Philippine

Competition Act
(R.A. No. 10667)
By: Atty. Omelkhair E. Ismael, RN
Enacted in 2015, Republic Act No. 10667 or the Philippine Competition
Act (PCA) is the country’s primary competition law.

It defines, prohibits, and penalizes anti-competitive practices, with the

aim of enhancing economic efficiency and promoting free and fair
competition in trade, industry, and all commercial economic activities.
 Overview
1. Definitions and scope of application
2. Power and functions of the Philippine Competition Commission
3. Prohibited acts
a. Anti-competitive agreements
i. Per se violations
ii. Not per se violations
b. Abuse of dominant position
c. Prohibited mergers and acquisitions
d. Exceptions
4. Covered transactions
a. Threshold for compulsory notification
b. Notifying entity
c. Exceptions
5. Determining the relevant market
6. Determining control or dominance of market
7. Determining existence of anti-competitive conduct
8. Forbearance by the Philippine Competition Commission
Definitions
The Philippine Competition Act (PCA) or RA 10667 is the primary law of the Philippines for
promoting fair market competition.

It is based on the premise that efficient market competition is an effective mechanism for
allocating goods and services, and that safeguards are needed to maintain competitive
conditions.
Definitions
1. Agreement – any type or form of contract, arrangement, understanding, collective recommendation,
or concerted action, whether formal or informal, explicit or tacit, written or oral. [Sec. 4(b)]

2. Confidential business information – information which concerns or relates to the operations,

production, sales, shipments, purchases, transfers, identification of customers, inventories, or
amount or source of any income, profits, losses, expenditures. [Sec. 4(e)]

3. Control – The ability to substantially influence or direct the actions or decisions of an entity, whether
by contract, agency or otherwise. [Sec. 4(f)]

4. Dominant position – A position of economic strength that an entity or entities hold which makes it
capable of controlling the relevant market independently from any or a combination of the following:
competitors, customers, suppliers, or consumers. [Sec. 4(g)]

5. Market – The group of goods or services that are sufficiently interchangeable or substitutable and
the object of competition, and the geographic area where said goods or services are offered. [Sec.
4(i)]
Scope of Application
This Act shall:
1. Be enforceable against any person or entity engaged in any trade, industry and commerce in the
Republic of the Philippines;

2. Be applicable to international trade having direct, substantial, and reasonably foreseeable effects in
trade, industry, or commerce in the Republic of the Philippines, including those that result from acts
done outside the Republic of the Philippines.

This Act shall NOT apply to:

1. The combinations or activities of workers or employees;

2. Agreements or arrangements with their employers When such combinations, activities, agreements,
or arrangements are designed solely to facilitate collective bargaining in respect of conditions of
employment. [Sec. 3]
Power and functions of the
Philippine Competition
Commission (PCC)
Power and functions of the Philippine Competition
Commission (PCC)
The Commission shall have original and primary jurisdiction over the enforcement and implementation of PCA.

The Commission shall exercise the following powers and functions:

a. Conduct inquiry, investigate, and hear and decide on cases involving any violation of this Act and other existing
competition laws motu proprio or upon receipt of a verified complaint

b. Review proposed mergers and acquisitions, and upon exercise of its powers to review, prohibit mergers and
acquisitions that will substantially prevent, restrict, or lessen competition in the relevant market;

c. Monitor and undertake consultation with stakeholders and affected agencies

d. Stop or redress any anti-competitive agreement;

e. Conduct administrative proceedings, impose sanctions, fines or penalties for any noncompliance with or
breach of this Act and its implementing rules and regulations (IRR) and punish for contempt;
f. Issue subpoena duces tecum and subpoena ad testificandum to require the production of books, records, or other
documents or data which relate to any matter relevant to the investigation;

g. Upon order of the court, undertake inspections of business premises and other offices, land and vehicles, as used
by the entity,

h. Issue adjustment or divestiture orders including orders for corporate reorganization or divestment which are
structural remedies, should only be imposed:
1. Where there is no equally effective behavioral remedy; or
2. Where any equally effective behavioral remedy would be more burdensome for the enterprise concerned
than the structural remedy

i. Deputize any and all enforcement agencies of the government or enlist the aid and support of any private institution,
corporation, entity or association, in the implementation of its powers and functions;

j. Monitor compliance by the person or entities concerned with the cease and desist order or consent judgment;

k. Issue advisory opinions and guidelines on competition matters and submit annual and special reports to Congress,
including proposed legislation;
l. Monitor and analyze the practice of competition in markets that affect the Philippine economy;

m. Conduct, publish, and disseminate studies and reports on anti-competitive conduct and agreements to inform
and guide the industry and consumers

n. Intervene or participate in administrative and regulatory proceedings requiring consideration of the provisions of
this Act that are initiated by government agencies;

o. Assist the National Economic and Development Authority, in consultation with relevant agencies and sectors, in
the preparation and formulation of a national competition policy;

p. Act as the official representative of the Philippine government in international competition matters;

q. Promote capacity building and the sharing of best practices with other competition related bodies;

r. Advocate pro-competitive policies of the government by:

