OECD kpcdb

1. Philippine Competition Act

 

The Philippine Competition Act (the “Competition Act” or “PCA) came into effect on 8 August 2015. It is the Philippine’s first comprehensive legal framework on competition policy.

 

The goal of the Competition Act is to enhance economic efficiency and promote free and fair competition in trade, industry and all commercial economic activities, with the objective of protecting consumer welfare and advancing domestic and international trade and economic development.

 

The PCA defines, prohibits, and penalises three types of anti-competitive conduct: anti-competitive agreements, abuse of dominant position, and anti-competitive mergers and acquisitions. It also introduces a compulsory notification regime for certain mergers and acquisitions.

 

The legal system in the Philippines is mixed, meaning that it carries aspects of both common law and civil law.

 

General exclusion: There are no sectors excluded or exempted from the application of the PCA. State-controlled firms are not exempt from the application of the PCA when conducting commercial activities in competition with private firms.

 

Extra-territorial application: The PCA has extraterritorial effect, being enforceable against acts committed outside of the Philippines which affect trade, industry or commerce in the Philippines.

 

2. Philippine Competition Commission and the Office For Competition

 

The Philippine Competition Commission (the “Commission” or “PCC”) was established on 1 February 2016. It is an independent quasi-judicial body, mandated to implement the Philippines’ competition policy. The Office for Competition under the Department of Justice (the “DOJ-OFC”) was created in 2011 prior to the entry into force of the PCA and retains authority to conduct preliminary investigations and to prosecute criminal offences arising under the Competition Law and other competition related laws. 

 

The PCC’s role is to protect markets from anti-competitive behaviour, protect consumers, promote competitive businesses, protect SMEs, and maintain a stable fair playing field, by instituting a regulatory environment for competition in the marketplace. This is pursuant to its original and primary jurisdiction in the enforcement and regulation of all competition-related issues. 

 

Organisational structure of PCC: Located in Pasig City, the PCC has 6 core offices: Administrative and Legal; Communication and Knowledge Management; Competition Enforcement; Economics; Financial, Planning and Management; Mergers and Acquisitions. The number of staff is 86 as of 2016. For 2016, the PCC was allocated a budget of PhP245,073,000.00. This increased to PhP420,871,000.00 in 2017. 

 

Section 6 of the PCA stipulates that the PCC shall be composed of a Chairperson and 4 Commissioners, who are each appointed by the President. The Chairperson and Commissioners have the rank equivalent of cabinet secretary and undersecretary, respectively. All enjoy security of tenure and shall not be suspended or removed from office except for just cause as provided by law.

 

The PCC is mandated to submit an annual report and special reports to Congress.

 

DOJ-OFC: Total number of staff as of end-2016: Seven out of 18 positions with a budget of: 11.687 million (2016), 17.324 million (2017).

 

Other regulators with competition powers Under Section 32, the PCC has original and primary jurisdiction in the enforcement and regulation of all competition-related issues.

 

If the issue involves both competition and non-competition issues, the PCC will still have jurisdiction. However, the concerned sector regulators have to be consulted with and be given reasonable opportunity to submit opinion and recommendation on the matter, before the PCC makes a decision.

 

The PCC may also work with sector regulators to issue rules and regulations to promote competition, protect consumers, and prevent abuse of market power by dominant players within their respective sectors, where appropriate.

 

Competition advocacy: 

 

The PCC has wide explicit advocacy functions. Preparatory work on the conduct of market studies and issue papers began in the last quarter of 2016. In addition, the PCC has the power under Section 12(r), to advocate pro-competitive policies of the government by:

 

(1) Reviewing economic and administrative regulations as to whether they negatively affect relevant market competition, and advising the concerned agencies against such regulations; and

(2) Advising on the competitive implications of government actions, policies and programmes. 

 

Section 12 (k) also sets out that the PCC also issues advisory opinions and guidelines on competition matters for the effective enforcement of the Competition Law and submit annual and special reports to Congress, including proposed legislation for the regulation of commerce, trade or industry. 

 

The PCC can also assist the National Economic and Development Authority, in consultation with relevant agencies and sectors, in preparation and formulation of a national competition policy. 

 

International co operation: The DOJ-OFC has co operation agreements with Japan and Australia. 

 

3. Investigation

 

Initiation of investigation: The PCA, in Section 31 specifies that the PCC, motu proprio, or upon the filing of a verified complaint by an interested party or upon referral by a regulatory agency, has the sole and exclusive authority to initiate and conduct a fact-finding or preliminary inquiry (“Preliminary Inquiry”) for the enforcement of the PCA based on reasonable grounds. upon the filing of a verified complaint by an interested party or upon referral by a regulatory agency.

 

The Preliminary Inquiry is completed within 90 days from its commencement. Under Section 31 of the PCA and Section 2.6 of the 2017 Rules of Procedure (“Rules”), The PCC terminates a Preliminary Inquiry by: 

 

1. Issuing a resolution ordering its closure if no violation or infringement of the PCA, its implementing rules, or other competition laws is found, subject to any other action that the PCC may consider proper or necessary under the circumstances;
2. Issuing a resolution to close the Preliminary Inquiry without prejudice, if the facts or information available at the end of the ninety (90)-day period are insufficient to proceed, on the basis of reasonable grounds, to the conduct of a full administrative investigation (“Full Administrative Investigation”); or
3. Issuing a resolution to proceed, on the basis of reasonable grounds, to the conduct of a Full Administrative Investigation.

 

A Full Administrative Investigation is conducted to ascertain whether there is sufficient basis to charge an entity for violation of the PCA, its implementing rules, or other competition laws.

