Contents

INTRODUCTION 6

Why is fair market competition important? 6
What happens if there is no competition? 8

THE PHILIPPINE COMPETITION ACT (PCA) AND THE 11

PHILIPPINE COMPETITION COMMISSION (PCC)

What is the PCA, and why is it important? 11
What business practices does the PCA prohibit? 14
What businesses and business entities does the PCA cover? 14

COMBATING ANTI-COMPETITIVE PRACTICES 15

The Philippine Competition Commission (PCC) 15
PCC Decisions 16
Report Anti-Competitive Practices to the PCC 17

UNDERSTANDING ANTI-COMPETITIVE AGREEMENTS 18

UNDERSTANDING CARTELS 24

UNDERSTANDING ABUSE OF DOMINANT POSITION 26

UNDERSTANDING MERGERS AND ACQUISITIONS 29

 About the PCC
The Philippine Competition Commission (PCC) is a newly constituted
independent quasi-judicial body mandated to implement the national
competition policy, and enforce Republic Act No. 10667 or the Philippine
Competition Act (PCA), which serves as the primary competition law in the
Philippines for promoting and protecting competitive markets.

Over the last few years, our country has made significant strides in economic
growth. Amid this positive momentum, there remains a challenge in attaining
sustained and inclusive development where no one is left behind.

The enactment of the PCA, and the creation of the PCC, aims to promote
economic efficiency and ensure fair and healthy market competition where
everyone across our country, from metro cities to far-flung communities, can
contribute to and benefit from economic developments.

A stable and fair playing field is expected to result in greater interest among
foreign investors which, in turn, would lead to further market growth and global
opportunities for Filipino companies, big or small.
 A Handbook for the General Public

Your

Pca
handbook

You play a big part in building strong, competitive markets in the country. This
handbook explains the key priorities of the Philippine Competition Act (PCA),
how it works in your best interest as a consumer, and how you can help the
Philippine Competition Commission (PCC) enforce it.

5
PHILIPPINE COMPETITION ACT
INTRODUCTION

Why is
fair competition
good for Filipinos?

When businesses compete,

consumers benefit through Competition keeps the
lower prices, more product
economy working well
choices, and better-quality
goods and services. for everyone.

Without competition, there

is no motivation to provide
convenient and fast services
to consumers, and no reason
to innovate products.

6
 A Handbook for the General Public

Consumers benefit from

competition in markets.
Thanks to competition, a
wide variety of goods and
services remain affordable
and of good quality.

Competition benefits businesses,

too. It ensures that they can
access, at reasonable cost, supplies
and inputs they need for their
enterprise, such as raw materials,
labor, and financing.

In competitive markets, companies

play fair and no one benefits from
undue advantage. This makes it
easier to start and operate a new
business. Competition enables
small businesses to compete with
bigger businesses on fair terms.

7
PHILIPPINE COMPETITION ACT

What would happen if

businesses decided
not to independently
and fairly compete
with one another?

8
 A Handbook for the General Public

Businesses might band together

and agree on practices that would
benefit them most at the
expense of consumers.

For example, they could agree to set a common high selling price for their products
in order to maximize profit, to the detriment of consumers.

They could deprive consumers of the benefit of fair competition, where the dynamics of
supply and demand ultimately determine fair market prices.

They might
enter into
Anti-Competitive
Agreements.

9
PHILIPPINE COMPETITION ACT

Markets that are dominated by a

monopoly or by a small number of
companies are vulnerable to
anti-competitive practices.

When only one company supplies

a product or a service, it operates
as a monopoly.

This refers to instances when

Abuse businesses, together or alone,
of restrict or prevent competition
Dominance in certain industries or segments
through their market dominance.

Small enterprises can be For example, when inputs Fewer choices, higher
forced out of a market when are withheld or sold under prices, and lack of
bigger firms abuse their unfair conditions such as quality products and
dominant position in the unreasonable prices or services mean consumers
market. This happens when usurious payment terms, ultimately lose.
dominant firms are able businesses lose profit
to create an environment and may find it difficult to
where smaller firms are continue altogether.
unable to compete.

10
 A Handbook for the General Public
PCA AND PCC

What is the
Philippine
Competition Act?

Republic Act No. 10667 or the Philippine Competition Act (PCA) is the
primary policy of the Philippines for promoting and protecting fair market
competition. It became effective on August 8, 2015.

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PHILIPPINE COMPETITION ACT

What does
fair competition
look like?

Promotes Facilitates
Encourages private
entrepreneurial spirit technology development
investments
and transfer

Allows consumers to exercise

Enhances their right of choice over goods
resource productivity and services

Why is competition important?

In a competitive market, businesses
are more attuned to consumer demand.
Consumers win when businesses
compete. Fair competition leads
to more choices, lower prices,
and higher quality of goods and
services. Ultimately, competition
fosters more rapid economic growth
and poverty reduction.

