https://www.phcc.gov.

ph/competition-law-bar-reference-materials/

SCOPE AND APPLICATION OF THE PHILIPPINE COMPETITION ACT

WHAT IS THE PHILIPPINE COMPETITION ACT?

The PCA is the primary law in the Philippines enacted to promote and protect market competition. The law
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. Its key
prohibitions include entering into anti-competitive agreements, abusing a dominant market position, and
forming anti-competitive mergers and acquisitions (M&As).

WHO AND WHAT ARE COVERED BY THE PHILIPPINE COMPETITION ACT?

The PCA covers any person or entity engaged in trade, industry, and commerce in the Philippines. The law
also applies to international trade that may impact trade, industry, and commerce in the country. The law,
however, does not apply to collective bargaining agreements or arrangements between workers and
employers and activities to facilitate collective bargaining agreements in respect of conditions of employment.
POWERS AND FUNCTIONS OF THE
PHILIPPINE COMPETITION COMMISSION
WHAT IS THE PHILIPPINE COMPETITION COMMISSION (PCC)?

The PCC is an independent quasi-judicial government agency mandated to implement the national
competition policy and enforce the PCA. It has original and primary jurisdiction over the enforcement and
implementation of the PCA and its IRR.

The OFC under the Department of Justice (DOJ-OFC) shall only conduct preliminary investigation and
undertake prosecution of all criminal offenses arising under the PCA and other competition-related laws.

WHAT ARE THE POWERS AND FUNCTIONS OF THE PCC?

As the Philippines’ antitrust authority, the PCC is mandated to exercise the following powers and functions,
among others:

(a) Conduct inquiry, investigate, and hear and decide on cases involving any violation of this Act and other
existing competition laws:

a. motu proprio
b. upon receipt of a verified complaint from an interested party
c. upon referral by the concerned regulatory agency, and institute the appropriate civil or criminal
proceedings;

(b) Review proposed mergers and acquisitions, determine thresholds for notification, determine the
requirements and procedures for notification, 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 for the purpose of
understanding market behavior;

(d) Upon finding, based on substantial evidence, that an entity has entered into an anti-competitive agreement
or has abused its dominant position after due notice and hearing, stop or redress the same, by applying
remedies, such as, but not limited to, issuance of injunctions, requirement of divestment, and disgorgement of
excess profits under such reasonable parameters that shall be prescribed by the rules and regulations
implementing this Act;

(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 and personal appearance
before the Commission, summon witnesses, administer oaths, and issue interim orders such as show cause
orders and cease and desist orders after due notice and hearing in accordance with the rules and regulations
implementing this Act;

(g) Upon order of the court, undertake inspections of business premises and other offices, land and vehicles,
as used by the entity, where it reasonably suspects that relevant books, tax records, or other documents
which relate to any matter relevant to the investigation are kept, in order to prevent the removal, concealment,
tampering with, or destruction of the books, records, or other documents;
(h) Issue adjustment or divestiture orders including orders for corporate reorganization or divestment in the
manner and under such terms and conditions as may be prescribed in the rules and regulations implementing
this Act. Adjustment or divestiture orders, 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. Changes to the structure of an enterprise as it existed before
the infringement was committed would only be proportionate to the substantial risk of a lasting or
repeated infringement that derives from the very structure of the enterprise;

(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 for the effective enforcement of this Act and
submit annual and special reports to Congress, including proposed legislation for the regulation of commerce,
trade, or industry;

(l) Monitor and analyze the practice of competition in markets that affect the Philippine economy; implement
and oversee measures to promote transparency and accountability; and ensure that prohibitions and
requirements of competition laws are adhered to;

(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 such as the Securities and Exchange
Commission, the Energy Regulatory Commission and the National Telecommunications Commission;

(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, as to whether or
not they adversely affect relevant market competition, and advising the concerned agencies against
such regulations; 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.

