Self-Check or Pay the Price: Anti-Competitive Agreements

Enacted in 2015, the Philippine Competition Act (R.A. 10667), is a breakthrough legislation that consolidates the country’s competition laws and policies in one. It seeks to protect consumers against three types of anti-competitive conduct:

1. Anti-competitive agreements among competitors
2. Abuse of market dominance; and
3. Anti-competitive mergers and acquisitions.

Businesses found by the Philippine Competition Commission (PCC) to have committed anti-competitive behavior may be sanctioned with administrative fines of up to P100 million for the 1^st offense, and up to P250 million for the 2^nd offense, depending on the gravity and duration of the violation. Officers, directors, or managerial employees who are knowingly and willfully responsible for such violation may also be held criminally liable. An inquiry or investigation by the PCC of a possible violation may be prompted by the PCC’s own initiative, a verified complaint filed by any interested party, or by a referral from a regulatory agency.

Given the stiff penalties under the law, and the lapse on 07 August 2017 of the 2-year grace period for compliance, businesses are best advised to ensure that their practices do not cross the line on what may be regarded as anti-competitive conduct.

The following anti-competitive agreements are per sep rohibited under Section 14 (a) of the law:

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.

The following agreements, if they have the object or effect of substantially preventing, restricting or lessening competition, are prohibited under Section 14 (b) of the law:

1. Setting, limiting, or controlling production, markets, technical development, or investment;
2. Dividing or sharing the market, whether by volume of sales or purchases, territory, type of goods or services, buyers or seller or any other means.

An “agreement” refers to any type or form of contract, arrangement, understanding, collective recommendation or concerted action, and may even be oral, as long as there is a meeting of the minds among competitors, or among entities at different levels of the distribution or production chain, such as those entered into by suppliers, manufacturers, distributors, and retailers.

An internal audit of business arrangements and making adjustments as may be needed would be helpful to avoid exposure to risk under the law.