RFBT: PHILIPPINE COMPETITION ACT

RA No. 10667 Title

Providing for a National Competition Policy, prohibiting anti-competitive acts

RA 10667 Policy (Mechanism)

State recognizes competition as mechanism for allocating goods/services

Policy Goal 1 (Efficiency)

Enhance economic efficiency and promote free and fair competition

Policy Goal 2 (Concentration)

Prevent economic concentration that will unduly stifle competition

Policy Goal 3 (Penalize)

Penalize anti-competitive agreements, abuse of dominant position

Policy Goal 4 (Consumers)

Protect consumer welfare and advance domestic/international trade

Applicability (Location)

Enforceable against any person/entity in trade/industry/commerce in PH

Applicability (International)

Applies to international trade with direct, substantial, foreseeable effects in PH

Exclusion from the Act

Combinations/activities of workers for collective bargaining purposes

Acquisition

Purchase of securities/assets for the purpose of obtaining control

Aside from how I would get home, what were you concerned about when I left Yeyey’s birthday party?

That you looked better with a ponytail on and I didn’t see it

Agreement

Any contract, arrangement, understanding, or concerted action

Commission

Refers to the Philippine Competition Commission

Control

Ability to substantially influence or direct an entity's actions/decisions

Dominant position

Economic strength to control relevant market independently

Market

Group of interchangeable goods/services and the geographic area

Merger

Joining of two or more entities into existing or new entity

Relevant market

Combination of relevant product market and relevant geographic market

Relevant product market

Goods/services interchangeable by consumer due to characteristics/price

Relevant geographic market

Area with homogenous competition conditions, distinguishable from neighbors

Prohibited Act 1

Anti-Competitive Agreements

Prohibited Act 2

Abuse of Dominant Position

Prohibited Act 3

Prohibited Mergers

Per Se Prohibited Agreement 1

Restricting competition as to price or terms of trade

Per Se Prohibited Agreement 2

Fixing price at an auction or any form of bidding

Prohibited Agreement 2a (Effect)

Setting, limiting, or controlling production or markets

Prohibited Agreement 2b (Effect)

Dividing or sharing the market by volume, territory, or means

Other Prohibited Agreements

Those substantially preventing, restricting, or lessening competition

Agreement Defense (Improvement)

Contributes to improving production or distribution of goods/services

Agreement Defense (Progress)

Promoting technical or economic progress with consumer benefits

All I can say is I was __________ to meet you

Enchanted

Not considered competitors

Entities under common control or cannot act independently

Abuse of Dominant Position

Engaging in conduct that substantially prevents, restricts competition

Abuse 1: Selling below cost

Selling goods or services below cost to drive out competition

Abuse 1: Selling below cost (Defense)

Price established in good faith to meet competitor's lower price

Abuse 2: Entry barriers

Imposing barriers to entry or preventing competitors from growing

Abuse 2: Entry barriers (Exception)

Resulting from superior product, process, business acumen, or law

Abuse 3: Tying (Unconnected)

Transaction subject to acceptance of unconnected obligations

Abuse 4: Discrimination

Setting prices/terms discriminating unreasonably between customers/sellers

Permissible Price Diff 1

Socialized pricing for the less fortunate sector of economy

Your dad wanted to _____ the cat that destroyed your foot.

shoot

Permissible Price Diff 2

Reflects cost differences in manufacture, sale, or delivery

Permissible Price Diff 3

Response to the competitive price of payments or services

Permissible Price Diff 4

Changes in response to changing market conditions or volume

Abuse 5: Supply restrictions

Imposing restrictions on where, to whom, or form of sale

Permissible Restriction 1

Permissible franchising, licensing, exclusive distributorship agreements

Permissible Restriction 2

Agreements protecting intellectual property rights or trade secrets

Abuse 6: Tying (Goods/Services)

Supply dependent upon purchase of unconnected other goods/services

Abuse 7: Low purchase price

Directly/indirectly imposing unfairly low purchase prices

Abuse 8: Unfair price

Directly/indirectly imposing unfair purchase or selling price

Abuse 8: Unfair price (Exception)