1. Reviewing economic and administrative regulations, motu proprio or upon request; and
2. Advising the Executive Branch on the competitive implications of government actions, policies and programs;
and

s. Charging reasonable fees to defray the administrative cost of the services rendered. [Sec.12]
Prohibited Acts
1. Anti-competitive Agreements
2. Abuse of Dominant Position
3. Prohibited Mergers and Acquisitions
Prohibited acts
Anti-competitive agreements

Anti-competitive agreements are those that substantially prevent, restrict, or lessen competition. It is illegal for
business rivals to act together in ways that can limit competition, lead to higher prices, or hinder other businesses
from entering the market.

Note: Agreements between or among competitors.

i. Per se violations

The following agreements, between or among competitors, are per se prohibited:

1. Restricting competition as to price, or components, 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.
ii. Not per se violations

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.

Agreements other than those specified in (i) and (ii) which have the object or effect of
substantially preventing, restricting or lessening competition shall also be prohibited. [Sec. 14]
 Examples of Anti-Competitive Agreements

▪ Price Fixing - Competitors collude with one another to fix prices for goods
or services, rather than allowing prices to be determined by market forces.

▪ Bid-Rigging – Parties participating in a tender process coordinate their

bids, rather than submit independent bid prices.

▪ Output Limitations - Competitors agree to limit production or set quotas, or

else to coordinate investment plans.

▪ Market-Sharing - Competitors agree to restrict their sales to specific

geographic areas, effectively creating local monopolies for each of them.
Administrative Fines and Penalties
First offense: Fine of up to one hundred million pesos (P100,000,000.00).

Second offense: Fine of not less than one hundred million pesos (P100,000,000.00) but not more
than two hundred fifty million pesos (P250,000,000.00).

In fixing the amount of the fine, the Commission shall have regard to both the gravity and the
duration of the violation.

Criminal Penalty
An entity that enters into any anti-competitive agreement as covered in Sec. 14 shall be penalized
by imprisonment from two (2) to seven (7) years, and a fine of not less than fifty million pesos
(P50,000,000.00) but not more than two hundred fifty million pesos (P250,000,000.00). The
penalty of imprisonment shall be imposed upon the responsible officers, and directors of the entity.

When the entities involved are juridical persons, the penalty of imprisonment shall be imposed on its
officers, directors, or employees holding managerial positions, who are knowingly and willfully
responsible for such violation.
Abuse of Dominant Position
Markets that are dominated by a single or handful of large companies are particularly vulnerable to
anticompetitive practices. In the conduct of their business, dominant companies (considering their size, scope,
and position of economic strength) may have a disproportionately severe effect on the market and its
companies.

PROHIBITED ACTS
a. Predatory Pricing - 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
• Exception: Those that develop in the market as a result of or arising from a superior product or process,
business acumen, or legal rights or laws;
c. Making a transaction subject to acceptance by the other parties of other obligations which have no
connection with the transaction;

d. Discriminatory behavior - Setting prices or other terms or conditions that discriminate unreasonably
between customers or sellers of the same goods or services, where the effect may be to lessen
competition substantially:

Exception: That the following shall be considered permissible price differentials:

1. Socialized pricing for the less fortunate sector of the economy;

2. 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;
3. 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
4. Price changes in response to changing market conditions, marketability of goods or services, or
volume;
e. Imposing restrictions on the lease or contract for sale or trade of goods or services, such as fixing
prices, giving preferential discounts or rebate upon such price, or imposing conditions not to deal with
competing entities, the object or effect of the restrictions is to prevent, restrict or lessen competition
substantially:

Exception:

1. Permissible franchising, licensing, exclusive merchandising or exclusive distributorship agreements; or

2. Agreements protecting intellectual property rights, confidential information, or trade secrets;

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 enterprises, and other
marginalized service providers and producers;
h. Exploitative behavior towards consumers, customers, and/or competitors - Directly or indirectly
imposing unfair purchase or selling price on their competitors, customers, suppliers or consumers;

Exception: Prices that develop in the market as a result of or due to a superior product or process, business
acumen or legal rights or laws

i. Limiting production, markets or technical development, to the detriment of consumers

Exception: Prices that develop in the market as a result of or due to a superior product or process, business
acumen or legal rights or laws

Administrative Fines and Penalties

First offense: Fine of up to one hundred million pesos (P100,000,000.00).

