engaged in any trade, industry and commerce in the Republic of the Philippines.
- Applicable to international trade having direct, substantial, and reasonable foreseeable effects in trade, industry, or commerce, including those that result from acts done outside the Republic of the Philippines.
Shall NOT apply to the combinations or activities of workers or employees nor to agreements or arrangement with their employers when such combinations, activities, agreements, or arrangements are designed to solely facilitate collective bargaining in respect of conditions of employment.
What are the Prohibitid Acts under Philippine Competition Act?
RA 10667
- Anti-competitive Agreements
- Abuse of Dominant Position
- Prohibited Mergers
Anti-Competitive Agreement(s)
a. The following agreemnts, between or among competitors are per se prohibited:
1. Restricting competition as to price, or components thereof, or other terms of trade;
2. Fixing price at an auction or in any form of bidding including cover bidding, bid suppression, bid rotation and market allocation and other analogous practices of bid manipulation;
b. The following agreements, between or among competitors which have the object or effect of substantially preventing, restricting or lessening competition shall be prohibited:
1. Setting, (limiting), or controlling production, markets, technical development or investment;
2. Dividing or sharing the market, whether by volume of sales or purchases, territory, type of goods or services, buyers or sellers or any other means;
c. Agreements other than those specified in (a) and (b) of this section which have the object or effect of substantially preventing, restricting, or lessening competition shall also be prohibited.
What are transactions or agreements that are not necessarily deemed a violation of this Act?
Transactions that contribute to improving the production or distribution of goods and services or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefits.
Who are excluded from being classified as “competitors”?
An entity that controls, is controlled by, or is under common control with another entity or entities, have common economic interests, and are not otherwise able to decide or act independently of each other shall not be considered competitors for the purposes of this section.
Acts considered as Abuse of Dominant Position
a. Selling goods or services below cost with the object of driving competition out of the relevant market;
b. Imposing barriers to entry or committing acts that prevent competitors from growing within the market in an anti-competitive manner;
c. Making a transaction subject to acceptance by the other parties of other obligations which, by their nature or accoridng to commercial usage, have no connection with the transaction;
d. Setting prices or other terms or conditions that discriminate unreasonably between customers or sellers of the same goods or services, where such customer or sellers of the same goods or services, where such customer or sellers are contemporaneously trading on similar terms and conditions, where the effect may be to lessen competition substantially;
e. Imposing restrictions on the lease or contract for sale or trade of goods or services concerning where, to whom, or in what forms goods or services may be sold or traded, such as fixing prices, giving preferential discounts or rebate ubon such price, or imposing conditions not to deal with competing entities, where the object or effect of the restrictions is to prevent, restrict or lessen competition substantially;
f. Making supply of particular goods or services dependent upon the purchase of other goods or services from the supplier which have no direct connection with the main goods or services to be supplied;
g. Directly or indirectly imposing unfairly low purchase prices for the goods or services of, among others, marginalized agricultural producers, fisherfolk, micro-, small-, medium-scale enterprices, and other marginalized service providers and producers;
h. Directly or indirectly imposing unfair purhcase or selling price on their competitors, customers, suppliers or consumers;
i. Limiting production, markets or technical development to the prejudice of consumers
Permissible Price Differentials
(4)
- Socialized pricing for the less fortunate sector of the economy;
- Price differential which reasonably or approximately reflect differences in the cost of manufacture, sale, or delivery resulting from differing methods, technical conditions, or quantities in which the goods or services are sold or delivered to the buyers or sellers;
- Price differential or terms of sale offered in response to the competitive price of payments, services or changes in the facilities furnished by a competitor; and
- Price changes in response to changing market conditions, marketability of goods or services, or volume.
Abuse of Dominant Position is subject to the following:
(3)
- Nothing in this Act shall be construed or interpreted as a prohibition on having a dominant position in a relevant market or on acquiring, maintaining and increasing market share through legitimate means that do not substantially prevent, restrict or lessen competition.
- Any 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 may not necessarily be considered an abuse of dominant position.
