Philippines

Chairman Arsenio Balisacan, PhD

7 years

The Chairman and the Commissioner posts

FY 2016 PhP300 million (USD 5.86 million)

FY 2017 PhP420.87 million (USD 8.22 million)

FY 2018: PhP457.59 million (USD 8.94 million)

FY 2019: PhP446.90 million (USD 8.73 million)

As of 26 July 2019, the PCC has filled up 161 out of 200 approved positions.

None. The PCC is an independent quasi-judicial body, although it is attached to the Office of the President for budgetary purposes.

No. The agency’s decisions may only be overruled by the Court of Appeals and the Supreme Court.

The PCC issued guidelines on its enforcement strategies and priorities. In determining whether it shall take enforcement action on a potential anti-competitive practice, it shall consider the following: (a) public interest; (b) resource allocation; (c) likelihood of successful outcome; and (d) other reasonable grounds to conduct enforcement action.

In determining whether an anti-competitive practice is of public interest, the PCC may consider the following factors:

1. Whether it involves any of the priority sectors identified by the PCC;
2. Whether it results or may result in widespread consumer detriment;
3. Whether it involves misuse of public funds;
4. Whether action of the PCC thereon will have precedential value; or
5. Whether action of the PCC thereon will have significant deterrent effect.

The PCC’s priority sectors for 2019 are:

• manufacturing
• rice
• pharmaceuticals
• air and land transport
• logistics
• e-commerce
• retail/supermarkets
• telecommunications
• agricultural credit
• poultry and livestock
• milk products
• fertilizers & pesticides
• logistics supply chain
• corn milling and trading
• refined petroleum
• sugar

The PCC has the power to compel the production of documents and appearances of witnesses and/or parties before it to give testimonies through the issuance of the appropriate subpoenas. It also has the power to conduct inspections of business premises and other offices, pursuant to a court order, where it reasonably suspects that relevant information that relate to any matter relevant to an investigation are kept. It may also deputize any enforcement agency of the government or enlist the aid and support of any private institution, corporation, entity, or association.

During an investigation, the PCC may likewise consult with resource persons and request information voluntarily from third parties.

No.

Yes, Section 35 of the Philippine Competition Act (PCA) mandates the development of a Leniency Program.

The Leniency Program of the PCC allows any entity that participates or participated in a violation of Section 14(a) or 14(b) of the PCA, to avail of “leniency” in the form of either: (1) immunity from suit; or (2) exemption, waiver, or gradation of fines (“reduction of fines”) in exchange for the voluntary disclosure of information regarding such violation, subject to certain requirements.

The PCC will only allow a maximum of one beneficiary of immunity from suit and one beneficiary of reduction of fines for each reported violation of Section 14(a) or 14(b). This principle is meant to ensure that members of a cartel will race to the PCC and disclose the existence of the anti- competitive agreement to obtain the benefits of the Leniency Program.

Violations of Sections 14(a) and 14(b) of the PCA which include price-fixing, bid-rigging, output restriction, and market allocation, are widely considered to be the most harmful form of anti-competitive behavior. The PCC’s Leniency Program is designed to deter the creation of such cartels, and to aid in the detection and prosecution of existing ones by incentivizing cooperation from current and former cartel participants who possess information and/or evidence necessary for a successful investigation and case.

The benefits available depend on when the entity applied for leniency and the entity’s role in the cartel. The available benefits are summarized in the matrix below:

Immunity from suit includes immunity from administrative and criminal liability arising from violations of Sections 14(a) and 14(b) of the PCA. It likewise includes immunity from civil actions initiated by the PCC on behalf of affected parties and third parties. The benefit of reduction of fines only applies to the administrative penalty that may be imposed by the PCC.

It must be noted that the benefit of immunity from suit is available until it is granted to an entity. Hence, in case the first qualified entity is only granted reduction of fines, the second qualified entity may be granted immunity from suit if it submitted the Marker Request Form prior to the start of Preliminary Inquiry, or at the discretion of the PCC if the Marker Request Form was submitted after the start of the Preliminary Inquiry.

Yes, violations of Sections 14a (price fixing and bid rigging) and 14b (market allocation and output restriction) of the PCA have corresponding criminal liabilities. Section 31 vis-a-vis Section 13 of the PCA provides that the Philippine Competition Commission may file before the Department of Justice (DOJ) criminal complaints for violations of the PCA or relevant laws for preliminary investigation and prosecution before the proper court.

Yes. The 2017 Rules of the PCC provides: Section 6.17. Liability of officers, directors, trustees, and partners. — Responsible officers, directors, trustees, and partners shall be solidarily liable with the infringing Entity. Further, the PCA and the 2017 Rules of the PCC provide that responsible officers, directors, and employees holding managerial positions may be criminally liable for violations of Sections 14(a) and 14(b) of the PCA which cover price-fixing, bid-rigging, market allocation, and output restriction.

