QUESTION AND ANSWERS ON PHILIPPINE COMPETITION ACT

1. We know that competition leads to more choices for consumers. Does consumer choice indicate
competition?

Not necessarily. Though consumers may have different choices for a product or service, there is
no guarantee of competitive prices. If suppliers fix prices or enter into other anti-competitive
agreements, then the choices available to the consumer may be priced artificially high. With
competition, suppliers have an incentive to price their goods lower and to improve the quality of
their products, in order to attract more customers. Chapter 16 of the Philippine Development
Plan (PDP) 2017-2022 laid down possible indicators of competition in the country. Among
others, these include business dynamism, product market efficiency, product market regulation,
market size expansion, and reduction of the regulatory compliance costs incurred by firms. This
marks the first time that the government medium-term plan includes a chapter dedicated to
competition policy.

2. Are exclusive distributorship agreements among suppliers and manufacturers covered by the
PCA?

Yes. According to Section 3 of the PCA, a person or entity engaged in trade, industry and
commerce in the Philippines is covered by the law, which also applies to any foreign business
whose operations could have a direct and substantial effect on any other trade, industry, or
commerce in the Philippines, now or in the near future.

3. Is there a provision in the law on how the standard of “substantially preventing, restricting, or
lessening competition” may be measured or quantified?

The law gives the PCC discretion in determining what is “substantial lessening of competition
(SLC)”, depending on the circumstances of each case. In the context of reviewing mergers, the
PCC looks at the impact on competition over time in the relevant market. A merger gives rise to
SLC when it has a significant impact on competition, and consequently, on the ability of firms to
reduce prices, improve quality, or become more efficient or innovative (Section 4, 2017 Merger
Review Guidelines). In its evaluation, the Commission may consider, on a case-bycase basis, the
broad range of factors that may arise in different transactions. These may include market
structure, market position of the entities concerned, actual or potential competition from
entities within or outside of the relevant market, alternatives available to suppliers and users,
and their access to suppliers or markets, as well as barriers to entry (Section 4.5, 2017 Merger
Review Guidelines).

4. The PHILIPPINE COMPETITION COMMISSION is a quasi-judicial body that implements the

provisions of the PCA. What is meant by quasijudicial?
 A quasi-judicial body may refer to a tribunal or adjudicative body that appears to be a court of
law, to the extent that it performs functions discharged by regular courts. However, a quasi-
judicial body is not a regular court and is not bound by the technical rules of procedure
applicable to courts of law. A quasi-judicial body is created to resolve questions or issues that
require knowledge, experience, and expertise on matters that are highly technical or specialized.
In the case of the PCC, the law creating the agency designates it to hear and decide on cases
involving anti-competitive conduct and agreements, abuse of dominant position, and anti-
competitive mergers and acquisitions—matters which require specialized knowledge of
competition law and economics.

5. Does the PCC have jurisdiction over government agencies or contractors of government in cases
of bid rigging?

Yes. Section 14 of the PCA prohibits anti-competitive agreements among competitors, which
include bid rigging and bid rotation. The PCA does not make a distinction between the
government and private sector when it comes to applicability of the law. As such, the PCC has
enforcement jurisdiction over bids for government projects.

6. Is it illegal for a large business to drive out a smaller rival?

Not necessarily. The law does not punish an entity for being “big”, provided that the large
business competes fairly and legally, does not enter into an anticompetitive agreement, or
abuse its dominant position.

7. How does the PCC determine market dominance? Does PCC have standards for determining
market concentration per sector or industry?

Under Section 4 (g) of the PCA, a dominant position refers to a position of economic strength
that an entity holds which enables it to control the relevant market independently from any or a
combination of the following: competitors, suppliers, customers, or consumers. Market
dominance is presumed if an entity has a 50% share of the relevant market.

But the law also requires the PCC to look into a number of factors, including the entity’s ability
to fix prices unilaterally, existence of barriers to entry, the existence and power of competitors,
access of competitors to the entity’s source of inputs, the ability of customers to switch to other
goods or services, the entity’s recent conduct, and other criteria established by the PCA.

8. Is it illegal for a trader to grant credit only to farmers willing to sell at very low prices, and then
sell the very same farm product to third parties at higher prices?

If the trader is the dominant provider of access to credit and markets, then forcing a
marginalized farmer to sell their goods at unfairly low prices may be a violation of the PCA.
Under Section 15 (g) of the PCA, buying goods or services at unfairly low prices from
marginalized sectors of the society is prohibited.
9. Are exclusive distributorship agreements among suppliers or manufacturers anti-competitive?

Not necessarily. However, if the exclusive distributorship agreements prevent other competitors
or other entities in the supply chain from gaining access to a significant number of customers
and/or sources of inputs, then such agreements may lead to a substantial lessening of
competition and hence, may violate Section 14 of the PCA.

