Delgado, Rod Bendolf F.

2014606661
Legal Research and Thesis Writing JD40101

LEGAL MEMORANDUM

Topic: What is the standard of reasonable ground/basis in competition law cases?

Competition laws, also known as antitrust laws, are “laws that stabilize the market
condition by regulating the monopoly and unfair business practices”.1 In 2015, the Philippine
Congress passed the Philippine Competition Act (PCA) or R.A. 10667. This legislation seeks to
“protect the wellbeing of consumers and preserve the efficiency of competition in the
marketplace”.2

Within this act, it reflected its belief on how competition would encourage efficiency and
innovation in businesses; According to the Philippine Competition Commission (PCC), tasked to
“implement the national competition policy and attain the objectives and purposes of this Act”,
competition -

 Promotes entrepreneurial spirit,

 Encourages private investments,
 Facilitates technology development and transfer, and
 Enhances resource productivity. Id.

This provides a vague goal set by the PCA, which can be used as a standard that must be
attained in order to fulfil its purpose. In the Philippines, there have been no cases on competition
law. Because of the lack of jurisprudence in the Philippine context, resorts should be made to
foreign jurisprudence. Foreign cases will then be applied to the standard set by the PCA, as
reasonable grounds/basis in competition law cases.

1
Competition Law, (n.d.), In US Legal, Inc. Retrieved from https://definitions.uslegal.com/c/competition-law/
2
Philippine Competition Commission, Philippine Competition Law, available at https://phcc.gov.ph/republic-act-
no-10667/ (2018, December 3)
 PROMOTES ENTREPRENEURIAL SPIRIT

The first standard of a reasonable ground/basis that can be used in competition law cases
is if the trade, business, or industry failed to promote entrepreneurial spirit. According to
Cambridge dictionary, the word entrepreneurial “involves seeing a new opportunity and taking
risks”.3 In the year 2017, the European imposed a fine on Google for “abusing its dominant position
4
in online search by giving preferential treatment to its own comparison shopping service.”
Favouring one’s own services is a type of abuse of dominance, and this act has been prohibited by
the European Commission.5 The reason behind this prohibition is, according to the case
“consumers are in a situation with a smaller variety of visible comparison shopping services—i.e.
primarily Google shopping—that may not offer them the best service.” Id at 4.

Therefore, failure to promote entrepreneurial spirit by favouring one’s own services can be
used as reasonable ground/basis in competition law cases.

ENCOURAGING PRIVATE INVESTMENTS

The second standard of a reasonable ground/basis that can be used in competition law cases
is if the trade, business, or industry failed to encourage private investments or investments in
general. Restricting or limiting market allocations, such as investments, is highly condemned by
the Competition Authority in Italy.6 In the case Consorzio Industrie Fiammiferi, the Competition
Authority held that, for the first time, “pursuant to the principle of supremacy of EU law, national
legislation on the rules on the establishment and activities of the Italian match manufacturer
consortium were incompatible with certain articles such as Article 101 of the TFEU”. Id.

3
Entrepreneurial, (n.d.), In Cambridge Dictionary. Retrieved from https://dictionary.cambridge.org/us/dictionary/
english/entrepreneurial
4
Compelling Economics, Agenda The Google case: shop till you drop (off the screen) March 2018, available at
https://www.oxera.com/agenda/google-shopping-case/ (2018, December 3)
5
Cullen International, #10CompetitionLawCasesYouShouldKnowAbout, available at
https://pages.culleninternational.com/10_Competition_Law_Cases?fbclid=IwAR2zIlUTI7DvNv-
3cFOHnKfaG36e9HWFa7nu8DMq2e-k65DMONtSzlgHUcw (2018, December 3)
6
Siragusa, M., Beretta, M., & Bay, M., (n.d.), Competition Law in Italy, Retrieved from
https://www.clearygottlieb.com/-/media/organize-archive/cgsh/files/other-pdfs/competition-laws-outside-the-
united-states.pdf
 Article 101 of the TFEU (Treaty on the Functioning of the European Union), states in
paragraph one, “The following shall be prohibited as incompatible with the internal market: […]
(b) limit or control production, markets, technical development, or investment;”7

The infringement of Article 101 of the TFEU was attributable to the parties’ actions and
the rules were therefore disregarded by the Italian courts and any public administration. Id at 6.
Hence, failing to encourage private investments, and investments in general, can be used as
reasonable ground/basis in competition law cases.

FACILITATES TECHNOLOGY DEVELOPMENT AND TRANSFER

The third standard of a reasonable ground/basis that can be used in competition law cases
is if the trade, business, or industry failed to facilitate technology development and transfer. In the
year 2008, The Secretariat of the Competition Commission of Switzerland submitted an
application to the Commission to issue sanctions regarding Swisscom's abuse of its market
dominant position in the area of ADSL services.8 It was alleged that Swisscom “may abuse its
exclusive broadcasting rights by discriminating among competing pay TV distributors”. 5 Though,
it was further declared that Swisscom did not perceive a case for market dominance, for the
Secretariat of the Competition Commission failed to take into account “the fact that cable network
operators could also offer broadband setup services”. Id at 8.

If, however, it was proven that Swisscom had abused its broadcasting rights by
discriminating among competing cable network operators/pay TV distributors, it could have been
used as a ground for market dominance.

Therefore, failure to facilitate or advance technological development by discriminating

operators/industries that use a different type of technology can be used as a reasonable
ground/basis for competition law cases.

7
Official Journal 115, Consolidated version of the Treaty on the Functioning of the European Union, available at
https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:12008E101:EN:HTML (2018, December 3
8
Swisscom, Active competition on the broadband market, available at https://www.swisscom.ch/content/dam/
swisscom/en/about/investors/news/2008/20081113-01-wettbewerb-im-breitbandmarkt-spielt.pdf
 ENHANCES RESOURCE PRODUCTIVITY

The final standard of a reasonable ground/basis that can be used in competition law cases
is if the trade, business, or industry failed to enhance resource productivity. In a 2013 case in Spain,
the Spanish NCA found that Correos (Spanish postal incumbent) “abused its dominant position in
the upstream market for access services to the public postal network and the downstream services
market for administrative notifications”.9 Correos’ refusal to supply access services not only
prevents resource productivity but also prevented them from winning contracts from public
administrations. 5 The Spanish NCA concluded that Correos’ refusal “created an insurmountable
barrier to entry in the downstream market, because it prevented other operators from providing
administrative notification services to public authorities”. Id at 9.

Therefore, failure to enhance one’s resource productivity through one’s refusal to supply
services to other markets/operators in need of such, in order for them to provide their own services,
can be used as a reasonable ground/basis in competition law cases.

9
National Competition Laws Bulletin, Postal services and competition law: An overview of EU and national case
law, available at https://www.lw.com/thoughtLeadership/overview-of-eu-national-case-law (2018, December 3