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Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
AT A GLANCE:
Section 26 of the Philippine Competition Act and Section 1 of Rule 7 of the IRR demonstrate that the Commission does not rely on rigid tests. Instead, the Commission considers a variety of factors, as stated above, in determining whether an agreement or conduct is anti-competitive. This approach enables the Commission to distinguish between conduct or agreements that are prohibited under the law and those that are permissible or do not substantially harm competition.
The Philippine Competition Act or Republic Act No. 10667 establishes the legal framework for promoting and protecting fair competition in the markets across the Philippines.
The State recognizes that past measures undertaken to liberalize key sectors in the economy need to be reinforced by measures that safeguard competitive conditions. The State also recognizes that the provision of equal opportunities to all promotes entrepreneurial spirit, encourages private investments, facilitates technology development and transfer and enhances resource productivity. Unencumbered market competition also serves the interest of consumers by allowing them to exercise their right of choice over goods and services offered in the market. (Section 2, Republic Act No. 10667)
Pursuant to these goals, the State shall regulate or prohibit monopolies when the public interest so requires and that no combinations in restraint of trade or unfair competition shall be allowed. (Section 2, Republic Act No. 10667)
Central to the enforcement of this law is the determination of whether an agreement or conduct is anti-competitive. Under Section 4(b) of the Philippine Competition Act, an agreement refers to “any type or form of contract, arrangement, understanding, collective recommendation, or concerted action, whether formal or informal, explicit or tacit, written or oral.” Meanwhile, Section 4(c) of the same law defines conduct as “any type or form of undertaking, collective recommendation, independent or concerted action or practice, whether formal or informal.”
Section 26 of the Philippine Competition Act lays down the core principles that the Philippine Competition Commission (“Commission”) must follow when determining the existence of anti-competitive agreements or conduct, to wit:
Section 26. Determination of Anti-Competitive Agreement or Conduct. – In determining whether anti-competitive agreement or conduct has been committed, the Commission shall:
(a) Define the relevant market allegedly affected by the anti-competitive agreement or conduct, following the principles laid out in Section 24 of this Chapter;
(b) Determine if there is actual or potential adverse impact on competition in the relevant market caused by the alleged agreement or conduct, and if such impact is substantial and outweighs the actual or potential efficiency gains that result from the agreement or conduct;
(c) Adopt a broad and forward-looking perspective, recognizing future market developments, any overriding need to make the goods or services available to consumers, the requirements of large investments in infrastructure, the requirements of law, and the need of our economy to respond to international competition, but also taking account of past behavior of the parties involved and prevailing market conditions;
(d) Balance the need to ensure that competition is not prevented or substantially restricted and the risk that competition efficiency, productivity, innovation, or development of priority areas or industries in the general interest of the country may be deterred by overzealous or undue intervention; and
(e) Assess the totality of evidence on whether it is more likely than not that the entity has engaged in anti-competitive agreement or conduct including whether the entity’s conduct was done with a reasonable commercial purpose such as but not limited to phasing out of a product or closure of a business, or as a reasonable commercial response to the market entry or conduct of a competitor.
This provision outlines the process in which the Commission shall determine the existence of Anti-Competitive Agreement or Conduct, beginning with the definition of the relevant market and proceeding to an assessment of the totality of evidence to determine whether it is more likely than not that an entity has engaged in Anti-Competitive Agreement or Conduct.
In addition, Section 1, Rule 7 of the Implementing Rules and Regulations (IRR) of the Philippine Competition Act elaborates this determination. It provides:
SECTION 1. Determination of an Anti-Competitive Agreement or Conduct. —
In determining whether an anti-competitive agreement or conduct substantially prevents, restricts, or lessens competition, the Commission, in appropriate cases, shall, inter alia:
(a) Define the relevant market allegedly affected by the anti-competitive agreement or conduct, following the principles laid out in Section 24 of the Act and Rule 5 of these Rules;
(b) Determine if there is actual or potential adverse impact on competition in the relevant market caused by the alleged agreement or conduct, and if such impact is substantial and outweighs the actual or potential efficiency gains that result from the agreement or conduct;
(c) Adopt a broad and forward-looking perspective, recognizing future market developments, any overriding need to make the goods or services available to consumers, the requirements of large investments in infrastructure, the requirements of law, and the need of our economy to respond to international competition, but also taking account of past behavior of the parties involved and prevailing market conditions;
(d) Balance the need to ensure that competition is not prevented or substantially restricted and the risk that competition efficiency, productivity, innovation, or development of priority areas or industries in the general interest of the country may be deterred by overzealous or undue intervention; and
(e) Assess the totality of evidence on whether it is more likely than not that the entity has engaged in anti-competitive agreement or conduct, including whether the entity’s conduct was done with a reasonable commercial purpose, such as but not limited to, phasing out of a product or closure of a business, or as a reasonable commercial response to the market entry or conduct of a competitor.
Taken together, Section 26 of the Philippine Competition Act and Section 1 of Rule 7 of the IRR demonstrate that the Commission does not rely on rigid tests. Instead, the Commission considers a variety of factors, as stated above, in determining whether an agreement or conduct is anti-competitive. This approach enables the Commission to distinguish between conduct or agreements that are prohibited under the law and those that are permissible or do not substantially harm competition.
Related Articles:
- ANTI-COMPETITIVE AGREEMENTS UNDER THE PHILIPPINE COMPETITION ACT
- WHAT ARE THE POWERS AND FUNCTIONS OF THE PHILIPPINE COMPETITION COMMISSION?
- Suppressing the Predators in Business: A Brief Discussion on the Philippine Competition Act of 2015 (Republic Act No. 10667)
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Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding legal services, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/ 09175772207/ 09778050020.
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