Tatad vs Secretary of Energy

We now come to grips with the contention that some provisions of R.A. No. 8180 violate
section 19 of Article XII of the 1987 Constitution. These provisions are:

(1) Section 5 (b) which states — "Any law to the contrary notwithstanding and
starting with the effectivity of this Act, tariff duty shall be imposed and collected on
imported crude oil at the rate of three percent (3%) and imported refined petroleum
products at the rate of seven percent (7%) except fuel oil and LPG, the rate for which
shall be the same as that for imported crude oil. Provided, that beginning on January
1, 2004 the tariff rate on imported crude oil and refined petroleum products shall be
the same. Provided, further, that this provision may be amended only by an Act of
Congress."

(2) Section 6 which states — "To ensure the security and continuity of petroleum
crude and products supply, the DOE shall require the refiners and importers to
maintain a minimum inventory equivalent to ten percent (10%) of their respective
annual sales volume or forty (40) days of supply, whichever is lower," and

(3) Section 9 (b) which states — "To ensure fair competition and prevent cartels and
monopolies in the downstream oil industry, the following acts shall be prohibited:

xxx xxx xxx

(b) Predatory pricing which means selling or offering to sell any

product at a price unreasonably below the industry average cost so
as to attract customers to the detriment of competitors.

On the other hand, section 19 of Article XII of the Constitution allegedly violated by the
aforestated provisions of R.A. No. 8180 mandates: "The State shall regulate or prohibit
monopolies when the public interest so requires. No combinations in restraint of trade or
unfair competition shall be allowed."

Horizontal Agreement vs Vertical Agreement

Horizontal- agreement of cooperation between 2 or more competitors or competing

businesses operating at the same level in the market

Vertical- agreements between firms at different levels of the supply chain

Section 2
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;

Section 14. Anti-Competitive Agreements. –

(a) 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;

(b) 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, Kmiting, 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;

(c) Agreements other than those specified in (a) and (b) of this section which have
the object or effect of substantially preventing, restricting or lessening competition
shall also be prohibited: Provided, Those which 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 of this Act.

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, shall not be considered competitors for purposes of this section.

(h) 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;

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, shall not be considered competitors for purposes of this section.

American Needle vs NFL

The alleged conduct related to licensing of intellectual property constitutes

concerted action that is not categorically beyond §1’s coverage. Pp. 4–20.

(a) The meaning of “contract, combination … , or, conspiracy” in §1 of the

Sherman Act is informed by the Act’s “ ‘basic distinction between concerted and
independent action.’ ” Copperweld Corp. v. Independence Tube Corp., 467 U. S.
752, 767. Section 1 “treat[s] concerted behavior more strictly than unilateral
behavior,” id., at 768, because, unlike independent action, “[c]oncerted activity
inherently is fraught with anticompetitive risk” insofar as it “deprives the
marketplace of independent centers of decision making that competition
assumes and demands,” id., at 768–769. And because concerted action is
discrete and distinct, a limit on such activity leaves untouched a vast amount of
business conduct. That creates less risk of deterring a firm’s necessary conduct
and leaves courts to examine only discrete agreements. An arrangement must
therefore embody concerted action in order to be a “contract, combination … or,
conspiracy”

Agan vs PIATCO

monopoly is a privilege or peculiar advantage vested in one or more

persons or companies, consisting in the exclusive right (or power) to
carry on a particular business or trade, manufacture a particular article,
or control the sale of a particular commodity. The 1987 Constitution
[66]

strictly regulates monopolies, whether private or public, and even

provides for their prohibition if public interest so requires. Article XII,
Section 19 of the 1987 Constitution states:

Sec. 19. The state shall regulate or prohibit monopolies when the public interest
so requires. No combinations in restraint of trade or unfair competition shall be
allowed.

Clearly, monopolies are not per se prohibited by the Constitution but

may be permitted to exist to aid the government in carrying on an
enterprise or to aid in the performance of various services and
functions in the interest of the public. Nonetheless, a determination
[67]

must first be made as to whether public interest requires a monopoly.

As monopolies are subject to abuses that can inflict severe prejudice to
the public, they are subject to a higher level of State regulation than an
ordinary business undertaking.
In the cases at bar, PIATCO, under the 1997 Concession
Agreement and the ARCA, is granted the exclusive right to operate a
commercial international passenger terminal within the Island of Luzon
at the NAIA IPT III
In fine, the efficient functioning of NAIA IPT III is imbued with public interest. The
provisions of the 1997 Concession Agreement and the ARCA did not strip
government, thru the MIAA, of its right to supervise the operation of the whole
NAIA complex, including NAIA IPT III. As the primary government agency tasked
with the job,[79] it is MIAAs responsibility to ensure that whoever by contract is
given the right to operate NAIA IPT III will do so within the bounds of the law
andwith due regard to the rights of third parties and above all, the interest of the
public.