While it has original and primary jurisdiction in the enforcement and regulation of all competition-related
issues, the PCC works with relevant sector regulators on matters where their expertise and knowledge on the
sector are critical.
PROHIBITED ACTS: ANTI-COMPETITIVE AGREEMENTS
WHAT ARE ANTI-COMPETITIVE AGREEMENTS?

Anti-competitive agreements include agreements between or among competitors that substantially prevent,
restrict or lessen competition. Such agreements may be in the form of a contract, arrangement,
understanding, collective recommendation, or concerted action, whether formal or informal, explicit or tacit,
written or oral.

Also known as cartels, anti-competitive agreements between or among competitors involve collusive conduct
to fix prices, rig bids, limit output, or allocate the market.

Under the PCA, there are anti-competitive agreements that are per se prohibited (Section 14[a]) and there are
agreements that are prohibited for having an anti-competitive object or effect (Section 14[b] and [c]).

WHAT ARE PER SE VIOLATIONS?

These anti-competitive agreements that are inherently illegal and require no further inquiry into their actual
effect on the market or the intentions of the parties who engaged in the illegal act or agreement. The
Philippine Competition Act classifies price fixing and bid rigging as per se violations.

PRICE FIXING

Price fixing involves restricting competition as to price, or components thereof, or other terms of trade. This
happens when competitors agree on the price of goods or services, rather than independently setting their
respective prices.

Illustrative case:

In 2007, the European Commission fined three Dutch brewers for price-fixing of beer in the Netherlands.
Heineken, Grolsch, and Bavaria paid a total of 273.7 million Euros while a fourth brewer, InBev, did not
receive a fine as it participated in the Commission’s leniency program.

The Commission found that between 1996 and 1999 at least, the four brewers held numerous unofficial
meetings, during which they coordinated prices and price increases of beer in the Netherlands. Evidence
adduced, including handwritten notes, confirmed the dates and places of these unofficial meetings. The
companies were determined to have coordinated prices for both “on-trade” (consumption on the premises,
such as bars and pubs) and “off-trade” (sale through supermarkets and the like) segments of the beer market
in the Netherlands. They also coordinated occasionally on non-pricing aspects, such as conditions offered to
individual customers in the on-trade segment. The Commission further found evidence that the brewers were
aware that their actions were illegal, as they tried to conceal their activity through the use of code names and
hotels/restaurants as venues for their meetings.
BID RIGGING

Bid-rigging involves fixing prices at an auction or any form of bidding, including cover bidding, bid
suppression, bid rotation, and market allocation, among others. Bid-rigging usually occurs when parties
participating in a tender coordinate their bids rather than submit independent proposals.

Illustrative case:

In 2013, the Ontario Superior Court of Justice fined a Japanese automobile parts company CAD5 million for
conspiring with other suppliers to rig the bids for the supply of parts to the 2001 and 2006 Honda Civic models
fabricated in Canada. Furukawa Electric Co., Ltd., a supplier of electrical boxes (i.e., fuse boxes, relay boxes,
and junction blocks) used in motor vehicles, was among the pre-qualified suppliers of Honda Canada. When
Honda called for supplier quotes, Furukawa coordinated with its Japan-based competitors regarding their
price quotations or bids. These meetings resulted in an arrangement whereby Furukawa would earn the
contract for the tender. Consequently, Furukuwa was awarded the contract to supply the automobile parts of
the 2001 and 2006 models of the Honda Civic. From 2000 to 2005, the estimated sales amounted to
CAD16.5 million. The Competition Bureau learned of the international bid-rigging conspiracy through its
Leniency Program, where Furukawa offered to help the Bureau in the investigation of the case, which started
in 2009.

WHAT ARE NOT PER SE VIOLATIONS?

Not per se violations are other anti-competitive agreements prohibited by the law which have the object or
effect of substantially preventing, restricting, or lessening competition. Since these agreements are not per se
illegal, the PCC needs to conduct inquiries to determine whether they restrict competition and violate the
PCA.