 

Powers of investigation: Under Section 12 of the PCA and Section 2.14 of the Rules, the PCC has the following powers, among others: 

 

1. Administer oaths, summon and examine witnesses, and receive evidence;
2. Request anyone who may have access to, possession, custody, or control or may have knowledge of any information, which relate to any matter relevant to the Investigation or proceeding; 
3. Issue subpoena;
4. Apply for an inspection order with the court to undertake inspections of business premises and other offices, land, and vehicles, as used by the entity to be inspected, where the PCC reasonably suspects that relevant books, tax records, or other documents, including Electronically Stored Information that relate to any matter relevant to the Investigation are kept, and when it is necessary for the conduct of a full and thorough investigation, to prevent the removal, concealment, tampering with, or destruction of the books, records, or other documents; 
5. Consult with resource persons;
6. Deputise any enforcement agency of the government, or enlist the aid and support of any private institution, corporation, entity, or association; and
7. Initiate proceedings for contempt and similar violations committed during investigation.

 

Under Sections 13 and 31 of the PCA, the PCC may file before the Department of Justice criminal complaints for violations of the PCA for preliminary investigation by the Office for Competition and prosecution thereof before the proper court. 

 

Obstruction of investigation, contempt: Under Section 6.15 of the Rules, the PCC may impose a fine of PHP50 thousand to PHP2 million on anyone who commits acts constituting obstruction of investigation. Obstructive acts include destroying or concealing information which relate to any matter relevant to the investigation, disobedience or resistance to any officer of the PCC who is engaged in the performance of official duties, inviting reliance on any information that is false, and engaging in any act that interferes with or tends to interfere with the speedy or orderly administration of the PCA.

 

Under Section 6.14 of the Rules, misconduct committed against or before the PCC that seriously interrupts any hearing, session, or proceeding constitutes contempt that is punishable by imprisonment not exceeding 30 days or by a fine not exceeding PHP100 thousand, or both. -.

 

Procedural fairness: Under Section 2.10 of the Rules, before the conclusion of the Full Administrative Investigation, the PCC may conduct a conference with the entity under Full Administrative Investigation for purposes of clarifying or ascertaining facts, issues, and other matters necessary and relevant to the investigation.

 

Confidentiality: Under Sections 11.1 and 11.8 of the Rules, confidential information shall not be disclosed to any person not authorised to have access thereto. This notwithstanding, the PCC may disclose confidential information when consent is obtained from the entity claiming confidentiality, when disclosure is required by law, a valid order of a court of competent jurisdiction or pursuant to a lawful writ or process of a government agency, when disclosure is based on an agreement with a government agency, or when necessary for enforcing the PCA, its implementing rules, or other competition laws.

 

Under Section 4(e) of the PCA and Section 11.2 of the Rules, confidential business information refers to information, which concerns or relates to the operations, production, sales, shipments, purchases, transfers, identification of customers, inventories, or amount or source of any income, profits, losses, expenditures, which are not generally known to the public or to other persons who can obtain economic value from its disclosure or use, or is liable to cause serious harm to the person who provided it, or from whom it originates, and is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

 

According to Section 11.3 of the Rules, the PCC may extend confidential treatment to information other than confidential business information, if such information is not generally known to the public, is subject of reasonable efforts under the circumstances to maintain its secrecy, and the disclosure of such information is prejudicial to, or may compromise or adversely affect any investigation.

 

Section 11.4 of the Rules states that the PCC shall keep confidential the identity of persons providing information under condition of anonymity, unless such confidentiality is expressly waived by the latter. The PCC may, even without request of anonymity, treat as confidential the identity of any persons providing information when necessary for the enforcement of the PCA, its implementing rules, or other competition laws.

 

4. Remedies and Sanctions

 

Under Section 12 of the PCA, the PCC is vested with the power to investigate hear and decide cases involving violations of the PCA and other competition laws. 

 

Under Section 12(d) of the PCA and Rule VI of the Rules, the PCC may impose any of the following remedies to address anti-competitive conduct or agreements, and other competition concerns to the extent reasonably necessary to maintain, enhance, or restore competition in the relevant market/s, or to promote public welfare: structural remedies, behavioural remedies, injunction, disgorgement, and divestiture.

 

Under Section 29 of the PCA and Section 6.1 of the Rules, the PCC may impose the following schedule of fines on any entity found to have violated Sections 14 (Anti-competitive agreements) or 15 (Abuse of Dominant Position) of the PCA: (a) First offense - Up to PHP 100 million; (b) Second offense - Not less than PHP 100 million up to PHP 250 million; (c) Third offense and succeeding offenses - Not less than PHP 150 million but not more than PHP 250 million. Fines shall be tripled if the violation involves the trade or movement of basic necessities and prime commodities, as defined in The Price Act.

 

Criminal sanctions are only applied to certain types of anti-competitive agreements. According to Section 30 of the PCA, an entity that enters into any anti-competitive agreement covered by Sections 14(a) and 14(b) shall be subject to a fine of not less than PHP50 million but not more than PHP250 million and imprisonment. 

 

5. Appeal

 

According to Section 39 of the PCA, decisions of the PCC are appealable to the Court of Appeals, for a review on the merits and thus decides on questions of law or fact, or both. In case of reversal or modification by the Court of Appeals, the Court of Appeals decision is followed by the parties. The PCC decision may be elevated to the Supreme Court via an Appeal by Certiorari (Rule 45 in our Rules of Court), which involves questions of law only. Ground for filing is when PCC acts in excess of its jurisdiction or with grave abuse of discretion. A successful Petition will result to nullification of the PCC decision. 

 

6. Private enforcement 

 

Under Section 45, any person who suffers direct injury by reason of any violation of the PCA can institute a separate and independent civil action with the regular courts after the PCC has completed the Preliminary Inquiry