12
 A Handbook for the General Public

Did you know?

The Philippines is one of more than 140 countries with a Competition Law. While it is one
of the last member states of the Association of Southeast Asian Nations (ASEAN) to pass
such a law, it only took six months to establish the Philippine Competition Commission
(PCC) from the enactment of the PCA.

Country Competition Competition Year

Authority Policy
Law Number 5 of 1999
concerning the Prohibition
Komisi Pengawas
Indonesia of Monopolistic Practices 1999
Persaingan Usaha and Unfair Business
Competition

Office of Trade Trade

Thailand 1999
Competition Commission Competition Act

Competition Commission
Singapore Competition Act 2004
of Singapore

Vietnam Competition
Vietnam Competition Law 2004
Authority

Malaysia Competition
Malaysia Competition Act 2010
Commission
Economic Planning and
Brunei
Development - Competition Order 2015
Darussalam
Prime Minister’s Office
Ministry of Commerce -
Myanmar Competition Law 2015
Department of Trade

Philippine Competition Philippine

Philippines 2015
Commission Competition Act

Ministry of Industry and

Lao PDR Competition Law 2016
Commerce

Cambodiaa
a
Cambodia has not yet legislated its draft competition law.
Source: ASEAN Competition Policy and Law, 2017

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PHILIPPINE COMPETITION ACT

What business practices

does the PCA
prohibit?

Entering into Abusing a dominant Entering into

anti-competitive market position anti-competitive
agreements mergers and acquisitions

What businesses and business

entities does the PCA
cover?
The PCA covers any person or entity engaged in trade, industry,
and commerce in the Republic of the Philippines.

It also applies to international trade that may impact trade,

industry, and commerce in the Philippines.

The PCA does not apply to collective bargaining agreements or

arrangements between workers and employers, and other such
activities affecting conditions of employment.

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 A Handbook for the General Public
COMBATING ANTI-COMPETITIVE PRACTICES

The
philippine
competition
commission

The PCA created the Philippine

Competition Commission (PCC),
which has been mandated to
promote the well-being and
efficiency of competition in
the market for the benefit of
consumers and businesses.
The PCC’s main objective is
to enhance consumer welfare
and promote economic growth
and development.

The PCC has jurisdiction over

all competition-related issues,
and must be consulted by sector
regulators on any activities that
may impact competition.

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PHILIPPINE COMPETITION ACT

PCC Decisions
The PCC is empowered to impose significant fines and penalties
on businesses which have been found to violate the prohibited acts
provided in the PCA, to be in contempt, or fail to comply with orders,
or supply misleading or false information to the PCC. Only the Court of
Appeals and the Supreme Court may issue a temporary restraining order
or injunction against the PCC in the exercise of its duties and functions.

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 A Handbook for the General Public

Report Anti-Competitive Practices to the PCC

The identity of the persons who

provide information to the Commission
under condition of anonymity is kept
confidential. Further, the law protects
confidential business information
submitted to the Commission.

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PHILIPPINE COMPETITION ACT
UNDERSTANDING ANTI-COMPETITIVE AGREEMENTS

anti-
CompetitiVE
AGREEMENTS
An anti-competitive
agreement includes
any type or form of
contract, arrangement, or
understanding between
or among businesses to fix
prices or manipulate bids. The
agreement may be:

1. Formal or informal
2. Explicit (written or
announced) or tacit
3. Written or oral (verbal
agreement)

Some agreements are also

considered anti-competitive
if their object or effect would
substantially prevent, restrict,
or lessen market competition.
Examples of such agreements
are supply restriction and
market sharing.

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 A Handbook for the General Public

HORIZONTAL
VS.
VERTICAL
AGREEMENTS

Horizontal agreements are made between businesses in the same

level of the production chain, while vertical agreements are made
between players in different levels of the production chain.

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PHILIPPINE COMPETITION ACT

Horizontal
AGREEMENTS

Three panaderias in the same town agree

to sell their cupcakes for the same price.

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 A Handbook for the General Public

Vertical
AGREEMENTS

Flour miller colludes with

other businesses in the
production chain by agreeing
on a selling price for each
stage of production, from the
miller to the retail store.

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PHILIPPINE COMPETITION ACT

Examples of
anti-competitive
agreements

PRICE FIXING OUTPUT LIMITATION

Businesses agree to directly or Businesses agree to limit production

indirectly fix purchase or by restricting output or setting
selling price. quotas. This creates an artificial
shortage in the market, thereby
Under fair market competition, driving prices up. Consumers end up
the dynamics of supply and
paying more, and businesses earn
demand determine the prices
larger profits without innovating
of goods and services. When
or being efficient.
businesses act independently
of the market by agreeing to fix
prices, they are engaging in
anti-competitive behavior.