SUPPLY RESTRICTION

Supply restriction is an agreement by two or more competitors which sets or limits production levels and
create an artificial supply shortage, thereby raising prices. Similar forms of anti-competitive agreements
include restrictions in markets, technical development, or investment.

Illustrative case:

In 2010, the Builders’ Association of India filed a complaint against the Cement Manufacturers’ Association
(CMA) and the cement manufacturing companies involved for engaging in a cartel arrangement. Competitors
were alleged to have discussed various confidential business information through the CMA, such as prices
and quantity of production, which led to an agreement of controlling the supply of cement products in the
region. After investigation, ten cement manufacturing companies were found guilty of artificially restricting
their output which led to price hikes of cement products across India. The Competition Commission of India
found the parties guilty of breaching the 2002 Competition Act of India and imposed penalties amounting to
INR63.17 billion.

MARKET SHARING

Market sharing is a collusive agreement by two or more competitors which divides or allocates the market.
Market sharing not only includes territories, but also customers, volume of sales or purchases, and type of
goods or services, among other considerations.
Illustrative case:

In 2011, two pharmaceutical companies admitted to dividing the market between them in providing
prescription medicines to care homes in England. From May to November 2011, Tomms Pharmacy, a trading
company under the subsidiaries of Hamsard 3149, and Lloyds Pharmacy Limited, agreed to distribute medical
products in their pre-assigned markets only, resulting in limited choices of prescription medicines for
consumers. The Office of Fair Trading (OFT) found that the arrangement breached the 1998 Competition Act
of England. The OFT fined Hamsard the amount of GBP387,856; however, under its Leniency Program, OFT
granted 100 percent reduction to Lloyds for disclosing the agreement.

WHAT ARE THE EXCEPTIONS TO THE COVERAGE OF ANTI-COMPETITIVE AGREEMENTS?

Agreements not falling under Section 14(a) and 14(b) of the PCA that have an anti-competitive object or
effect, but nevertheless contribute 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 may not necessarily be considered anti-competitive. (Note: This only applies to Section 14 (c)
of the PCA).
PROHIBITED ACTS: ABUSE OF DOMINANT POSITION
It is not illegal to have a dominant position in the market; however, it is illegal to abuse one’s dominance.

HOW TO DETERMINE CONTROL OR DOMINANCE OF MARKET?

In determining the control of an entity, the Commission may consider the following:

Control is presumed to exist when the parent owns directly or indirectly, through subsidiaries, more than one
half (1/2) of the voting power of an entity, unless in exceptional circumstances, it can clearly be demonstrated
that such ownership does not constitute control. Control also exists even when an entity owns one half (1/2)
or less of the voting power of another entity when:

(a) There is power over more than one half (1/2) of the voting rights by virtue of an agreement with
investors;
(b) There is power to direct or govern the financial and operating policies of the entity under a statute or
agreement;
(c) There is power to appoint or remove the majority of the members of the board of directors or equivalent
governing body;
(d) There is power to cast the majority votes at meetings of the board of directors or equivalent governing
body;
(e) There exists ownership over or the right to use all or a significant part of the assets of the entity;
(f) There exist rights or contracts which confer decisive influence on the decisions of the entity

WHEN CAN A BUSINESS BE CONSIDERED DOMINANT IN THE MARKET?

A 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 the following:
competitors, customers, suppliers, or consumers.

Dominance can exist either on the part of one firm (single dominance) or of two or more firms (collective
dominance). In determining whether a business has a market dominant position, the Commission will
consider the following factors:

• The share of the entity in the relevant market and whether it can fix prices on its own or restrict supply
in the relevant market;
• The competitors’ shares in the relevant market;
• Existence of barriers to entry and the elements which could change both the barriers and the supply
from competitors;
• Existence and power of competitors;
• Credible threat of future expansion by competitors or entry by potential competitors;
• Market exit of competitors;
• Bargaining strength of customers;
• Possibility of access by competitors or other enterprises to its sources of inputs;
• Power of its customers to switch to other goods or services;
• Recent market behavior;
• Ownership, possession, or control of infrastructure which are not easily duplicated;
• Technological advantages or superiority, compared to other competitors;
• Access to capital markets or financial resources;
• Economies of scale and scope;
• Vertical integration; and
• Existence of a highly developed distribution and sales network.
WHEN CAN A BUSINESS BE HELD LIABLE FOR ABUSING ITS MARKET DOMINANCE?

