Philippine Competition Act (R.A.

10667)

PHILIPPINE COMPETITION ACT (PCA) or RA10667

 primary law of the Philippines for promoting fair market competition
 based on the premise that efficient market competition is an effective mechanism for allocating goods
and services, and that safeguards are needed to maintain competitive conditions

SCOPE AND APPLICATION

 enforceable against any person or entity engaged in any trade, industry and commerce in the Republic
of the Philippines
 applicable to international trade having direct, substantial, and reasonably foreseeable effects in trade,
industry, or commerce in the Republic of the Philippines, including those that result from acts done
outside the Republic of the Philippines
 does not apply
1. to the combinations or activities of workers or employees
2. to agreements or arrangements with their employers
• when such combinations, activities, agreements, or arrangements are designed solely to
facilitate collective bargaining in respect of conditions of employment.

DEFINITION OF TERMS
(a) Acquisition refers to the purchase of securities or assets, through contract or other means, for the purpose
of obtaining control by:
(1) One (1) entity of the whole or part of another;
(2) Two (2) or more entities over another; or
(3) One (1) or more entities over one (1) or more entities;

(b) Agreement refers to any type or form of contract, arrangement, understanding, collective recommendation,
or concerted action, whether formal or informal, explicit or tacit, written or oral;

(c) Conduct refers to any type or form of undertaking, collective recommendation, independent or concerted
action or practice, whether formal or informal;

(d) 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;

(e) Control refers to the ability to substantially influence or direct the actions or decisions of an entity, whether
by contract, agency or otherwise;

(f) Dominant position refers to a position of economic strength that an entity or entities hold which makes it
capable of controlling the relevant market independently from any or a combination of the following:
competitors, customers, suppliers, or consumers;

(g) 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;

(h) Market refers to the group of goods or services that are sufficiently interchangeable or substitutable and the
object of competition, and the geographic area where said goods or services are offered;

(i) Merger refers to the joining of two (2) or more entities into an existing entity or to form a new entity;

(j) Relevant market refers to the market in which a particular good or service is sold and which is a combination
of the relevant product market and the relevant geographic market, defined as follows:
(1) A relevant product market comprises all those goods and/or services which are regarded as
interchangeable or substitutable by the consumer or the customer, by reason of the goods and/or
services’ characteristics, their prices and their intended use; and
(2) The relevant geographic market comprises the area in which the entity concerned is involved in the
supply and demand of goods and services, in which the conditions of competition are sufficiently

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 homogenous and which can be distinguished from neighboring areas because the conditions of
competition are different in those areas.

PROHIBITED ACTS

Anti-Competitive Agreements
 These are agreements that substantially prevent, restrict, or lessen competition.
 It is illegal for business rivals to act together in ways that can limit competition, lead to higher prices,
or hinder other businesses from entering the market.

i. Per se violations
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;
(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;

ii. Not per se violations

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;
(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;

Agreements other than those specified in (i) and (ii) and which have the object or effect of substantially
preventing, restricting or lessening competition shall also be prohibited.

Defense
An agreement may not necessarily be deemed a violation of this Act, if the transaction contributes 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.

Not considered competitors

If 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.

Examples of Anti-Competitive Agreements

• Price Fixing - Competitors collude with one another to fix prices for goods or services, rather than
allowing prices to be determined by market forces.
• Bid-Rigging – Parties participating in a tender process coordinate their bids, rather than submit
independent bid prices.
• Output Limitations - Competitors agree to limit production or set quotas, or else to coordinate
investment plans.
• Market-Sharing - Competitors agree to restrict their sales to specific geographic areas, effectively
creating local monopolies for each of them.

Abuse of Dominant Position

 Markets that are dominated by a single or handful of large companies are particularly vulnerable to
anticompetitive practices.
 In the conduct of their business, dominant companies (considering their size, scope, and position of
economic strength) may have a disproportionately severe effect on the market and its companies.