Prices due to superior product, process, business acumen, or law

The one and only thing I figured out on my own that you didn’t want to say why you were confident you could get your Lexus

Wills/Inheritance

Abuse 9: Limiting production

Limiting production, markets, technical development to prejudice consumers

Abuse 9: Limiting production (Exception)

Limitations due to superior product, process, business acumen, or law

Dominant Position Presumption

Rebuttable presumption if market share is at least 50%

Dominant Position (Not Prohibited)

No prohibition on having, acquiring, or maintaining dominant position

Abuse Defense (Improvement)

Conduct contributes to improving production or distribution of goods

Abuse Defense (Progress)

Promoting technical/economic progress with consumer fair share benefit

Commission power over M&A

The Commission shall have power to review mergers/acquisitions

Prohibited M&A

Agreements that substantially prevent, restrict, or lessen competition

M&A Exception 1a (Gains)

Brings about efficiency gains greater than competition limitation

M&A Exception 1b (Failing)

Party faces financial failure, agreement is least anti-competitive

M&A Exception 2 (Prior)

Continuing to own stock acquired prior to the Act's approval

M&A Exception 3 (Investment)

Acquisition solely for investment, not exercising control/voting

Burden of Proof (Exemptions)

Lies with the parties seeking the exemption

Proof for Exception 1a

Show significant efficiency gains won't be realized otherwise

Finality of M&A rulings

Favorable ruling may not be challenged under this Act

Finality Exception

Ruling was obtained on the basis of fraud or false information

Compulsory Notification (Threshold)

Transaction value exceeds one billion pesos (₱1,000,000,000.00)

Compulsory Notification (Timing)

Prohibited from consummating until 30 days after notification

What is our dream 5 car garage?

1. Lexus LX 570

2. Ford Thunderbird

3. Toyota Supra Mark IV

4. Toyota Celica GT4

5. Honda Pilot

Notification Criteria

Commission shall promulgate other criteria, e.g., market share

MC No. 18-001 (Size of Party)

MC No. 18-001 (Size of Party)

PCC Advisory 2019-001 (Transaction)

> ₱2B effective March 1, 2020

PCC Advisory 2019-001 (Party)

> ₱5.6B effective March 1, 2020

Bayanihan Act (Transaction)

> ₱50B effective September 15, 2020

MC No. 4-2023 (Size of Party)

> ₱7B effective March 1, 2023

MC No. 4-2023 (Transaction)

> ₱2.9B effective March 1, 2023

Effect of no notice 1

Agreement consummated without notice shall be considered void

Effect of no notice 2 (Fine)

Request for further information

Commission may request information deemed necessary/relevant

Request for info (Effect on time)

Extends non-consummation period for an additional 60 days

Total M&A review period

In no case shall total review exceed 90 days

Expiration of period (No decision)

Merger/acquisition shall be deemed approved, parties may proceed

Confidentiality rule applies to

All notices, documents, and information to or from Commission

Confidentiality Exception 1

Release is with consent of the notifying entity

Where did we first do it hehe

BF Northwest

Confidentiality Exception 2

Mandatorily required to be disclosed by law or valid court order

M&A of special corporations

Favorable PCC ruling doesn't dispense with agency recommendation

Favorable government agency recommendation

Gives rise to disputable presumption of no violation

Commission determines prohibited

May Prohibit implementation of the agreement

Commission may allow

Prohibit until agreement is modified or parties enter agreements

Notification Threshold (Regulations)

Commission shall adopt/publish regulations stipulating criteria

Admin Fine (First offense)

Up to ₱100M

Admin Fine (Second offense)

₱100M to ₱250M

Admin Fine (Fixing amount)

Commission shall regard both gravity and duration of violation

Where did we do it the second time hehe

SM Center

Failure to comply with Order (Penalty)

₱50,000 to ₱2,000,000 for each violation/day

Failure to comply (Accrual)

Fines accrue daily starting 45 days after receiving order

Incorrect/Misleading Info Fine

Up to ₱1,000,000 if intentionally or negligently supplied