10. Should a “Merger and Acquisition” done outside the Philippines be cleared first by the PCC?

Yes. The PCC must be notified of the definitive agreement of a merger or acquisition which was
executed outside the Philippines if such transaction breaches the relevant threshold for
compulsory notification under the PCA’s Implementing Rules and Regulations as amended by
PCC Memorandum Circular No. 18-001. This circular allows for the annual adjustment of merger
notification thresholds based on the nominal Gross Domestic Product growth of the previous
year.

11. Why does the PCA’s Implementing Rules and Regulations include size of party (SoP) and size of
transaction (SoT) tests in determining the threshold?

Section 12 (b) and Section 19 of the PCA grant the Commission authority to determine
thresholds for notification and to adopt the transaction value threshold. Learning from the
practice and experiences of more mature competition authorities in jurisdictions such as the US
and Canada, the framers of the PCA’s Implementing Rules and Regulations saw it fit to adopt
SoP and SoT in defining transaction value, which, in turn, shall be used for setting the thresholds
for notification. The SoP and SoT tests ensure that only transactions that have a significant
impact on the relevant market will be notified to the Commission.

12. When reviewing Merger and Acquisitions, does the PCC take into consideration long-term
efficiency gains?

Yes. Especially for M&A transactions that are assessed to have anti-competitive effects, long-
term efficiency gains that benefit consumers must be substantiated thoroughly and proven to
be likely by merging firms. Chapter IV, Section 21 (a) of the PCA and Rule 4, Section 10 of the
Implementing Rules and Regulations provides that otherwise anti-competitive mergers may
nonetheless be allowed when the parties establish that the merger 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 are likely to result, from the merger or acquisition (Section 9.1, 2017
Merger Review Guidelines). The burden is on the merging firms to substantiate efficiency claims
so that the Commission can verify by reasonable means the likelihood and magnitude of each
asserted efficiency, and how and when each would be achieved, among other things (Section
9.5, 2017 Merger Review Guidelines). The efficiencies must be demonstrable, with detailed and
verifiable evidence of anticipated price reductions or other benefits. Moreover, the efficiency
gains must be merger specific and consumers will not be worse off as a result of the merger. For
 that purpose, efficiencies should be substantial and timely, and should, in principle, benefit
consumers in those relevant markets where it is otherwise likely that competition concerns
would occur (Section 9.6, 2017 Merger Review Guidelines).

13. Does the Commission publish all M&A notifications?

No. The Commission only publishes its decisions, and not the notifications received from
merging entities.

14. Can somebody file an opposition to an application for a merger while the PCC’s review is
ongoing?

The PCC may investigate any merger that the agency has reasonable grounds to believe is likely
to substantially prevent, restrict, or lessen competition in the market (Section 13.1, PCC Rules on
Merger Procedure). Complaints from businesses and consumers will be considered as inputs in
deciding on whether or not PCC will open an investigation (Section 13.4, PCC Rules on Merger
Procedure). PCC will consider each complaint on its merits to determine if an investigation is
warranted (Section 13.7, PCC Rules on Merger Procedure). In deciding on whether or not to
consider a complaint, the PCC shall take into account the following: • PCC’s jurisdiction; • public
interest; • resource allocation; • strength of supporting evidence; or • overall effect of the
merger on the market (Section 13.8, PCC Rules on Merger Procedure).

A complainant has no standing to take part in the investigation. However, the complainant will
be informed of PCC’s action on the complaint. The PCC may also decide to communicate or
consult with the complainant at any stage of the proceedings in line with its power to gather
information. In addition, the complainant is entitled to a copy of the non-confidential version of
the decision on the merger (Section 13.9, PCC Rules on Merger Procedure)

15. If the PCC clears a merger transaction as compliant, can this decision be appealed?

Under Section 39 of the PCA, the decisions of the PCC can be questioned before the Court of
Appeals. But under Section 23 of the PCA, merger or acquisition agreements that have received
a favorable ruling from the Commission, except when such ruling was obtained through fraud or
false material information, may not be challenged in court.

16. Apart from imposing fines, what else can the PCC do to ensure that violators are held
accountable?

The PCC may impose behavioral and structural remedies, such as injunctions and divestiture.
The PCC may file before the Department of Justice (DOJ) a criminal complaint for any violation of
the law. If the court upholds the complaint, the guilty party can face imprisonment of two to
seven years (Section 30, PCA). Under Section 17 of the PCA, a merger or acquisition
consummated in violation of the requirement to notify the Commission shall be considered void.
In addition, the parties will be slapped an administrative fine of one (1) to five (5) percent of the
 value of the transaction. The Commission also may hold in contempt any entity guilty of the list
of misconduct laid down in Section 38 of the PCA.