- That the foregoing shall not constrain the Commission or the relevant regulator from pursuing measures that would promote fair competition or more competition as provided in this Act.
What are prohibited mergers and acquisitions?
Merger or acquisiton agreements that substantially prevent, restrict, or lessen competition in the relevant market or in the market for goods or services as may be determined by the Commission shall be prohibited.
Implementing Agency of RA 10667
Philippine Competition Commission
Exceptions in Mergers and Acquisitions
- Merger or acquisition agreement may, nonetheless, be exempt from prohibition by the Commission when the parties establish either of the following:
a. The concentration has brought about or is likely to bring about gains in efficiencies that are greater thatn the effects of any limitation on competition that result or likely from merger or acquisition agreement; or
b. A party to the merger or acquisition is faced with actual or imminent financial failure, and the agreement represents the least anti-competitive arrangement among the known alternative uses for the failing of the entity’s assets. - An entity shall not be prohibited from continuing to own and hold the stock or other share capital or assets of another corporation which it **acquired prior to the approval of this Act ** or acquiring or maintaining its market share in a relevant market through such means without violating the provisions of this Act.
- The acquisiton of the stock or ther share capital of one or more corporations solely for investment and not used for voting or exercising control and not to otherwise bring about, or attempt to bring about the prevention, restriction, or lessening of competition in the relevant market shall not be prohibited.
Burden of Proof
Mergers and Acquisitions
The burden of proof for exemption lies with the parties seeking the exemption. A party seeking to rely on the exemption specified in 1(A) above must demonstrate that if the agreement were not implemented, significant efficiency gains would not be realized.
Finality of Rulings on Mergers and Acquisitions
Merger or acquisition agreements that have received a favorable ruling from the Commission, except when such ruling was obtained on the basis of fraud or false material information, may not be challenged under this Act.
Compulsory Notification
Mergers and Acquisitions
Parties to the merger or acquisiton agreement wherein the value of the transaction exceeds 3.2 billion pesos and size of party exceeds 7.8 billion pesos are prohibited from consummating their agreement until thirty (30) days after providing notification to the Commission in the form and containing the information specified in the regulations issued by the Commission.
Effect of no notice
Mergers and Acquisitions
- An agreement consummated in violation of this requirement to notify the Commission shall be considered void and
- Subject the parties to an administrative fine of 1% to 5% of the value of the transaction
Effect of request for further information
Mergers and Acquisitions
The issuance of such a request has the effect of extending the period within which the agreement may not be consummated for an additional sixty (60) days, beginning on the day after the request for information is received by the parties.
In **no case **shall the total period for review exceed ninety (90) days
Expiration of the period of review
Period has expired and no decision has been promulgated
The merger shall be deemed approved and the parties may proceed to implement or consummate it.
Exception in Confidentiality of notices, documents, and information
When the release of information contained therein is with the consent of the notifying entity or is mandatorily required to be disclosed by law or by valid order of a court of competent jurisdiction, or of a government or regulatory agenct, including an exchange.
Effect on the requirement of favorable recommendation
Merger or acquisiton 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 ruling by the Commission shall not be construed as dispensing of the requirement for a favorable recommendation by the appropriate government agency under section 79 of the Corporation Code of the Philippines.
Favorable recommendation by a governmental agency with a competition mandate shall give rise to a disputable presumption that the proposed merger or acquisition is not violative of this Act.
Effect of Notification
The Commission determines that such agreement is prohibited and does not qualify for exemption
The Commission may:
1. Prohibit the implementation of the agreement
2. Prohibit the implementation of the agreement unless and until it is modified by the changes specified by the Commission.
3. Prohibit the implementation of the agreement unless and until the pertinent party or parties enter into legally enforceable agreements specified by the Commission.
Notification Threshold
The Commission shall, from time to time, adopt and publish regulations stipulating:
a. The** transaction value threshold** and such other criteria subject to the notification requirement of SEction 17 of this Act;
b. The information that must be supplied for notified merger or acquisition;
c. Exceptions or exemptions from the notification requirement; and
d. Other rules relating to the notification procedures.
