Two prohibited acts are provided in Republic Act No. 10667, also known as the “Philippine Competition Act” and its Implementing Rules and Regulations (IRR), to wit: (a) Anti-Competitive Agreements; and (b) Abuse of Dominant Position. The basic difference is that anti-competitive agreements can only be committed by at least two entities. This article discusses the first prohibited act — anti-competitive agreements.
There are three general types of agreements prohibited under R.A. 10667. The headings are added for convenience.
1. PER SE PROHIBITED
The following agreements, between or among competitors, are per se prohibited:
- 1. Restricting competition as to price, or components thereof, or other terms of trade; and
- 2. Fixing price at an auction or in any form of bidding including cover bidding, bid suppression, bid rotation and market allocation and other analogous practices of bid manipulation.
2. CARTELS
The following agreements, between or among competitors which have the object or effect of substantially preventing, restricting or lessening competition shall be prohibited:
- 1. Setting, limiting, or controlling production, markets, technical development, or investment; and
- 2. Dividing or sharing the market, whether by volume of sales or purchases, territory, type of goods or services, buyers or sellers or any other means.
3. OTHER PROHIBITED AGREEMENTS
Agreements other than those specified above which have the object or effect of substantially preventing, restricting or lessening competition shall also be prohibited.
However, those which contribute to improving the production or distribution of goods and services or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefits, may not necessarily be deemed a violation of the Philippine Competition Act.
COMMON PROVISIONS; PENALTIES
Check the process for Determination of Anti-Competitive Agreements or Conduct.
For purposes of this Section, an entity that controls, is controlled by, or is under common control with another entity or entities, have common economic interests, and are not otherwise able to decide or act independently of each other, shall not be considered competitors.
Control refers to the ability to substantially influence or direct the actions or decisions of an entity, whether by contract, agency or otherwise. [Refer to the Determination of Control]
An entity refers to any person, natural or juridical, sole proprietorship, partnership, combination or association in any form, whether incorporated or not, domestic or foreign, including those owned or controlled by the government, engaged directly or indirectly in any economic activity.
Criminal prosecution
An entity that enters into any anti-competitive agreement shall, for each and every violation, be penalized by imprisonment from 2 to 7 years, and a fine of not less than P50,000,000.00 but not more than P250,000,000. When the entities involved are juridical persons, the penalty of. imprisonment shall be imposed on its officers, directors, or employees holding managerial positions, who are knowingly and willfully responsible for such violation.
[Note: There is no criminal penalty for Abuse of Dominant Position.]
Administrative Fines
The imposition of administrative finds is separate from the penalties in a criminal prosecution. The Philippine Competition Competition may, after due notice and hearing, may impose the following schedule of administrative fines on any entity found to have violated the said sections:
- First offense: Fine of up to P100,000,000
- Second offense: Fine of not less than P100,000,000, but not more than P250,000,000
In fixing the amount of the fine, the Commission shall have regard to both the gravity and the duration of the violation.
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