17. How far has the PCC gone in working with sector regulators to come up with rules and
regulations to promote competition?

The PCC has forged memoranda of agreement (MOAs) with a growing number of sector
regulators and government agencies. To date, the PCC has forged partnerships with the
following:

 Bangko Sentral ng Pilipinas

 DTI
 Insurance Commission
 Securities and Exchange Commission
 Ombudsman, etc.

18. How does the PCC monitor competition concerns at the local level?

The Commission has been looking into the possibility of setting up an office outside Metro
Manila. For now, the PCC is exploring all possible means so that people from outside Metro
Manila can report their competition concerns. The PCC is also in close coordination with various
sector regulators and other government agencies at the local level, particularly those with which
it has forged MOAs.

19. What can the PCC do to ensure that all businesses— whether big or small, be they based in
Makati or Divisoria—are aware of the law?

The PCC adopts a multi-stakeholder approach in competition policy advocacy. The agency has
reached out not only to businesses, but also to the media, legal community, academe, and other
government agencies, among others. The PCC has organized public seminars and consultations,
as well as roadshows and campus tours on competition law and policy. The PCC also publishes
information, education and communication (IEC) materials, which are disseminated through all
media channels.

20. How does one file a complaint?

For enforcement-related complaints, an individual may file a verified complaint, which is a

sworn statement supported by documentary evidence. The complaint may be filed in person at
this address: 25th Floor, Vertis North Corporate Center 1, North Avenue, Quezon City.
Alternatively, the complainant may call +632 8771 9708, or email the Competition Enforcement
Office (enforcement@phcc.gov.ph). For merger concerns, anyone who wishes to file a complaint
on the grounds that a merger or acquisition is likely to substantially prevent, restrict or lessen
competition in the market may do so by submitting one (1) original copy of the complaint, with
its attachments, and an electronic version of the complaint and all attachments, in a secure
electronic storage device, with each attachment saved as a separate file, and each file name
 referring to the identifying appendix number. The electronic version of the complaint and all
attachments must be saved in PDF, Word, or in a spreadsheet format, in two (2) versions,
protected and non-protected (Section 13.5, PCC Rules on Merger Procedure).

21. What information should the complaint contain?

The complaint should include the following information: a. Information regarding the
complainant, including its ultimate parent entity, if any; a concise overview of the lines of
business it is engaged in or its affiliated organizations, if any; and a contact person for future
correspondence; b. Information on the merger party or parties complained of, including its
ultimate parent entity, if known, and the lines of business it is engaged in; c. Relationship of the
complainant vis-à-vis the entity complained of (such as being a customer or a competitor); d.
Acts constituting the violation of Section 17 or 20 of the PCA; e. Relevant documents and other
supporting materials; f. If possible, indicate the goods, services or intellectual property rights,
affected by the merger and explain the commercial relationships between or among these
goods or services, and include the relative market positions of the entities concerned; g. Names
and addresses of persons that the PCC may approach and interview for additional information;
h. Remedy sought by the complainant; i. Statement under oath that the complainant has read
the complaint and that the allegations therein are true and correct of their personal knowledge
or based on authentic records.

22. What are anti-competitive agreements?

The first category of prohibitions are anti-competitive agreements, which are further classified into
2, those that are prohibited per se and those that are prohibited if shown to have an adverse impact
on competition. Per se prohibited agreements are agreements between or among competitors that
restrict competition as to price or other terms of trade, or that fix the price and terms of engagement
at an auction or bidding. Arguably, the safe harbor clauses embedded in the law cannot be invoked
as a defense in case of violations of per se prohibited agreements. 
 
On the other hand, under the law, certain arrangements are prohibited only if they have the effect of
substantially preventing, restricting or lessening competition, such as arrangements that control
production, technological development, or investments, and those that divide the market whether by
volume of sales, purchases or territory. Unlike the first group of anti-competitive agreements
discussed above, this second group of prohibited anti-competitive agreements could potentially enjoy
the benefit of safe harbor clauses embedded under the law. Under the law, agreements that promote
technical or economic progress or improve production or distribution of goods are not prohibited if
the consumers enjoy a fair share of resulting benefits. The law leaves it up to the Philippine
Competition Commission (“Commission”) through its decisions or regulations or to the courts to
interpret the concept of “fair share of resulting benefits”, such as, for instance, whether benefits must
necessarily be quantifiable (e.g. lower prices) or may be qualitative (e.g. more product choices, higher
quality products) and whether it is necessary that all consumers enjoy the “benefit”. 
 