The PCA prohibits entities from abusing their dominant position in the relevant market by engaging in conduct
that would substantially prevent, restrict, or lessen competition.

Examples of conduct constituting abuse of dominant position:

• Selling goods or services below cost to drive competition out of the market;
• Imposing barriers to entry or committing acts that prevent competitors from growing within the market;
• Making a transaction subject to acceptance by other parties who have no connection to the
transaction;
• Setting prices or other terms or conditions that discriminate unreasonably between customers or
sellers of the same goods or services;
• Imposing restrictions on the lease or contract for sale or trade of goods or services concerning where,
to whom, or in what form a good or service may be sold or traded;
• Making supply of particular goods or services dependent upon the purchase of other goods or services
from the supplier;
• Imposing unfairly low purchase prices for the goods or services of marginalized service providers and
producers, such as farmers, fisherfolk, and micro, small, and medium enterprises (MSMEs);
• Imposing unfair purchase or selling price on competitors, customers, suppliers or consumers; and
• Limiting production, markets or technical development to the prejudice of consumers.

Illustrative case:

In a Statement of Objections filed in March 2019, the PCC Enforcement Office charged Urban Deca Homes
(UDH) Manila Condominium Corporation and 8990 Holdings, Inc. with abuse of dominance. This was due to
UDH’s imposition of a sole internet service provider (ISP) on its residents, preventing them from availing
themselves of alternative fixed-line ISPs. The Enforcement Office, the PCC’s investigative and prosecutorial
arm, found that UDH’s exclusive partnership with Itech Rar Solutions prevented the entry and access of other
providers in UDH Manila. It also found that UDH Manila’s property manager blocked other ISPs from installing
fixed-line internet on units and from marketing their services to interested residents. The probe was triggered
by numerous complaints posted by unit owners and tenants of UDH Manila in PCC’s Facebook account. The
complainants claimed they were prevented from getting other ISPs even if the in-house Fiber to Deca Homes
service was slow, expensive, and unreliable.

WHAT ARE THE EXCEPTIONS TO THE COVERAGE OF ABUSE OF DOMINANCE?

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 may not necessarily be considered an abuse of dominant position.

Additionally, the acquisition, maintenance, and increase of market share does not violate the PCA if:

• It is acquired through legitimate means, such as having superior skills, rendering superior service,
producing or distributing better-quality products, having business acumen, and using and enjoying
intellectual property rights; and
• It does not substantially prevent, restrict, or lessen competition in the market.
PROHIBITED ACTS: ANTI-COMPETITIVE MERGERS & ACQUISITIONS
WHAT ARE PROHIBITED MERGERS AND ACQUISITIONS?

Anti-competitive mergers and acquisitions (M&As) refer to transactions that substantially lessen, restrict, or
prevent competition in the relevant market as determined by the PCC in the exercise of its power to review
such transactions.

Illustrative case:

The PCC blocked the merger of two sugar millers in Southern Luzon—Universal Robina Corporation (URC)
and Central Azucarera Don Pedro, Inc. (CADPI)-Roxas Holdings, Inc. (RHI). In a Commission decision issued
in January 2019, the PCC found that URC’s buyout of its only competitor in the sugarcane milling services
market leads to a monopoly in Southern Luzon. The PCC’s Mergers and Acquisitions Office earlier raised
competition concerns on URC’s proposed acquisition of CADPI and RHI assets. In response, the merging
parties submitted their proposed voluntary commitments, but failed to sufficiently address competition
concerns raised by PCC. URC’s sugar mill is in Balayan while CADPI-RHI’s milling facilities are in Nasugbu.
While both mill operators are in Batangas, the monopoly to be created by the merger will substantially lessen
competition in the sugar milling services market not only in Batangas, but also in Cavite, Laguna, and
Quezon. The PCC’s market investigation earlier showed that farmers stand to lose the benefits of competition
due to the merger, especially in terms of planters’ cut in sharing agreements, sugar recovery rates, and
incentives.