1. Cartels; hub and spoke cartels

RA 7581, Price Act, Section 5

PCA, Sec. 14 (a), (b)

3) Cartel, which is any combination of or agreement between two (2) or more

persons engaged in the production, manufacture, processing, storage, supply,
distribution, marketing, sale or disposition of any basic necessity or prime
commodity designed to artificially and unreasonably increase or manipulate its
price. There shall be prima facie evidence of engaging in a cartel whenever two
(2) or more persons or business enterprises competing for the same market and
dealing in the same basic necessity or prime commodity, perform uniform or
complementary acts among themselves which tend to bring about artificial and
unreasonable increase in the price of any basic necessity or prime commodity or
when they simultaneously and unreasonably increase prices on their competing
products thereby lessening competition among themselves.

Section 14. Anti-Competitive Agreements. –

(a) 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;

Cover bidding- submitting bids that are intended to be unsuccessful

Bid suppression- when they agree to not submit a bid

Bid rotation- the practice of taking turns to win the bid

Market allocation- agreements where competitors divide markets amongst

themselve
 (b) 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;

Gokongwei vs SEC

Basically, these anti-trust laws or laws against monopolies or combinations in restraint of

trade are aimed at raising levels of competition by improving the consumers' effectiveness as
the final arbiter in free markets. These laws are designed to preserve free and unfettered
competition as the rule of trade. "It rests on the premise that the unrestrained interaction of
competitive forces will yield the best allocation of our economic resources, the lowest prices
and the highest quality ... ." 34 they operate to forestall concentration of economic
power. 35 The law against monopolies and combinations in restraint of trade is aimed at
contracts and combinations that, by reason of the inherent nature of the contemplated acts,
prejudice the public interest by unduly restraining competition or unduly obstructing the
course of trade. 36

The terms "monopoly", "combination in restraint of trade" and "unfair competition" appear to
have a well defined meaning in other jurisdictions. A "monopoly" embraces any combination
the tendency of which is to prevent competition in the broad and general sense, or to control
prices to the detriment of the public. 37 In short, it is the concentration of business in the
hands of a few. The material consideration in determining its existence is not that prices are
raised and competition actually excluded, but that power exists to raise prices or exclude
competition when desired. 38 Further, it must be considered that the Idea of monopoly is now
understood to include a condition produced by the mere act of individuals. Its dominant
thought is the notion of exclusiveness or unity, or the suppression of competition by the
qualification of interest or management, or it may be thru agreement and concert of action. It
is, in brief, unified tactics with regard to prices. 39

From the foregoing definitions, it is apparent that the contentions of petitioner are not in
accord with reality. The election of petitioner to the Board of respondent Corporation can
bring about an illegal situation. This is because an express agreement is not necessary for
the existence of a combination or conspiracy in restraint of trade. 40 It is enough that a
concert of action is contemplated and that the defendants conformed to the
arrangements, 41 and what is to be considered is what the parties actually did and not the
words they used. For instance, the Clayton Act prohibits a person from serving at the same
time as a director in any two or more corporations, if such corporations are, by virtue of their
business and location of operation, competitors so that the elimination of competition
between them would constitute violation of any provision of the anti-trust laws. 42 There is
here a statutory recognition of the anti-competitive dangers which may arise when an
individual simultaneously acts as a director of two or more competing corporations. A
common director of two or more competing corporations would have access to confidential
sales, pricing and marketing information and would be in a position to coordinate policies or
to aid one corporation at the expense of another, thereby stifling competition.
 1. Dominant position; Abuse of Dominance

PCA, Sec. 4 (g), Sec. 15

IRR, Rule 8

Section 15. Abuse of Dominant Position. – It shall be prohibited for one or more entities to
abuse their dominant position by engaging in conduct that would substantially prevent,
restrict or lessen competition:

(a) Selling goods or services below cost with the object of driving competition out of
the relevant market: Provided, That in the Commission’s evaluation of this fact, it
shall consider whether the entity or entities have no such object and the price
established was in good faith to meet or compete with the lower price of a competitor
in the same market selling the same or comparable product or service of like quality;

(b) Imposing barriers to entry or committing acts that prevent competitors from
growing within the market in an anti-competitive manner except 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;

(d) 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: Provided, That 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: Provided, That nothing contained in this Act shall prohibit or render
unlawful:
 (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) Directly or indirectly imposing unfair purchase or selling price on their

competitors, customers, suppliers or consumers, provided that 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 shall not be considered unfair prices; and

