What Is "Abuse of Dominant Position"?: Tssssss SSSSSST

ON ABUSE OF
DOMINANT POSITION
Self-Study Module #4
– may have a disproportionately
sssssst 1 tssssss severe effect on the market and

its competition. At its extreme,
What is a dominant position?

their acts can lead to the demise
of much smaller competitors.
In competition law, dominant In other words, a company The PCA does not mean
position refers to a position of (or group of companies) is said to unfairly burden dominant
economic strength that an entity to be dominant if it is so big, companies. What the law is really
holds, making it capable of or is capable of controlling concerned with, and punishes, is
controlling the relevant market the market, that it can act abuse of dominant position, not
independently from any or a independently or regardless of success or bigness.
combination of the following: how other players may act or
competitors, customers, react to its actions.
suppliers, or consumers.
2 3 What is
What is wrong with If there is nothing “abuse of
being dominant? wrong with being
Nothing. dominant, why dominant
does the Philippine
It is not wrong for a company
to be big or dominant. “Bigness”
Competition Act
position”?
may be a result of good business
practices. It creates scale and deal with There is abuse of
efficiencies that ultimately
benefit the public. Thus, big
dominance? dominant position
when an entity with
companies may be better able The law’s provisions on abuse
than their smaller competitors to of dominance are not meant
a significant degree
introduce innovations or efficient to punish companies for their of power in a market
processes that can reduce their success. But, markets that are engages in conduct
costs while improving quality. dominated by a small number of that substantially
As a result, products or services large companies are vulnerable to
become more affordable and of anti-competitive practices.
prevent, restrict, or
better value to the consumer. In the conduct of their
lessen competition.
So to emphasize, there is nothing business, dominant companies,
wrong with being big or dominant! considering their size, scope, and
position of economic strength
*Disclaimer: This self-study module is meant only as an introduction, and for general information purposes. It is not a substitute for the
sstttss
Philippine Competition Act (PCA) or its Implementing Rules and Regulations. It should not be taken as legal advice.
ON ABUSE OF DOMINANT POSITION
2 Self-Study Module #4
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How might a dominant player engage in

abusive anti-competitive behavior?
The Philippine Competition Act or services from the supplier such as those which give each
identifies several instances that which have no direct connection party the right to unilaterally
might indicate possible abuse of with the main goods or services terminate the agreement; or
dominant position, including: being supplied; — Agreements protecting
• Predatory Pricing. Selling • Discriminatory Behavior. intellectual property rights,
goods or services below cost with Setting prices or other terms confidential information, or
the object of driving competition and conditions that discriminate trade secrets.
out of the relevant market; unreasonably between customers • Monopsony. Directly or
• Imposing barriers to entry or sellers of the same goods or indirectly imposing unfairly
or committing acts that prevent services; low purchase prices for the
competitors from growing within • Imposing restrictions on the goods or services of, among
the market in an anti-competitive lease or contract of sale or trade others, marginalized agricultural
manner, except those that of goods or services concerning producers, fisherfolk, micro,
develop in the market as a result where, to whom, or in what form small, and medium enterprises
of, or arising from a superior goods or services may be sold (MSMEs), and other marginalized
product or process, business or traded, such as fixing prices, service providers and producers;
acumen, or legal rights or laws; giving preferential discounts • Directly or indirectly
• Tying/Bundling. Making a or rebate upon such price, or imposing unfair purchase or
transaction subject to acceptance imposing conditions not to deal selling price on their competi-
by the other parties of other with competing entities. It is not tors, customers, suppliers or
obligations which have no necessarily unlawful to enter into: consumers; and
connection with the transaction; — Permissible franchising, • Limiting production, markets
or making the supply of particular licensing, exclusive or technical development to the
goods or services dependent merchandising or exclusive prejudice of consumers.
upon the purchase of other goods distributorship agreements
Again, there is nothing illegal The law recognizes that conduct

about having a dominant which contributes to improving
position, or acquiring, production or distribution of
maintaining and increasing goods or services within the
market share through legitimate relevant market, or promoting
means that do not substantially technical and economic progress
prevent, restrict, or lessen while allowing consumers a fair
competition. share of the resulting benefit may
not necessarily be considered an
abuse of dominant position.
ON ABUSE OF DOMINANT POSITION
3 Self-Study Module #4
sssssst 5 tssssss
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How will the Philippine There shall be
Competition Commission a rebuttable
determine if a company has a presumption of
market dominant
dominant position? position if the
To determine if a company (c) The existence and power of market share of
has a dominant position, the its competitors; an entity in the
Commission could consider the
following factors:
(d) The possibility of access by relevant market is
its competitors or other entities
(a) Its market share in the to its sources of inputs; at least fifty percent
relevant market and whether it (e) The power of its customers (50%).
is able to fix prices unilaterally to switch to other goods or
or restrict supply in the relevant services;
market;
( f) Its recent conduct; and
The Commission,
(b) The existence of barriers to
(g) Such other criteria that it however, may also
entry;
may deem to be relevant. set a new market
share threshold
sssssst 6 tssssss for any particular
sector, and it
How can the Philippine Competition shall, from time to
Commission discourage or prevent time, determine
and publish the
abuse of dominance?
threshold for
As previously mentioned, the (SMP) obligations—to help big
effect of an anti-competitive act businesses avoid anti-competitive dominant position
by a dominant player can have practices, provide safeguards for or minimum level
a disproportionate effect on non-dominant businesses, and
competitors and on competition ensure that the market remains of share in the
in the market that may be very competitive. relevant market
difficult to remedy.
The Commission can also work that could give rise
The PCC can minimize the with sector regulators to issue
threat of abuse of dominance by rules that promote competition, to a presumption of
requiring players with dominant protect consumers, and prevent dominant position.
position to comply with ex abuse of market power by
ante (or “before the event”) dominant players within their
rules. These are preventive respective sectors. sstttss
measures—sometimes referred
to as significant market power

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ON ABUSE OF

– may have a disproportionately

sssssst 1 tssssss severe effect on the market and

What is a dominant position?

How might a dominant player engage in

Again, there is nothing illegal The law recognizes that conduct

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