WHAT ARE THE EXCEPTIONS TO THE PROHIBITION OF ANTI-COMPETITIVE M&AS?

M&A agreements which substantially prevent, restrict, or lessen competition may be allowed if the parties are
able to prove that (a) 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 are likely to result from the merger or
acquisition agreement; or (b) a party is faced with actual or imminent financial failure and the agreement
represents the least anti-competitive arrangement among the known alternative uses of its assets.

Illustrative case:

In 2017, Alipay Singapore Holding Pte. (Alipay) proposed to acquire Globe Fintech Innovations, Inc. (Mynt).
After its Phase 1 review, the PCC flagged a potential competition concern in the non-bank electronic money
market. However, following a Phase 2 review, Mynt was found to have no incentive to block entry or
expansion of other players in the market. Also, other payment options (e.g., cash) limit the market power
which Mynt may exercise. Alipay is owned by Ant Financial Group, which provides a digital platform for
financial services. Mynt operates G-Xchange Inc., which handles the “G-cash,” a micropayment service
making the mobile phone into a virtual wallet; and Fuse Lending Inc, which is a tech-based lending company.
COVERED TRANSACTIONS
WHAT ARE THE THRESHOLDS FOR COMPULSORY NOTIFICATION OF MERGERS AND
ACQUISITIONS?

Parties to a merger or acquisition agreement where the size of transaction and size of person/party exceed
the thresholds set annually by the PCC are required to notify the Commission of such agreement before
consummating the transaction. The annual adjustment of thresholds for compulsory notification is based on
the Philippine Statistics Authority’s official estimate of the nominal gross domestic product (GDP) of the
previous year.

In September 2020, the values of the size-of-party and size-of-transaction thresholds, which were then set at
PHP 6 billion and PHP 2.4 billion, respectively, were further adjusted pursuant to Republic Act No. 11494 or
the Bayanihan to Recover as One Act. Section 4(eee) of the said law exempts mergers or acquisitions from
compulsory notification with transaction values below PHP 50 billion if entered into within two (2) years from
the effectivity of the law on 15 September 2020. The said section was enacted as part of the government’s
economic recovery measures, and for the stated purpose of “promoting business continuity and capacity
building.”

WHO IS/ARE THE NOTIFYING ENTITY/ENTITIES?

Under the Implementing Rules and Regulations of the PCA (IRR), the notifying entity/entities refer to the
following parties:

• The acquiring and acquired parties to the notifiable M&A and their ultimate parent entities.
• 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.

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.

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.
WHAT IS THE RECOURSE IF A PROPOSED M&A IS FOUND TO BE ANTI-COMPETITIVE??

If it finds that the M&A could substantially prevent, restrict, or lessen competition in the market, the PCC can
prohibit the transaction or impose conditions before the transaction can be consummated. Alternatively, the
merging parties can propose voluntary commitments meant to curtail the anti-competitive effects of the
transaction. If the Commission accepts these commitments, then the transaction can proceed, on condition
that the PCC will monitor the parties post-merger to determine if they have complied with those commitments.