Further extending specific safe harbor clauses, there is a general provision in the law that mandates
the Commission, in determining whether an anti-competitive agreement or conduct has been
committed, to evaluate whether actual or potential efficiency gains outweigh adverse impact on
competition. Whether or not the safe harbor clauses under the law will leave a wide or narrow gap
 for defense of an otherwise anti-competitive agreement will depend on the rigor with which
regulatory authority will evaluate economic data or statistics presented as evidence. 
 
It is noted that the text of the law limits the definition of prohibited agreements to those entered
between or among competitors. This leaves the applicability of the prohibition to vertical agreements
open to interpretation/ argument. 

23. What is abuse of dominant position?

The second category of prohibitions are certain acts that are committed by market players enjoying a
dominant position. The law defines “dominant position” as a position of economic strength such that
an entity can control the relevant market independent from other competitors, customers, suppliers,
or consumers. The following factors are further considered in determining whether an entity has a
dominant position in a relevant market: market share and the corresponding ability to fix prices, the
existence of barriers to entry into the market, tax regimes, and government regulations, as well as the
potential for these barriers to be altered. The Commission may also consider other facts, including
the existence and power of the main competitors, their access to the input source or raw materials,
the ability of customers to freely switch to other goods or services, as well as the recent conduct and
behavior of the entity in question. For clearer guidance, the law also assigns a 50% market share as
the default threshold for presumed market dominance. However, this threshold is not static, as the
Commission has the authority to prescribe a different threshold across all or for a particular sector
or market. 
 
Establishing market dominance is only the first step in the analysis of the second category of
prohibitions. This is the case because market dominance is not per se proscribed. The legislature
acknowledges that through industry or skill, a company may gain dominance within its market.
Thus, the law specifies the acts or agreements which, if committed by a dominant enterprise, are
potentially illegal. Among such acts are predatory pricing, erecting barriers to entry, subjecting
transactions to unreasonable conditions, product tie-ups and limiting production, markets, or
technical development to the prejudice of consumers. In order to be illegal, these specifically
identified acts/agreements must prevent, restrict or lessen competition. As with anti-competitive
agreements, the safe harbor clause may be invoked as a defense. 

24. What is relevant market?

A clear understanding and application of the concept of relevant market is crucial in ensuring
that an agreement is not prohibited under the law. The legal definition appears to be clear
under the law – it refers to a relevant product in a relevant geographic market. A relevant
product is a group of substitutable goods or services, while relevant geographic market is the
area in which conditions of competition are homogenous. However, in cases where a market
is comprised of differentiated or specialized products, a consistent application of the legal
definition to the facts may prove to be a challenge and prone to dispute. 
25. What is continuing business compliance?

Compliance with the newly-enacted Philippine Competition Law will require counsel to review
existing competition compliance programs to ensure that pricing, supply, purchase and other
cooperation agreements will not breach Philippine regulations. Further, corporate decision
makers must review potential acquisition or merger transactions to determine that these will
not violate Philippine Competition Law. This evaluation will require familiarity with the state of
Philippine markets and how regulators are likely to define the relevant market and quantify
and interpret changes in the levels of industry concentration. Apart from a prospective
 review, compliance will also require a review of existing agreements vulnerable to antitrust
challenge. A transitional clause provides a cure period of 2 years from effectivity of the law
for parties to renegotiate or restructure their businesses. A key feature of the law is its
extraterritorial reach. Thus, acts done outside the Philippines are covered by the law if these
have direct, substantial and reasonably foreseeable effects in trade, industry or commerce in
the Philippines. 

26. Which legislative and regulatory provisions govern merger control?

The Philippine Competition Act (10667/2015) (PCA) is the primary statute governing competition
and merger control in the Philippines, together with the Implementing Rules and Regulations of
Republic Act 10667 (PCA-IRR) and other rules and regulations issued by the Philippine Competition
Commission (PCC).
The PCA took full effect in 2017 after a two-year transitional period.

27. Do any special regimes apply in specific sectors (eg, national security, essential public services)?

No. The pre-notification merger control regime under the PCA and the PCA-IRR applies to covered
transactions regardless of sector. However, the PCC has signed partnership agreements with certain
government agencies that oversee regulated sectors (eg, banking, insurance and electric power), with
the objective of working together towards a harmonised and efficient regulatory approach to the
relevant sector.

28. Which body is responsible for enforcing the merger control regime? What powers does it have?

The PCC, created by virtue of the PCA, is the independent quasi-judicial body that is tasked with
implementing the national competition policy.
The PCC has original and primary jurisdiction over the enforcement and implementation of the
PCA. It has the power, among other things, to:

 review proposed mergers and acquisitions;

 set the thresholds for notification;
 specify the requirements and procedures for notification; and
 upon exercising its powers to review, prohibit mergers and acquisitions that will substantially
prevent, restrict or lessen competition in the relevant market.
The PCC also has the power to conduct inquiries and investigate, hear and decide on cases involving
any violation of the PCA and other competition laws.
29. What types of transactions are subject to the merger control regime?