Prohibited Acts
a. Predatory pricing - Selling goods or services below cost with the object of driving competition out of the
relevant market

b. Imposing barriers to entry or committing acts that prevent competitors from growing within the market in
an anti-competitive manner
Exception: Those that develop in the market as a result of or arising from a superior product or process, business
acumen, or legal rights or laws;

c. Making a transaction subject to acceptance by the other parties of other obligations which, by their nature or
according to commercial usage, have no connection with the transaction;

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d. Discriminatory behavior - Setting prices or other terms or conditions that discriminate unreasonably between
customers or sellers of the same goods or services, where such customers or sellers are contemporaneously
trading on similar terms and conditions, where the effect may be to lessen competition substantially.
Exception: The following shall be considered permissible price differentials:
(1) Socialized pricing for the less fortunate sector of the economy;
(2) Price differential which reasonably or approximately reflect differences in the cost of
manufacture, sale, or delivery resulting from differing methods, technical conditions, or
quantities in which the goods or services are sold or delivered to the buyers or sellers;
(3) Price differential or terms of sale offered in response to the competitive price of payments,
services or changes in the facilities furnished by a competitor; and
(4) Price changes in response to changing market conditions, marketability of goods or services,
or volume;

e. Imposing restrictions on the lease or contract for sale or trade of goods or services concerning where, to
whom, or in what forms goods or services may be sold or traded, such as fixing prices, giving preferential
discounts or rebate upon such price, or imposing conditions not to deal with competing entities, where the
object or effect of the restrictions is to prevent, restrict or lessen competition substantially.
Exception:
(1) Permissible franchising, licensing, exclusive merchandising or exclusive distributorship
agreements such as those which give each party the right to unilaterally terminate the agreement; or
(2) Agreements protecting intellectual property rights, confidential information, or trade secrets;

f. Making supply of particular goods or services dependent upon the purchase of other goods or services from
the supplier which have no direct connection with the main goods or services to be supplied;

g. Directly or indirectly imposing unfairly low purchase prices for the goods or services of, among others,
marginalized agricultural producers, fisherfolk, micro-, small-, medium-scale enterprises, and other
marginalized service providers and producers;

h. Exploitative behavior towards consumers, customers, and/or competitors - Directly or indirectly imposing
unfair purchase or selling price on their competitors, customers, suppliers or consumers
Exception: Prices that develop in the market as a result of or due to a superior product or process, business
acumen or legal rights or laws

i. Limiting production, markets or technical development to the prejudice of consumers

Exception: Prices that develop in the market as a result of or due to a superior product or process, business
acumen or legal rights or laws

Prohibited Mergers and Acquisitions

Merger or acquisition agreements that substantially prevent, restrict or lessen competition in the relevant
market or in the market for goods or services as may be determined by the Commission shall be prohibited.

If within the relevant periods, the Commission determines that such agreement is prohibited and does not
qualify for exemption, the Commission may:
(a) Prohibit the implementation of the agreement;
(b) Prohibit the implementation of the agreement unless and until it is modified by changes specified
by the Commission.
(c) Prohibit the implementation of the agreement unless and until the pertinent party or parties enter
into legally enforceable agreements specified by the Commission.

EXCEPTIONS

Anti-Competitive Agreements
Prohibited agreements that 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.

Abuse of Dominant Position

The following may not necessarily be considered an abuse of dominant position:
1. Having a dominant position in a relevant market that does not substantially prevent, restrict or lessen
competition; or
2. Any conduct which contributes to improving production or distribution of goods or services within the
relevant market, or promoting technical and economic progress while allowing consumers a fair share of the
resulting benefit.

