The Philippine Competition Act (R.A. 10667), enacted in 2015, aims to promote competition, prevent anti-competitive practices, and protect consumer welfare through the establishment of the Philippine Competition Commission (PCC) in 2016. The PCC has the authority to investigate anti-competitive behavior, review mergers, and enforce prohibitions against practices like price-fixing or predatory pricing. As of January 2017, the PCC has received numerous notifications for mergers and potential anti-competitive behavior, highlighting its active role in regulating competition in the market.

1. Understanding the Philippine
Competition Act (R.A. 10667)
n
Presented by:
Augusto B. Agosto
Graduate Program, University of San Carlos

2. PCA was enacted in 2015 and its IRR became
effective on June 18, 2016

3. Content
• Overview of objectives and
rationale
• Major Provisions of PCA
• One year record of PCA

4. Objectives of competition
policy and law
To safeguard, protect and promote
competition and the competitive process
 Benefits: efficiency and consumer welfare-
better prices, quality and variety of products
 Why the need? Market failure

5. Making sure that firms play “fair”
Prevent firms from “unfairly” obtaining
market power
– “Unfairly’ erecting barriers to entry (exclusionary
abuse)
What is “unfair?”
Attaining dominant market position by means other
than becoming more efficient than other players
Examples: Forming cartels (horizontal agreements), predatory
pricing; refusal to sell to intentionally increase costs of rival

6. Prevent firms from exercising abuse of
market power (Exploitative abuse):
– A firm has market power if because of its
dominant position, it is able to affect the
selling price of its output by controlling how
much it produces.
– Limiting output/supply that would raise
prices (providing monopoly ‘rents’ )
 Examples: Agreement to fix prices, outputs;
shutting down capacity after acquisition of rival
firm
Making sure that firms play “fair”

7. Promoting competition
Addressing information asymmetries
(publication of relevant information)
Implementing measures to make
markets contestable
 Bringing down barriers to entry, allowing
more players-- make sure that there are
no unnecessary government regulations

8. The Philippine Competition
Commission (PCC) was
formed in February 2016.
The PCC is headed by a
Chairman (currently Dr.
Arsenio Balisacan) and
comprises four other
Commissioners.
Creation of the Philippine
Competition Commission

9. Arsenio M. Balisacan is a
Filipino economist and academic
serving as the first chairperson of
the Philippine Competition
Commission, the country's
antitrust agency enforcing
prohibitions against anti-
competitive business acts and
practices.
 Economic Planning Secretary
 Director-General of the National
Economic and Development
Authority (NEDA)
 Dean and Professor of the
University of the Philippines School
of Economics
 Executive Director of the Philippine
Center for Economic Development
 PhD in Economics from the
University of Hawaii
 MS degree in Agricultural
Economics from the University of
the Philippines Los Baños.

10. Creation of the Philippine
Competition Commission
• Independent, quasi-judicial body, attached agency to the OP
• Composition:
• One Chairman and four commissioners; with rank equivalent to a
cabinet secretary and undersecretaries, respectively; with
expertise in economics, law, finance
• Term: Seven years without re-appointment
• Powers and function: sole authority to initiate and conduct
preliminary investigation
– “No civil case shall be filed or instituted by a private party in
court, unless the PCC has completed a preliminary inquiry.”
(Section 45, PCA)

11. Powers and Functions of the PCC
• Conduct inquiry, investigate, hear and decide cases
• Review mergers and acquisition
• Monitor compliance
• Stop, redress, apply remedies based on finding
• Issue subpoenas
• Undertake inspection of business premises, under order
of court
• Deputize enforcement agencies
• Issue advisory opinions on competition matters
• Monitor and analyze competition practices in markets;
conduct, publish and disseminate studies, etc

12. Prohibited behaviors, agreements,
and processes
• Agreements entered into by competitors resulting in price fixing or
manipulation, or setting, or controlling production, markets, or
investment and restricting competition as to price, or components, or other
terms of trade;
• The abuse of dominant positions by selling goods or services below cost
with the object of driving competition out of the market; setting prices or
other terms or conditions that discriminate unreasonably between
customers or sellers of the same goods or services; and limiting production,
markets or technical development to the prejudice of consumers;
• The abuse of dominant positions by limiting production or technical
development to the prejudice of consumers; and
• Merger or acquisition agreements that substantially prevent, restrict or
lessen competition in the relevant market or in the market for goods or
services are likewise prohibited.

13. Prohibited Acts
• Anti-Competitive Agreements (Sec 14)
• a. Per se Prohibitions
– Restricting competition as to price (or other terms of trade)
– Price fixing at an auction/bid-rigging, market allocation and
other analogous practices of bid manipulation
 per se violations are limited to price-fixing and bid rigging.
• b. The following agreements with the object to substantially
prevent, restrict and lessen competition (‘Rule of Reason”)
– Setting, limiting, or controlling production, markets…
– Dividing or sharing the market (whether by volume, teritory,
type of goods, buyers, sellers...
• Only these (14a and 14b) are punishable as criminal
offenses (Sec 30)

14. Prohibited Acts
Abuse of Dominant Position (Sec 15)
a. Pricing below cost to drive out competition (predatory pricing)
b. Creating barriers to market entry or growth, … except those ...
arising from superior product or prices…
c. Making a transaction subject to acceptance by the other parties of
other obligations which, by their nature or according to commercial
usage, have no connection with the transaction (tying arrangement)
d. Setting prices or other terms or conditions that discriminate
unreasonably between customers or sellers of the same goods or
services (price discrimination), with list of exceptions
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, where the object or effect of the
restrictions is to prevent, restrict or lessen competition substantially.
– E. g. fixing prices, giving preferential discounts or rebate upon such
price, or imposing conditions not to deal with competing entities,
– Exception: Permissible franchising, licensing, exclusive
merchandising or exclusive distributorship agreements; protecting
IPR

15. Mergers and Acquisition (M&A)
• Prohibited Mergers or Acquisitions (M&A)
 Those that “substantially prevent, restrict or lessen competition
in the relevant market or in the market for goods or services”.
Exception: Efficiency gains offsetting impact of lessening
competition
• Compulsory Notification to the PCC
 For with M&As transaction value over PhP1 Billion (USD21.7 million);
 M&A cannot be consummated until after 30 days from notification;
 Violation of compulsory notification requirement will have following
consequences:
– Agreement is void; and
– Parties shall be subjected to administrative fine of 1% to 5% of
transaction value.

16. • In case of violations of the Act, the
Commission may impose administrative
fines of up to P100 million for first
offenders, and up to P250 million for
repeat offenders. Aside from the payment
of fines, offenders of any anti-competitive
agreement risk imprisonment from a
minimum of two years up to a maximum of
seven years.

17. One year record
• As of 30 January 2017, the Commission has
already received 80 notifications for mergers
and acquisitions and 8 referrals for possible
anticompetitive behavior in different sectors
of the economy.
• The Commission has also issued a total of 4
procedural guidelines as of today.

18. Battle over telco frequencies
• The legal battle emerged after the PCC wanted to review the
almost P70-billion acquisition of SMC’s Vega Telecom, which had
access to valuable telco frequencies, including those in the
powerful 700-MHz band.
• The resulting deal gave PLDT and Globe control over about 80
percent of all available telco frequencies.

20. • Thank you.