Illustrative case:

In 2017, the PCC accepted voluntary commitments from TQMP Glass Manufacturing Corp. (TQMP) as a
precondition to TQMP’s acquisition of AGC Flat Glass Philippines, Inc. (AGPH), the sole domestic
manufacturer of clear and bronze flat glass. The said commitments prevent TQMP from engaging in anti-
competitive conduct such as restricting supply to competitors of its related entities. The PCC found that, after
acquisition of AGPH, TQMP and its related entities would control more than 50 percent of clear and bronze
flat glass supplied in the Philippines either via importation or domestic manufacture. The PCC also noted that
TQMP had the ability and incentive to increase prices of clear and bronze flat glass supplied to competitors of
its related entities post-acquisition, as TQMP had related entities involved in the downstream industries of
glass processing and distribution. The PCC approved the said acquisition based on the commitments offered
by TQMP.

WHAT ARE THE EXCEPTIONS TO COMPULSORY NOTIFICATION?

Joint ventures of private entities formed for both solicited and unsolicited public-private partnership (PPP)
projects may be exempted from compulsory notification. The PCC however can modify or rescind, among
others, the transaction value threshold and other criteria subject to compulsory notification and the exceptions
or exemptions from the notification requirement.

Land Acquisition

A land acquisition not for the purpose of obtaining control by one (1) or more entities through contract or other
means is not subject to the compulsory notification requirement under the PCA and its IRR. A land acquisition
is not for the purpose of obtaining control when the following requisites are present:

1. The acquiring entity will not obtain control over an acquired entity as a result of the acquisition; or
2. The acquiring entity will not obtain control over a part of an acquired entity as a result of the acquisition:

(i) The land to be acquired does not contain improvements that constitute an operating segment as
defined under Section 6 that will result in a horizontal or vertical relationship between the Notifying Group of
the acquiring and acquired entities; and

(ii) The land to be acquired does not contain improvements that may be considered as an essential facility,
as defined under Section 7.

Consolidation of Ownership

A merger or acquisition involving several entities controlled by the same natural person(s) is not covered by
compulsory notification if there is no change in control, post-transaction.

If there are other shareholders who own or control shares in the holding company which will have the ability to
control the combined entities after the consummation of the transaction, the transaction will be covered by the
compulsory notification requirement.
DETERMINING THE RELEVANT MARKET
WHAT IS A RELEVANT MARKET?

The relevant market refers to the market in which a particular good or service is sold and which comprises
two dimensions: the relevant product market and the relevant geographic market. Each aspect is 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.

The following factors help determine the relevant market:

• Possibilities of substituting goods and services with other domestic or foreign products, considering
technological possibilities, availability of substitute products to consumers, and the time required for
such substitution;
• Cost of distribution of goods and services, along with its raw materials, and 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;
• Cost and probability of users or consumers seeking other markets; and
• National, local or international restrictions which limit the access by users or consumers to alternate
suppliers, or the access by suppliers to alternate consumers.
DETERMINING EXISTENCE OF ANTI-COMPETITIVE CONDUCT
HOW DOES THE PCC DETERMINE IF A BUSINESS CONDUCT IS ANTI-COMPETITIVE?

In determining whether an anti-competitive agreement or conduct exists or has been committed, the PCC
shall:

• Define the relevant market allegedly affected by the anti-competitive agreement or conduct, following
the principles laid out in Section 24 of the PCA;
• 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;
• 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 the Philippine economy to
respond to international competition, but also taking account of past behavior of the parties involved
and prevailing market conditions;
• 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
• Assess the totality of evidence on whether it is more likely than not that the entity has engaged in an
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
WHEN CAN THE PCC EXERCISE FORBEARANCE?

The Commission, motu proprio or upon application, prior to its initiation of an inquiry, may forbear from
applying the provisions of the PCA and its IRR, 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:

• Enforcement is not necessary to the attainment of the policy objectives of the PCA;
• Forbearance will neither impede competition in the market where the entity or group of entities seeking
exemption operates nor in related markets;
• Forbearance is consistent with public interest and the benefit and welfare of the consumers; and
• Forbearance is justified in economic terms.

Provided, that forbearance will be granted for a maximum period of one year. Any extension to the period will
have to be expressly approved by the Commission. Any extension of the duration of an exemption shall not
be longer than one year.