12/5/23, 8:29 PM Notes on RA 10667 Philippine Competition Act 1

NOTES ON RA 10667 - THE PHILIPPINE COMPETITION ACT

I. 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).

For the declaration of policy, see PCA Chapter 1, Section 2.

For the definition of terms used in the law, see Section 4

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.

For more information, see PCA Chapter 1, Section 3 and Chapter 8, Section 48

II. POWERS AND FUNCTIONS OF THE PCC

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 (Office for Competition) 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.

For more information, see PCA Chapter 2, Sections 5 & 13 and Chapter 7, Section 31

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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;

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(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;

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(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.

For more information, see PCA Chapter 2, Section 12 and Chapter 7, Section 32

III. PROHIBITED ACTS: ANTI – COMPETITIVE AFREEMENTS

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]).

For more information, see PCA Chapter 3, Section 14

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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.

See PCA Chapter 3, Section 14 (a)

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.

For more information, see Case COMP/B/37.766 — Dutch beer market

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

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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.
For more information, see Canada’s Competition Bureau. April 4, 2013. CAD 5 million
Fine for a Japanese Supplier of Motor Vehicle Components. Court File No. 13086

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.

See PCA Chapter 3, Section 14 (b) and (c)

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.

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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.

For more information, see Competition Commission of India. August 31, 2016. CCI
imposes penalties upon cement companies for cartelization. Case No. 29/2010.

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.

For more information, see Decision of the Office of Fair Trading. Market sharing
agreement and/or concerted practice in relation to the supply of prescription medicines
to care homes in England. March 20, 2014. Case CE/9627/12.

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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).

For more information, see PCA Chapter 2, Section 14

IV. 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

For more information, see PCA Chapter 4, Section 25

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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.

For more information, see PCA Chapter 1, Section 4

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.

For more information, see PCA Chapter 1, Section 4(g); PCA Chapter 5, Section
27; and PCA Implementing Rules and Regulations, Rule 8

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;

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 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.

For more information, see PCA Chapter 3, Section 15

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.

For more information, see PCC breaks condo-internet exclusivity deal

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.

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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.

For more information, see PCA Chapter 3, Section 15 (a), (d), (e) and (i)

V. PROHIBITED ACTS: ANTI- COMPETITIVE MERGERS AND

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.

See PCA Chapter 4, Section 20

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.

For more information, see Sugar milling merger-to-monopoly deal blocked

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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.

For more information, see PCA Chapter 4, Sections 21-22

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.

For more information, see Efficiency gains of digital finance acquisition

VI. 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

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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.”

For more information, see PCA Chapter 4, Sections 17 and 19 (a); PCC Rules of
Merger Procedure; PCC Memorandum Circular No 18-001; and PCC Commission
Resolution No. 02-2020

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.

See PCA Implementing Rules and Regulations, Rule 4, Section 2

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.

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

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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

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

COMPETITIVE??

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.

For more information, see PCA Chapter 4, Section 19, PCC Memorandum Circular No.
19-001and PCC Memorandum Circular No. 20-002

Coverage of Compulsory Notification in 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:

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(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.

For more information, see PCC Clarificatory Note No. 19-001

Coverage of Compulsory Notification in 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.

For more information, see PCC Clarificatory Note No. 18-001

VII. 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;

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 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.

See PCA Chapter 1, Section 4; Chapter 5, Section 24; and PCA Implementing Rules
and Regulations, Rule 5

VII. 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.

For more information, see PCA Chapter 5, Section 26 and PCA Implementing Rules
and Regulations, Rule 7

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VIII. FORBEARANCE (the act of delaying from enforcing a right, obligation or

debt)

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.

For more information, see PCA Chapter 5, Section 28 and PCA Implementing Rules
and Regulations, Rule 9

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