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Prohibited Mergers and Acquisitions
1. Merger or acquisition agreement may, nonetheless, be exempt from prohibition by the Commission when
the parties establish either of the following:
(a) The concentration has brought about or is likely to bring about gains in efficiencies that are greater
than the effects of any limitation on competition that result or likely to result from the merger or
acquisition agreement; or
(b) A party to the merger or acquisition agreement is faced with actual or imminent financial failure,
and the agreement represents the least anti-competitive arrangement among the known alternative
uses for the failing entity’s assets.
2. An entity shall not be prohibited from continuing to own and hold the stock or other share capital or assets
of another corporation which it acquired prior to the approval of this Act or acquiring or maintaining its
market share in a relevant market through such means without violating the provisions of this Act.
3. The acquisition of the stock or other share capital of one or more corporations solely for investment and
not used for voting or exercising control and not to otherwise bring about, or attempt to bring about the
prevention, restriction, or lessening of competition in the relevant market shall not be prohibited.

COVERED TRANSACTIONS

The Commission shall have the power to review mergers and acquisitions based on factors deemed relevant
by the Commission.

a. Thresholds for compulsory notification

Parties to a merger or acquisition are required to provide notification when:
(a) SIZE OF PARTY THRESHOLD:
The aggregate annual gross revenues in, into or from the Philippines, or value of the assets in the Philippines
of the ultimate parent entity of at least one of the acquiring or acquired entities, including that of all entities
that the ultimate parent entity controls, directly or indirectly, exceeds Five Billion Six Hundred Million Pesos
(PhP5,600,000,000.00); AND
(b) SIZE OF TRANSACTION THRESHOLD:
The value of the transaction exceeds Two Billion Two Hundred Million Pesos (PhP2,200,000,000.00). [Rule
4, Sec. 3, IRR of RA 10667, as amended by PCC Commission Resolution No. 03-2019 pursuant to PCC Memo.
Circ. No. 18-001, effective March 1, 2019]

The Commission shall, from time to time, adopt and publish regulations stipulating:
(a) The transaction value threshold and such other criteria subject to the notification requirement of Section 17
of this Act;
(b) The information that must be supplied for notified merger or acquisition;
(c) Exceptions or exemptions from the notification requirement; and
(d) Other rules relating to the notification procedures.

b. Notifying Entity
Parties to the merger or acquisition agreement wherein the value of the transaction exceeds Two Billion Two
Hundred Million Pesos (P2,200,000,000.00) are prohibited from consummating their agreement until thirty
(30) days after providing notification to the Commission in the form and containing the information specified
in the regulations issued by the Commission.

If notice to the Commission is required for a merger or acquisition, then either of the ff. must each submit a
Notification Form and comply with the procedure set forth:
• All acquiring and acquired pre-acquisition ultimate parent entities; or
• Any entity authorized by the ultimate parent entity to file notification on its behalf.

Effect of no notice
1. An agreement consummated in violation of this requirement to notify the Commission shall be considered
void and
2. Subject the parties to an administrative fine of one percent (1%) to five percent (5%) of the value of the
transaction.

Request for further information, effect

• Should the Commission deem it necessary, it may request further information that are reasonably
necessary and directly relevant to the prohibition under Section 20 (Prohibited Mergers and
Acquisitions) from the parties to the agreement before the expiration of the thirty (30)-day period
referred.
• The issuance of such a request has the effect of extending the period within which the agreement may
not be consummated for an additional sixty (60) days, beginning on the day after the request for

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 information is received by the parties. In no case shall the total period for review by the Commission
of the subject agreement exceed ninety (90) days from initial notification by the parties.

Expiration of the period of review

When the periods have expired and no decision has been promulgated for whatever reason, the merger or
acquisition shall be deemed approved and the parties may proceed to implement or consummate it.

Notification threshold
The Commission shall, from time to time, adopt and publish regulations stipulating:
(a) The transaction value threshold and such other criteria subject to the notification requirement
(b) The information that must be supplied for notified merger or acquisition;
(c) Exceptions or exemptions from the notification requirement; and
(d) Other rules relating to the notification procedures.

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