Second offense: Fine of not less than one hundred million pesos (P100,000,000.00) but not more than two
hundred fifty million pesos (P250,000,000.00).

In fixing the amount of the fine, the Commission shall have regard to both the gravity and the duration of the
violation.
 It is not illegal to be dominant
provided that a business does not
take advantage of its dominance to
substantially lessen competition in
the market.
Prohibited Mergers and Acquisitions

Mergers and acquisitions that substantially prevent, restrict or lessen competition in the relevant
market or in the market for goods or services are prohibited. [Sec. 20]

If the PCC determines that the agreement results in a prohibited merger or acquisition, it may:

a. Prohibit the implementation of the agreement;

b. Prohibit the implementation of the agreement unless and until it is modified by changes specified
by the Commission;
c. Prohibit the implementation of the agreement unless and until the pertinent party or parties enter
into legally enforceable agreements specified by the Commission. [Sec. 18]
Administrative Fines and Penalties
Grounds
a. Failure to notify the PCC when mandatory;
b. Entering into a prohibited agreement as defined.

Penalties
First offense: Fine of up to one hundred million pesos (P100,000,000.00).

Second offense: Fine of not less than one hundred million pesos (P100,000,000.00) but not more than two
hundred fifty million pesos (P250,000,000.00).In fixing the amount of the fine, the Commission shall have
regard to both the gravity and the duration of the violation.
Exceptions
1. Anti-Competitive Agreements

Prohibited agreements 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, may not necessarily be deemed a violation. [Sec. 14]

2. Abuse of Dominant Position

The ff. may not necessarily be considered an abuse of dominant position:

1. Having a dominant position in a relevant market that does not substantially prevent, restrict or
lessen competition; or
2. 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. [Sec. 15]
 3. Prohibited Mergers and Acquisitions
Prohibited mergers and acquisitions may, nonetheless, be exempt from prohibition by the
Commission when the parties establish either of the following:

1. The concentration has brought about or is likely to bring about gains in efficiencies that
are greater than the effects of any limitation on competition that result or likely to result from
the merger or acquisition agreement; or

2. A party to the merger or acquisition agreement 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 entity’s assets:
3. Provided, That 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

4. Provided further that the acquisition of the stock or other 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. [Sec. 21]
Covered Transactions
The Commission shall have the power to review mergers and acquisitions based on factors deemed relevant
by the Commission. [Sec. 16]

a. Thresholds for compulsory notification

Parties to a merger or acquisition are required to provide notification when:

a. SIZE OF PARTY THRESHOLD: The aggregate annual gross revenues in, into or from the Philippines,
or value of the assets in the Philippines of the ultimate parent entity of at least one of the acquiring or
acquired entities, including that of all entities that the ultimate parent entity controls, directly or indirectly,
exceeds Six Billion One Hundred Million Pesos (PhP6,100,000,000.00); AND

b. SIZE OF TRANSACTION THRESHOLD: The value of the transaction exceeds Two Billion Five
Hundred Million Pesos (PhP2,500,000,000.00). [Rule 4, Sec. 3, IRR of RA 10667, as amended by
PCC Commission Resolution No. 03-2019 pursuant to PCC Memo. Circ. No. 18-001, effective March 1,
2019]
Size of Party Threshold

exceeds

P6.1B
Size of Transaction Threshold

exceeds

P2.5B
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. [Sec. 19]

 b. Notifying Entity

Parties to the merger or acquisition agreement wherein the value of the transaction exceeds
Two Billion Five Hundred Million Pesos (P2,500,000,000.00) 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. [Sec. 17]

If notice to the Commission is required for a merger or acquisition, then either of the ff. must
each submit a Notification Form and comply with the procedure set forth:

• All acquiring and acquired pre-acquisition ultimate parent entities; or

• Any entity authorized by the ultimate parent entity to file notification on its behalf.
IF A TRANSACTION IS NOT SUBJECT TO COMPULSORY
NOTIFICATION, CAN THE PCC STILL REVIEW IT?
The PCC has the authority to review or investigate, motu proprio or on its own initiative, any
transaction that may result in substantial lessening or restriction of competition in a
market. Motu proprio means that, even without notification, the PCC may commence a review
of the proposed transaction.

Additionally, an agreement consummated in violation of compulsory notification requirement

shall be considered void and subject the parties to an administrative fine of one percent (1%)
to five percent (5%) of the value of the transaction.