Mergers and acquisitions may be subject to review by the Philippine Competition Commission
(PCC).
The PCC Rules on Merger Procedure define an ‘acquisition' as the purchase or transfer of securities
or assets, by contract or other means, for the purpose of obtaining control by:
 one entity of the whole or part of another entity;
 two or more entities over another entity; or
 one or more entities over one or more other entities.
A ‘merger', on the other hand, refers to the joining of two or more entities in an existing entity or to
form a new entity. This includes joint ventures, whether incorporated or not.

30. How is ‘control' defined in the applicable laws and regulations?

 The Implementing Rules and Regulations of Republic Act 10667 (PCA-IRR) define ‘control' as "the
ability to substantially influence or direct the actions or decisions of an entity, whether by contract,
agency or otherwise".
The Philippine Competition Act (PCA) and the PCA-IRR provide that control is presumed to exist
when the parent owns, directly or indirectly through subsidiaries, more than one-half of the voting
power of an entity, unless in exceptional circumstances it can clearly be demonstrated that such
ownership does not constitute control.
Control also exists even when an entity owns one-half or less of the voting power of another entity if:
 there is power over more than one-half of the voting rights by virtue of an agreement with
investors;
 there is power to direct or govern the financial and operating policies of the entity under a
statute or agreement;
 there is power to appoint or remove the majority of the members of the board of directors or
equivalent governing body;
 there is power to cast the majority votes at meetings of the board of directors or equivalent
governing body;
 there exists ownership over, or the right to use all or a significant part of, the assets of the entity;
or
 there exist rights or contracts which confer decisive influence on the decisions of the entity.

31. Is the acquisition of minority interests covered by the merger control regime, and if so, in what
circumstances?

Generally, no – unless the resulting interest exceeds 35% and the transaction meets both the ‘size of
party' and the ‘size of transaction' tests of the PCC.

32. Are joint ventures covered by the merger control regime, and if so, in what circumstances?

Yes, provided that they meet the notification threshold of the PCC – that is, the ‘size of party'
and the ‘size of transaction' tests. For joint ventures, these are as follows:
 Size of party: The aggregate annual gross revenues in, into or from the Philippines, or the value
of the assets in the Philippines of the ultimate parent entity (UPE) of at least one of the
acquiring or acquired entities, including those of all entities that the UPE controls, directly or
indirectly, exceeds PHP 6 billion. In the formation of a joint venture (other than in connection
with a merger or consolidation), the contributing entities shall be deemed acquiring entities and
the joint venture shall be deemed the acquired entity.
 Size of transaction: The value of the transaction exceeds PHP 2.4 billion. Rule 4, Section 3(d) of
the PCA-IRR provides that a joint venture is notifiable if either:

o the aggregate value of the assets that will be combined in the Philippines or contributed
into the proposed joint venture exceeds PHP 2.4 billion; or
o The gross revenues generated in the Philippines by assets to be combined in the
Philippines or contributed into the proposed joint venture exceed PHP 2.4 billion.
 In determining the assets of the joint venture, the following are included:

 o all assets which any entity contributing to the formation of the joint venture has agreed
to transfer, or for which agreements have been secured for the joint venture to obtain
at any time, whether or not such entity is subject to the requirements of the PCA; and
o any credit or other obligations of the joint venture which any entity contributing to its
formation has agreed to extend or guarantee, at any time.

33. Are foreign-to-foreign transactions covered by the merger control regime, and if so, in what
circumstances?

A transaction is notifiable if it meets both the size of party and the size of transaction thresholds
set by the PCC (see question 2.6). Under the PCC Guidelines on the Computation of Merger
Notification Thresholds, sales with a Philippine nexus will be included in calculating the value of
the gross revenues for the purposes of these tests.
The guidelines provide as follows:
 "The determination on whether the gross revenues from sales are considered to be ‘in', ‘into'
and ‘from' the Philippines depends on the location where competition with alternative suppliers
occur";
 "Usually, the said sales take place where the characteristic or representative action under the
contract in question is to be performed or executed"; and
 "Online transactions for the sale of goods have a Philippine nexus if the goods are to be
delivered within the Philippines or the contract of sale is perfected in the Philippines but
delivery will take place outside the Philippines."
In cases where the size of party and size of transaction thresholds are exceeded by a transaction
with a Philippine nexus, the deal will be considered notifiable notwithstanding the fact that it is
a foreign-to-foreign transaction.

