Background of the case:

The bus/private operators wants to form consortium with an objective to procure an

exclusive partnership with a sole automated provider for all the bus/private operators.

Issue:

Whether or not entering into a contractual arrangement exclusively with one provider
constitutes violation of the provisions of the Philippine Competition Act.

Yes. In the case of Competition Enforcement Office of the Philippine Competition Commission
v. Urban Deca Homes Manila Condominium Corporation and 8990 Holdings, Inc., PCC Case
No. E-2019-001, the Philippine Competition Commission (PCC) has ruled that the
exclusive deal between Urban Deca Homes Manila Condominium Corporation (“UDH
Manila Condo Corp”) and Itech Rar Solutions, Inc., a sole Internet Service Provider
(“ISPs”) on its residents and tenants, which prevents the latter from availing alternative
fixed-line ISPs, constitutes an abuse of market dominance in violation of Section 15 of
the Philippine Competition Act (PCA) which prohibits abuses of dominant position.

The case stemmed from the Statement of Objections (“SO”) filed by the Competition
Enforcement Office (“Enforcement Office”) against the Respondents UDH Manila
Condo Corp and 8990 Holdings, Inc. (“8990 Holdings”) concerning the anticompetitive
conduct being committed by the respondents in UDH Manila. According to the SO,
UDH Manila Condo Corp abused its dominant position in the provision of property
management services by preventing ISPs other than Fiber to Deca Homes (“FTDH”)
from providing fixed-line internet services to the residents of UDH Manila. As a result
of such abuse of dominant position, tenants and residents of UDH Manila have been
prejudiced as they were deprived of choices or alternatives to FTDH’s fixed-line
internet services with which they have complaints regarding its quality and prices.
Respondents admitted their anticompetitive conduct arising from the contractual
arrangement which resulted in a situation wherein the ISPs was limited only to FTDH
and subsequently submitted their Amended Joint Motion before the PCC for their
commitments, conditions and terms to remedy the harms arising from the respondent’s
abuse of dominant position in which the PCC confirmed the sufficiency of the proposed
measures.

The PCC emphasized that an entity’s dominance in a market is not per se

anticompetitive. However, Section 15 of the PCA prohibits abuse of such dominance
that would substantially prevent, restrict, or lessen competition.
Section 4(g) of the PCA provides that an entity is in dominant position in the
market if it is in a position of economic strength which makes it capable of
controlling the relevant market independently from any or a combination of
the following: competitors, customers, suppliers, or consumers.

Dominance that constitutes a violation of competition laws, as explained by the

Court of Justice in United Brands vs. Commission, is one that relates to a position
of economic strength enjoyed by an undertaking (entity) which enables it to
prevent effective competition being maintained on the relevant market by
affording it the power to behave to an appreciable extent independently of its
competitors, customers and ultimately of its consumers.

Indeed, a market dominant entity bears a “special responsibility, irrespective of

the causes of that position, not to allow its conduct to impair genuine undistorted
competition” in a relevant market.

Antitrust Laws in the Philippines

Antitrust laws, also referred as competition laws, are statutes developed to

protect consumers from predatory business practices. These laws ensure that fair
competition exists in an open-market economy. Antitrust laws are applied to a
wide range of questionable business activities including but not limited to price
fixing, illegal combinations, hoarding, profiteering, tying, coordination, abuse of
market power, and other arrangements in such industries.

I. Philippine Competition Act

On 21 July 2015, the Republic Act 10667 or the Philippine Competition Act (PCA)
was signed into law. The PCA prohibits anti-competitive agreements; abuse of a
dominant position; and anti-competitive mergers and acquisitions.

The provisions of the PCA are applicable to any person or entity engaged in any
trade, industry and commerce in the Republic of the Philippines. It shall likewise
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.

The act shall not apply to the combinations or activities of workers or employees
nor to 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,
PCA)

To implement the national competition policy and attain the objectives and
purposes of the PCA, the Philippine Competition Commission (PCC), was
created. The PCC is an independent quasi-judicial body aims to promote and
maintain market competition within the Philippines by regulating anti-
competition behavior.

A. Prohibited Acts under Philippine Competition Act

1. Anti-Competitive Agreements

Anti-competitive agreements are agreements that prevent, restrict or distort

competition.1 The PCA provides three kinds of anti-competitive agreements:

i. Agreements between or among competitors which are per se prohibited

such as price fixing and bid rigging;
ii. Agreements between or among competitors which have the object or
effect of substantially preventing, restricting or lessening competition; and
iii. 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.

2. Dominant Position

Under the PCA, dominant position refers to 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 competitors, customers, suppliers, or
consumers. (Sec. 4(g), PCA)

In determining whether a certain entity has a dominant position, the following factors
shall be considered2:

a) 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;

1
https://www.cccs.gov.sg/anti-competitive-behaviour/anti-competitive-agreements
2
Section 2, Rule 8, Implementing Rules and Regulations of Republic Act No. 10667.
 b) The existence of barriers to entry and the elements which could alter those
barriers and the supply from competitors;
c) The existence and power of its competitors;
d) The possibility of access by its competitors or other entities to its sources of
inputs;
e) The power of its customers to switch to other goods or services; or
f) Recent conducts of the entity.

II. Other Antitrust Laws

1. The 1987 Constitution

Article XII, Section 19 provides that the State shall regulate or prohibit monopolies
when the public interest so requires. No combinations in restraint of trade or unfair
competition shall be allowed.

2. The Civil Code of the Philippines

Article 28 of the Civil Code of the Philippines provides that unfair competition in
agriculture, commercial or industrial enterprises or in labor through the use of force,
intimidation, deceit, machination or any other unjust, oppressive or high-handed
method shall give rise to a right of action by the person who thereby suffers damage.

3. The Revised Penal Code

Article 186 of the Revised Penal Code prohibits monopolies and combinations in
restraint of trade. The following acts are prohibited:

i. Any person who shall enter into any contract or agreement or shall take part in
any conspiracy or combination in the form of a trust or otherwise, in restraint of
trade or commerce or to prevent by artificial means free competition in the
market;

ii. Any person who shall monopolize any merchandise or object of trade or
commerce, or shall combine with any other person or persons to monopolize and
merchandise or object in order to alter the price thereof by spreading false
rumors or making use of any other article to restrain free competition in the
market;
iii. Any person who, being a manufacturer, producer, or processor of any
merchandise or object of commerce or an importer of any merchandise or object
of commerce from any foreign country, either as principal or agent, wholesaler or
retailer, shall combine, conspire or agree in any manner with any person likewise
engaged in the manufacture, production, processing, assembling or importation
of such merchandise or object of commerce or with any other persons not so
similarly engaged for the purpose of making transactions prejudicial to lawful
commerce, or of increasing the market price in any part of the Philippines, of any
such merchandise or object of commerce manufactured, produced, processed,
assembled in or imported into the Philippines, or of any article in the
manufacture of which such manufactured, produced, or imported merchandise
or object of commerce is used.