PCA Chapter 2, Section 12 (a) and Chapter 4, Section 17

The parties shall not consummate the transaction before the expiration of the
relevant periods provided in this Rule. [Rule 4, Sec.2(b), IRR]

In the formation of a joint venture (other than in connection with a merger or

consolidation), the contributing entities shall be deemed acquiring entities, and the
joint venture shall be deemed the acquired entity. [Rule 4, Sec.2(c), IRR]
Illustrative case:

In April 2018, the PCC began a motu proprio review of the acquisition by ride-hailing service
provider Grab Holdings, Inc. (GHI) and MyTaxi.PH, Inc. (MTPH) of its competitor, Uber B.V.
(UBV) and Uber Systems, Inc. (USI). The PCC’s Mergers and Acquisitions Office issued a
Statement of Concerns (SOC) in May. The competition concerns flagged by the SOC included
price increases and service deterioration arising from the merger of the country’s two biggest
ride-hailing apps. Amid the review, Grab offered to address the competition concerns, which
was the basis of the PCC’s subsequent decision clearing the merger subject to conditions.

For more information, see Merger of dominant ride-hailing firms

d. Exceptions
The Commission shall, from time to time, adopt and publish regulations stipulating exceptions or
exemptions from the notification requirement. [Sec. 19]

An internal restructuring within a group of companies is exempt from notification if the acquiring and
acquired entities have the same ultimate parent entity (UPE).

Mergers or acquisitions are not considered purely internal and, therefore, do not qualify for the
exemption, if the restructuring leads to a change in control.

Such exemption shall not prevent the Commission from commencing a motu proprio review of
mergers and acquisitions under the IRR. [PCC Clarificatory Note 16-002]
Determining the Relevant Market
The Relevant Market refers to the market in which a particular good or
service is sold and which is a combination of the relevant product market
and the relevant geographic market, defined as follows:

1. A relevant product market comprises all those goods and/or services

which are regarded as interchangeable or substitutable by the
consumer or the customer, by reason of the goods and/or services’
characteristics, their prices and their intended use; and
2. The relevant geographic market comprises the area in which the
entity concerned is involved in the supply and demand of goods and
services, in which the conditions of competition are sufficiently
homogenous and which can be distinguished from neighboring areas
because the conditions of competition are different in those areas.
For purposes of determining the relevant market, the following factors, among others,
affecting the substitutability among goods or services constituting such market and the geographic
area delineating the boundaries of the market shall be considered:

1. The possibilities of substituting the goods or services in question, with others of domestic or
foreign origin, considering the technological possibilities, extent to which substitutes are
available to consumers and time required for such substitution;

2. The cost of distribution of the good or service, its raw materials, its supplements and
substitutes from other areas and abroad, considering freight, insurance, import duties and non-
tariff restrictions; the restrictions imposed by economic agents or by their associations; and the
time required to supply the market from those areas;

3. The cost and probability of users or consumers seeking other markets; and

4. National, local or international restrictions which limit access by users or consumers to

alternate sources of supply or the access of suppliers
Determining the Control or Dominance of Market
In determining whether an entity has market dominant position, the Commission shall
consider the following:

1. The share of the entity in the relevant market and whether it is able to fix prices
unilaterally or to restrict supply in the relevant market;
2. The existence of barriers to entry and the elements which could foreseeably alter both
said barriers and the supply from competitors;
3. The existence and power of its competitors;
4. The possibility of access by its competitors or other entities to its sources of inputs;
5. The power of its customers to switch to other goods or services;
6. Its recent conducts; and
7. Other criteria established by the regulations. [Sec. 27]
Presumption

Presumption of market dominant position if the market share of

an entity in the relevant market is at least fifty percent (50%),
unless a new market share threshold is determined by the
Commission for that particular sector. [Sec. 27]
Determining Existence of Anti-Competitive Conduct
In determining whether anti-competitive agreement or conduct has been committed, the
Commission shall:

1. Define the relevant market allegedly affected by the anti-competitive agreement or conduct;

2. 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;

3. 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;
4. 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

5. 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.
Forbearance by the Philippine Competition
Commission
The Commission may forbear from applying the provisions of this Act, for a limited time, in
whole or in part, in all or specific cases, on an entity or group of entities, if in its determination:

1. Enforcement is not necessary to the attainment of the policy objectives of this Act;

2. Forbearance will neither impede competition in the market where the entity or group of
entities seeking exemption operates nor in related markets; and

3. Forbearance is consistent with public interest and the benefit and welfare of the
consumers.[Sec.28]
A public hearing shall be held to assist
the Commission in making this
determination.

In the event that the basis for the issuance

of the exemption order ceases to be valid,
the order may be withdrawn by the
Commission. [Sec. 28]