34. What are the jurisdictional thresholds that trigger the obligation to notify? How are these
thresholds calculated?
In order to determine whether a transaction should be notified to the PCC, one should refer to
the thresholds under Rule 4 of the PCA-IRR and the latest PCC Memorandum Circular on
notification thresholds, considering that the PCA grants the PCC the power to set the thresholds
for notification. The PCC provides as follows in relation to the size of party and the size of
transaction thresholds:

The size of party threshold pertains to the computation of the aggregate value of the assets in
the Philippines, and revenues from sales in, into or from the Philippines, of the filing UPE,
including all entities that it controls, directly or indirectly.
The size of transaction threshold pertains to the computation of the value of the assets being
acquired or/and the gross revenues generated by the assets being acquired, or of the acquired
entity and entities it controls, depending on the type of transaction, as provided under Rule 4,
Section 3(b) and (d), as amended. With the passage of Republic Act 11494 – otherwise known as
the ‘Bayanihan to Recover as One Act' (BARO) – which took effect on 15 September 2021,
 mergers and acquisitions entered into within two years of the date on which BARO took effect
with a transaction value below PHP 50 billion) will be exempt from compulsory notification.
Rule 4, Section 3 of the PCA-IRR provides that the parties to a merger or acquisition must
provide when the transaction meets both the size of party and size of transaction thresholds, as
follows.

The size of party is met where the aggregate annual gross revenues in, into or from the
Philippines, or the value of the assets in the Philippines, of the UPE of at least one of the
acquiring or acquired entities, including all entities controlled by the UPE, directly or indirectly,
exceeds PHP 6 billion.

The size of transaction threshold is met where the value of the transaction exceeds PHP 2.4
billion

35. Are any types of transactions exempt from the merger control regime?

Yes. The following transactions are generally exempt from the compulsory notification
requirements:
 internal restructurings within a group of companies, subject to the conditions set out in PCC
Clarificatory Note 16-002 dated 16 September 2016;
 joint ventures of private entities formed for unsolicited public-private partnership (PPP) projects
pursuant to the Build-Operate-Transfer (BOT) Law, subject to the conditions and procedures set
forth in PCC Memorandum Circular 20-002 dated 2 July 2019;
 joint ventures of private entities formed for solicited public-private partnership projects
pursuant to the BOT Law and its implementing rules and regulations, subject to the conditions
and procedures set forth in PCC Memorandum Circular 19-001 dated 16 June 2020; and
 under BARO, mergers and acquisitions entered into within two years of its entry into force with
a value below PHP 50 billion, as implemented by the PCC Rules for the Implementation of
Section 4 (eee) of Republic Act 11494, otherwise known as the "Bayanihan to Recover as One
Act", Relating to the Review of Mergers and Acquisitions dated 24 September 2020.
36. Is notification voluntary or mandatory? If mandatory, are there any exceptions where
notification is not required?

Section 17 of the Philippine Competition Act (PCA) provides for a mandatory pre-notification
regime or notification prior to the consummation of covered transactions. The parties to a
transaction that meets the thresholds set out in Section 3 of Rule 4 of the Implementing Rules
and Regulations of Republic Act 10667 (PCA-IRR) must notify the Philippine Competition
Commission (PCC) within 30 days of signing of the definitive agreement for the transaction.
If deemed necessary, the PCC may likewise investigate transactions on its own initiative.
The PCC has issued a number of circulars providing for certain exempt transactions, as follows:
 internal restructurings within a group of companies, subject to the conditions set out in PCC
Clarification Note 16-002 dated 16 September 2016;
  joint ventures of private entities formed for unsolicited public-private partnership (PPP)
projects pursuant to the Build-Operate-Transfer (BOT) Law, subject to the conditions and
procedures set forth in PCC Memorandum Circular 20-002 dated 2 July 2019;
 joint ventures of private entities formed for solicited public-private partnership projects
pursuant to the BOT Law and its implementing rules and regulations, subject to the
conditions and procedures set forth in PCC Memorandum Circular 19-001 dated 16 June
2020.
Further, the Bayanihan to Recover as One Act (BARO) exempts mergers and acquisitions entered
into within two years of its entry into force with a value below PHP 50 billion, as implemented
by the PCC Rules for the Implementation of Section 4 (eee) of Republic Act 11494, otherwise
known as the "Bayanihan to Recover as One Act", Relating to the Review of Mergers and
Acquisitions dated 24 September 2020. The rules provide that:
 the parties to a merger or acquisition with a value below PHP 50 billion are not precluded
from voluntary notification; and
 the PCC may, at its discretion, give due consideration to the voluntary notification subject to
the review periods of 45 days for Phase I and 90 days for Phase II.
These review periods for voluntary notification apply only while the rules are in force. Voluntary
notification constitutes a waiver of the exemption from review provided in BARO.

37. Is there an opportunity or requirement to discuss a planned transaction with the authority,
informally and in confidence, in advance of formal notification?