(i) Limiting production, markets or technical development to the prejudice of

consumers, provided that limitations that develop in the market as a result of or due
to a superior product or process, business acumen or legal rights or laws shall not be
a violation of this Act:

Provided, That nothing in this Act shall be construed or interpreted as a prohibition on having
a dominant position in a relevant market or on acquiring, maintaining and increasing market
share through legitimate means that do not substantially prevent, restrict or lessen
competition:

Provided, further, That 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 may not necessarily
be considered an abuse of dominant position:

Provided, finally, That the foregoing shall not constrain the Commission or the relevant
regulator from pursuing measures that would promote fair competition or more competition
as provided in this Act.

Avon vs Luna

is exclusivity clause is more often the subject of critical scrutiny when

it is perceived to collide with the Constitutional proscription against
reasonable restraint of trade or occupation. The pertinent provision of the
Constitution is quoted hereunder. Section 19 of Article XII of the 1987
Constitution on the National Economy and Patrimony states that:
 SEC. 19. The State shall regulate or prohibit monopolies when the
public interest so requires. No combinations in restraint of trade or unfair
competition shall be allowed.

First off, restraint of trade or occupation embraces acts, contracts,

agreements or combinations which restrict competition or obstruct due
course of trade.[16]

Now to the basics. From the wordings of the Constitution, truly then,
what is brought about to lay the test on whether a given agreement
constitutes an unlawful machination or combination in restraint of trade is
whether under the particular circumstances of the case and the nature of the
particular contract involved, such contract is, or is not, against public
interest.[17]

Thus, restrictions upon trade may be upheld when not contrary to

public welfare and not greater than is necessary to afford a fair and
reasonable protection to the party in whose favor it is imposed.[18] Even
contracts which prohibit an employee from engaging in business in
competition with the employer are not necessarily void for being in restraint
of trade.

In sum, contracts requiring exclusivity are not per se void. Each

contract must be viewed vis--vis all the circumstances surrounding such
agreement in deciding whether a restrictive practice should be prohibited as
imposing an unreasonable restraint on competition.

The question that now crops up is this, when is a restraint in trade

unreasonable? Authorities are one in declaring that a restraint in trade is
unreasonable when it is contrary to public policy or public welfare. As far
back as 1916, in the case of Ferrazzini v. Gsell,[19] this Court has had the
occasion to declare that:

[T]here is no difference in principle between the public policy

(orden pblico) in the in the two jurisdictions (United States and the
Philippine Islands) as determined by the Constitution, laws, and judicial
decisions.

In the United States it is well settled that contracts in undue or

unreasonable restraint of trade are unenforciblebecause they are repugnant
to the established public policy in that country. Such contracts are illegal
in the sense that the law will not enforce them. The Supreme Court in
the United States, in Oregon Steam Navigation Co. vs. Winsor)20 Will.,
64), quoted with approval in Gibbs v. Consolidated gas Co. of Baltimore
(130 U.S., 396), said:

Cases must be judged according to their

circumstances, and can only be rightly judged when reason
and grounds of the rule are carefully considered. There are
two principle grounds on which the doctrine is founded that
a contract in restraint of trade is void as against public
policy. One is, the injury to the public by being deprived of
the restricted partys industry; and the other is, the injury to
the party himself by being precluded from pursuing his
occupation, and thus being prevented from supporting
himself and his family.

And what is public policy? In the words of the eminent Spanish jurist,
Don Jose Maria Manresa, in his commentaries of the Codigo Civil, public
policy (orden pblico):

[R]epresents in the law of persons the public, social and legal interest, that
which is permanent and essential of the institutions, that which, even if
favoring an individual in whom the right lies, cannot be left to his own
will. It is an idea which, in cases of the waiver of any right, is manifested
with clearness and force. [20]

As applied to agreements, Quintus Mucius Scaevola, another

distinguished civilist gives the term public policy a more defined meaning:
 Agreements in violation of orden pblico must be considered as
those which conflict with law, whether properly, strictly and wholly a
public law (derecho) or whether a law of the person, but law which in
certain respects affects the interest of society. [21]

Plainly put, public policy is that principle of the law which holds that
no subject or citizen can lawfully do that which has a tendency to be
injurious to the public or against the public good.[22] As applied to contracts,
in the absence of express legislation or constitutional prohibition, a court, in
order to declare a contract void as against public policy, must find that the
contract as to the consideration or thing to be done, has a tendency to injure
the public, is against the public good, or contravenes some established
interests of society, or is inconsistent with sound policy and good morals, or
tends clearly to undermine the security of individual rights, whether of
personal liability or of private property.[23]