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 A Handbook for the General Public

MARKET SHARING
Businesses divide the market and claim dominance according to territory,
customer demographic, sales volume, or product type. This creates local
monopolies, and deprives consumers of choices that would have been
available under fair market competition.

BID RIGGING
Businesses agree to fix prices at an auction or to manipulate bids. At a
fair bidding or auction, the business offering the best price or terms wins.
Businesses commit bid rigging when they set who among the bidders will win
the bid. They do this by submitting higher-priced bids or withdrawing their
bids in order for the “pre-selected” winner to get the contract. This is an
anti-competitive practice that forces buyers to select the higher-priced bid
and pass the additional cost to consumers.

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PHILIPPINE COMPETITION ACT
UNDERSTANDING CARTELS

What are
CARTELS?

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 A Handbook for the General Public

A cartel is a formal or informal organization of enterprises that

agree to engage in anti-competitive conduct such as fixing of prices or
market sharing.

If you or anybody you know has knowledge

of cartels in the Philippines, you can inform
the PCC through landline (+632 515 4536) or
e-mail ([email protected]).

25
PHILIPPINE COMPETITION ACT
UNDERSTANDING ABUSE OF DOMINANT POSITION

Understanding
Abuse of
dominant
position

A business may become dominant in a certain industry by gaining a significant

share in the market and becoming the industry leader by virtue of years in
operation and first-mover advantage. Being a market leader is not prohibited,
but abusing one’s dominant market position to limit or reduce competition
may be violative of the PCA.

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 A Handbook for the General Public

Examples of

ABUSE OF
DOMINANCE

PREDATORY PRICING
Selling goods or services below cost in order to drive
competitors out of a market.

PRICE DISCRIMINATION
Setting prices or terms that unreasonably exclude
some sellers or customers of the same goods
or services.

Restricting or refusing
to supply
When the dominant business damages competitor
operations by refusing to provide them goods
or services.

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PHILIPPINE COMPETITION ACT

Exploitative behavior
toward customers
or competitors
Dominant companies use this position to
exploit consumers and competitors by charging
excessive or unfair purchase or sales prices,
or by setting unfair trading conditions.

BLOCKING COMPETITORS’
ACCESS TO goods and
resources
A dominant business may purchase goods and
resources which it does not need, but their
competitor does. By removing this access to
much-needed materials, a dominant business can
force its competitors out of the market.

Dominant businesses found guilty of

abusive conduct may be penalized with
fines worth up to PhP100 million in the
first instance, and higher penalties later on.

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 A Handbook for the General Public
UNDERSTANDING MERGERS AND ACQUISITIONS

Understanding
Mergers AND
ACQUISITIONS

Mergers are the joining of two or more entities into an existing entity
or to form a new entity. Acquisitions are the purchase or transfer of a
company’s assets or securities which results in the change of control
over the acquired company or a part of it.

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PHILIPPINE COMPETITION ACT

Mergers can be beneficial for

consumers, particularly when these
allow businesses to operate at a
larger scale, which results in lower
prices due to lower cost of producing
goods or supplying services.

However, there are mergers and

acquisitions that could substantially
prevent, restrict, or lessen competition
in a market, thereby leaving consumers
vulnerable to higher prices and fewer
choices. These mergers are prohibited
under the Philippine Competition Act.

To ensure that markets are protected

against anti-competitive mergers and
acquisitions, the law requires that
when businesses enter into mergers
and acquisitions that are worth more
than PhP1 billion, they should formally
notify the PCC before closing the deal.

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 A Handbook for the General Public

The PCC conducts a merger review

to determine if the merger will
substantially lessen competition.
If the PCC finds that a deal between
companies will result in consumer
harm, it can block the merger and
impose penalties.

Even mergers and acquisitions worth less than PhP1 billion may harm
consumers, particularly when the market is small. For example, when the
only two grocery stores in a town, each worth PhP1 million, decide to
merge, the merger will result in a monopoly within the locality.

In this example, the merging businesses are

not required to notify the PCC because the
merger would be worth less than
PhP1 billion. However, the PCC may, of its
own volition, review the proposed merger.
Moreover, consumer groups, potential
competitors, or any other entity can ask the
PCC to review the transaction.

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\\\\\\\\\\\\\\\\\

Contact Us

The Philippine Competition Commission is

open Mondays through Fridays, from 9:00 a.m.
to 5:00 p.m. Submissions of notifications and
complaints are accepted during these hours.

 2nd Floor, Development Academy of the Philippines

\\\\\\
(DAP) Building, San Miguel Avenue, Ortigas Center, Pasig
City, Philippines

 www.phcc.gov.ph

 +632 515 4536

 [email protected]

 [email protected]

 [email protected]