Yes, the parties may request a pre-notification consultation with the Mergers and Acquisitions
Office of the PCC.
Under the PCC Merger Rules, the parties must submit the following information when
requesting a pre-notification consultation:
 the names and business contact information of the entities concerned;
 the type of transaction; and
 the markets covered or lines of businesses by the proposed transaction.
The parties may also submit a draft notification form.
During the consultation, to facilitate their assessment on whether a potential merger is
notifiable, the parties may:
 seek clarification on the information required under the form;
 inquire as to any additional information that may be required for the review;
 discuss the identified markets; and
 seek guidance on the thresholds set out in Rule 4 of the PCA-IRR.
The parties are then given non-binding advice by the PCC on the specific information that is
required in the form. However, the PCC will not give an opinion on whether the transaction is
likely to lead to a substantial lessening of competition.

38. Who is responsible for filing the notification?

 The pre-acquisition ultimate parent entities (UPEs) of each party to a transaction are responsible
for filing the notifications to the PCC. The UPEs may also authorise another entity to file the
notification form on their behalf.
The PCA-IRR defines a ‘UPE' as the legal entity that directly or indirectly controls a party to the
transaction and is not controlled by any other entity.

39. Can a transaction be notified prior to signing a definitive agreement?

Yes. The PCA-IRR states that: "The parties may notify, on the basis of a binding preliminary
agreement in any form, such as a memorandum of agreement, term sheet, or letter of intent.
Each of the acquired and acquiring entities must submit an affidavit with their Forms, attesting
to the fact that a binding preliminary agreement has been executed and that each party has an
intention of completing the proposed transaction in good faith."
Further, the notification form requires the parties to submit a copy of the most recent draft of
the definitive agreement as an appendix to the form. This must be accompanied by an
undertaking to submit the signed definitive agreement within two days of signing, identifying
any changes to the draft agreement that were implemented in the signed agreement.

40. Are the parties required to delay closing of the transaction until clearance is granted?

Yes. If the transaction is notifiable, the parties must delay closing of the transaction until either:
 express clearance has been issued; or
 the waiting periods or the relevant periods for merger review have expired.

41. Is there a simplified review process? If so, in what circumstances will it apply?

Yes. On 28 May 2019, the PCC approved and adopted the PCC Rules on Expedited Merger
Review. These rules provide for a simplified notification and review of certain types of
transactions which, based on the PCC's experience, are less likely to substantially prevent,
restrict or lessen competition in their relevant markets.
Transactions that meet the following criteria qualify for expedited review:
 There are no actual or potential horizontal or vertical relationship in the Philippines between the
acquiring and the acquired entity notifying groups;
 The merger is a global transaction where the acquiring and the acquired entities identified in the
definitive agreement are foreign entities (foreign parents), and their subsidiaries in the
Philippines act merely as manufacturers or assemblers of products, with at least 95% of such
products exported to the foreign parents, subsidiaries, affiliates or third parties located outside
the country, provided that the remaining 5% product sales in a market in the Philippines are
minimal in relation to the entirety of that market;
 The relevant geographic market of the merger is global and the acquiring and acquired entities
have a negligible or limited presence in the Philippines; or
 The transaction involves a joint venture, whether incorporated or not, that is formed purely for
the construction and development of a residential and/or commercial real estate development
project.
 The parties are strongly encouraged to have a pre-notification consultation with the PCC prior to
notification under expedited review.

42. To what extent will the authority cooperate with its counterparts in other jurisdictions during
the review process?

Neither the PCA, the PCA-IRR nor the Merger Procedure Rules contain a cooperation provision
involving the PCC and its counterparts in other jurisdictions. We have yet to see the PCC reach
out to foreign antitrust bodies in the process of its merger review.

43. What information-gathering powers does the authority have during the review process?

At any time during the review, the PCC may require the parties to provide additional data,
information or documents to those submitted upon notification.
If the PCC deems it necessary, it may also conduct site visits or inspections of the business
premises of the parties, their customers and/or their competitors, in order to better understand
issues such as:
 how products are manufactured, distributed or sold;
 how services are rendered; or
 the nature of competition in the market.
Additionally, the PCC may contact third parties – such as customers, suppliers or competitors –
by issuing market calls or inquiry letters in order to obtain relevant information regarding:
 the market;
 their views on the merger;
 any competition issues it may raise; and
 how they will be affected.
Finally, the PCC has the power to require a party to provide information or documents, or to
testify, through the issuance of subpoena duces tecum and/or subpoena ad testificandum.

44. Is there an opportunity for third parties to participate in the review process?

The PCC may contact third parties – such as customers, suppliers or competitors – by issuing
market calls or inquiry letters in order to obtain relevant information regarding:
 the market;
 their views on the merger;
 any competition issues it may raise; and
 how they will be affected.
Third parties may also include other governmental entities, sectoral regulators, industry
associations, consumer bodies, think-tanks, market research firms or centres for information,
among others.