From another perspective, the main objection to exclusive dealing is

its tendency to foreclose existing competitors or new entrants from
competition in the covered portion of the relevant market during the term of
the agreement.[24] Only those arrangements whose probable effect is to
foreclose competition in a substantial share of the line of commerce affected
can be considered as void for being against public policy. The foreclosure
effect, if any, depends on the market share involved. The relevant market for
this purpose includes the full range of selling opportunities reasonably open
to rivals, namely, all the product and geographic sales they may readily
compete for, using easily convertible plants and marketing organizations.[25]

Applying the preceding principles to the case at bar, there is nothing

invalid or contrary to public policy either in the objectives sought to be
attained by paragraph 5, i.e., the exclusivity clause
ERB vs. CA

The State shall regulate or prohibit monopolies when the public interest so
requires. No combinations in restraint of trade or unfair competition shall be
allowed.

This is so because the Government believes that deregulation will eventually

prevent monopoly. The simplest form of monopoly exists when there is only
one seller or producer of a product or service for which there are no
substitutes. In its more complex form, monopoly is defined as the joint
acquisition or maintenance by members of a conspiracy, formed for that
purpose, of the power to control and dominate trade and commerce in a
commodity to such an extent that they are able, as a group, to exclude actual or
potential competitors from the field, accompanied with the intention and
purpose to exercise such power.[

Unfair Competition

Wilaware vs Jesichris

We find the petition bereft of merit.

Article 28 of the Civil Code provides that "unfair competition in agricultural, commercial or
industrial enterprises or in labor through the use of force, intimidation, deceit, machination or
any other unjust, oppressive or high-handed method shall give rise to a right of action by the
person who thereby suffers damage."

From the foregoing, it is clear thatwhat is being sought to be prevented is not competitionper
sebut the use of unjust, oppressive or high- handed methods which may deprive others of a
fair chance to engage in business or to earn a living. Plainly,what the law prohibits is unfair
competition and not competition where the means usedare fair and legitimate.

In order to qualify the competition as "unfair," it must have two characteristics: (1) it must
involve an injury to a competitor or trade rival, and (2) it must involve acts which are
characterized as "contrary to good conscience," or "shocking to judicial sensibilities," or
otherwise unlawful; in the language of our law, these include force, intimidation, deceit,
machination or any other unjust, oppressive or high-handed method. The public injury or
interest is a minor factor; the essence of the matter appears to be a private wrong
perpetrated by unconscionable means.9

Here, both characteristics are present.

Coca Cola vs Gomez

 SECTION 168. Unfair Competition, Rights, Regulation and Remedies. -

168.1. A person who has identified in the mind of the public the goods he manufactures
or deals in, his business or services from those of others, whether or not a registered
mark is employed, has a property right in the goodwill of the said goods, business or
services so identified, which will be protected in the same manner as other property
rights.

168.2. Any person who shall employ deception or any other means contrary to good faith
by which he shall pass off the goods manufactured by him or in which he deals, or his
business, or services for those of the one having established such goodwill, or who shall
commit any acts calculated to produce said result, shall be guilty of unfair competition,
and shall be subject to an action therefor.

168.3. In particular, and without in any way limiting the scope of protection against unfair
competition, the following shall be deemed guilty of unfair competition:

(a) Any person, who is selling his goods and gives them the general appearance
of goods of another manufacturer or dealer, either as to the goods themselves or
in the wrapping of the packages in which they are contained, or the devices or
words thereon, or in any other feature of their appearance, which would be likely
to influence purchasers to believe that the goods offered are those of a
manufacturer or dealer, other than the actual manufacturer or dealer, or who
otherwise clothes the goods with such appearance as shall deceive the public
and defraud another of his legitimate trade, or any subsequent vendor of such
goods or any agent of any vendor engaged in selling such goods with a like
purpose;

(b) Any person who by any artifice, or device, or who employs any other means
calculated to induce the false belief that such person is offering the services of
another who has identified such services in the mind of the public; or

(c) Any person who shall make any false statement in the course of trade or who
shall commit any other act contrary to good faith of a nature calculated to
discredit the goods, business or services of another.

168.4. The remedies provided by Sections 156, 157 and 161 shall apply mutatis
mutandis. (Sec. 29,R.A. No. 166a)

The petitioner theorizes that the above section does not limit the scope of protection on the
particular acts enumerated as it expands the meaning of unfair competition to include "other acts
contrary to good faith of a nature calculated to discredit the goods, business or services of
another." Allegedly, the respondents' hoarding of Coca Cola empty bottles is one such act.

We do not agree with the petitioner's expansive interpretation of Section 168.3 (c).