The Court of Appeals

The decisions of the Court of Appeals are appealable to the Supreme Court.

The PCC has an Economics Office with 16 approved positions.

Effective March 01, 2019, parties to the merger or acquisition agreement, where the size of transaction exceeds PHP2.2 billion and the size of person/party exceeds PHP5.6 billion, must notify the PCC of such agreement before consummating the transaction.

The PCC has blocked the merger between the two sugar millers in Southern Luzon—Universal Robina Corporation (URC), and Central Azucarera Don Pedro Inc. (CADPI) and Roxas Holdings Inc. (RHI).

In a Commission Decision prohibiting the merger issued in February 2019, 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 earlier raised competition concerns on URC’s proposed acquisition of CADPI and RHI assets. The parties then voluntarily submitted commitments, but these failed to sufficiently address the competition concerns.

Both mill operators are in Batangas but 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 Commission also noted that while the transaction mainly affects sugarcane farmers in Southern Luzon, the sugar processed from these facilities serve nationwide demand, including that of Metro Manila.

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.

Specifically, the PCC’s Mergers and Acquisitions Office raised the following competition concerns:

• The transaction is a merger-to-monopoly and will eliminate the only competitor of URC in the relevant market;
• The transaction will create market power for URC and allow it to unilaterally reduce the planters’ share in the planter-miller sharing agreement, the theoretical recovery rates quoted to planters, and the incentives provided to planters;
• Other sugar mills outside of Batangas are too far (Pampanga, Tarlac, Camarines Sur), thus not sufficient to constrain URC from exercising market power; and
• Barriers to entry are high and the possibility of a new entrant seems remote and, if at all possible, may not be immediately forthcoming as to constrain URC from exercising market power after the transaction.

URC is engaged in a wide range of food-related businesses, including the production of packed foods and beverages, sugar, agro-industrial products, and bioethanol. Its mills are located in Batangas, Iloilo, Negros Oriental, Negros Occidental, and Cagayan. These mills produce raw sugar, refined sugar and molasses for supply to other URC business segments and third parties.

On the other hand, RHI owns 100% of the shares of CADPI, which operates an integrated sugar cane milling and refining plant in Batangas. RHI is also engaged in the trading of raw and refined sugar, and molasses.

The PCC subjected Grab’s acquisition of Uber in the Philippines to service quality and pricing standards in clearing the transaction. These conditions for clearance were part of Grab’s voluntary commitments to address the competition issues raised in the Statement of Concerns released on 2 May 2018 by PCC’s Mergers and Acquisitions Office. The Statement highlighted price increases and service deterioration arising from the merger of the country’s two biggest ride-hailing apps.

The Commission issued a Commitment Decision on 10 August 2018, holding Grab to a standard as if Uber were present in the market. The Commitment Decision aims to ensure that Grab’s quality of service and pricing are not unreasonably different before and after it acquired its competitor Uber. It covers the following:

• Service Quality Commitment: Grab shall commit to bring back market averages for acceptance and cancellation rates before the transaction, and response time to rider complaints.
• Fare Transparency Commitment: Grab will revise its trip receipt to show the fare breakdown per trip, including distance, fare surges, discounts, promo reductions, and per-minute waiting charge (if reinstated by the Land Transportation Franchising and Regulatory Board).
• Commitment on Pricing: Grab shall not have prices that have “extraordinary deviation” from the minimum allowed fares. It will be penalized equivalent to 5 percent of its commissions, or up to PHP 2 million, in the identified trips with extraordinary deviations that have no sufficient justification.
• Removal of “See Destination” Feature: Grab will remove “see destination” feature for drivers with low ride acceptance rate.
• Driver/Operator Non-Exclusivity Commitment: Grab shall not introduce any policy that will result in drivers and operators being exclusive to Grab. Current Grab drivers/operators are allowed to register/operate under other Transport Network Companies through a multi - homing scheme.
• Incentives Monitoring Commitment: Since incentives may result in drivers remaining exclusive to Grab, and thus affect its competitors’ conditions of entry and ability to expand, the Commission shall monitor and evaluate Grab’s incentives based on mandatory quarterly reports.

The Commitment Decision emphasizes that any breach of the conditions will subject Grab to fines of up to PHP 2 million per breach or unwinding of the transaction. Violations or arrangements intended to circumvent the application of the commitments by parties may likewise result in appropriate penalties.

The PCC stands to guard against any breach or noncompliance through an appointed impartial third-party trustee that independently monitors Grab on its commitments for a period of one year after issuance of the Commitment Decision.

Yes, there are plans to conduct a general review of the PCA to address the current limitations in the enforcement powers considering PCC’s experience in implementing the law.

More information about the agency can be found on its website and its annual reports.