45. What substantive test will the authority apply in reviewing the transaction? Does this test vary
depending on sector?
 In 2018, the PCC released its Merger Review Guidelines, which outline the principal analytical
techniques, practices and enforcement policies of the PCC with respect to mergers and
acquisitions that may have a direct, substantial and reasonably foreseeable effect on trade,
industry or commerce in the Philippines. According to the guidelines, such techniques, practices
and enforcement policies are modelled on the International Competition Network (ICN)
Recommended Practices for Merger Analysis, which in turn are derived from the ICN Merger
Guidelines Workbook, and on common practices across member jurisdictions, tailored to apply
to Philippine commercial and legal practices and made consistent with the PCA and the PCA-IRR.
The guidelines apply uniformly across all sectors. However, the PCC has signed partnership
agreements with other government agencies overseeing regulated sectors (eg, banking,
insurance and electric power), with the objective of working together towards a harmonised and
efficient regulatory approach concerning the specific regulated sector.

46. What is the basis of PCA?

It is 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.

47. What is an “Agreement”?

Any type or form of contract, arrangement, understanding, collectivere commendation, or

concerted action, whether formal or informal, explicit or tacit, written or oral. [Sec. 4(b)]

48. What is a “Confidential business information”?

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. [Sec. 4(e)]

49. What is “Control”?

The ability to substantially influence or direct the actions or decisions of an entity, whether by
contract, agency or otherwise. [Sec. 4(f)]

50. What does it mean by dominant position?

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. [Sec. 4(g)]

51. How does the PCA defines Market?

 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. [Sec.
4(i)]

52. Scope of PCA

This Act shall:

(1) Be enforceable against any person or entity engaged in any trade, industry and commerce in
the Republic of the Philippines.

(2) Be 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.

53. Exceptions to the Scope

This Act shall NOT apply to:

(1) The combinations or activities of workers or employees;
(2) 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. [Sec. 3]

54. What are prohibited agreements per se?

The following agreements, between or among competitors, are per se prohibited:

1. Restricting competition as to price, or components, 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.

55. What is price fixing?

An Anti-Competitive Agreement whereby competitors collude with one another to fix prices for
goods or services, rather than allowing prices to be determined by market forces.

56. What is bid-rigging?

An Anti-Competitive Agreement whereby parties participating in a tender process coordinate

their bids, rather than submit independent bid prices.

57. What is output limitations?

An Anti-Competitive Agreement whereby competitors agree to limit production or set quotas, or

else to coordinate investment plans.
58. What is Market-Sharing?

An Anti-Competitive Agreement whereby competitors agree to restrict their sales to specific

geographic areas, effectively creating local monopolies for each of them.

59. Administrative Fines and Penalties

First offense: Fine of up to one hundred million pesos (P100,000,000.00).

Second offense: Fine of not less than one hundred million pesos (P100,000,000.00) but not more
than two hundred fifty million pesos (P250,000,000.00).

60. Criminal Penalty

An entity that enters into any anti-competitive agreement as covered in Sec. 14 shall be
penalized by imprisonment from two (2) to seven (7) years, and a fine of not less than fifty
million pesos (P50,000,000.00) but not more than two hundred fifty million pesos
(P250,000,000.00). The penalty of imprisonment shall be imposed upon the responsible officers,
and directors of the entity.

When the entities involved are juridical persons, the penalty of imprisonment shall be imposed
on its officers, directors, or employees holding managerial positions, who are knowingly and
willfully responsible for such violation.

61. What is predatory pricing?

A prohibited act of selling goods or services below cost with the object of driving competition
out of the relevant market;

62. What is a prohibited merger and acquisition?

Mergers and acquisitions that substantially prevent, restrict or lessen competition in the
relevant market or in the market for goods or services are prohibited.

63. Actions of PCC against prohibited merger and acquisition

If the PCC determines that the agreement results in a prohibited merger or acquisition, it 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. [Sec. 18]
64. Exception to Anti-Competitive Agreement

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.

65. Exception to Abuse of Dominant Position

The ff. 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. [Sec. 15]

66. What are the factors to be considered in determining relevant market

For purposes of determining the relevant market, the following factors, among others, affecting
the substitutability among goods or services constituting such market and the
geographic area delineating the boundaries of the market shall be considered:

(a) The possibilities of substituting the goods or services in question, with others of domestic or
foreign origin, considering the technological possibilities, extent to which
substitutes are available to consumers and time required for such substitution;

(b) The cost of distribution of the good or service, its raw materials, its supplements
and substitutes from other areas and abroad, considering freight, insurance,
import duties and non-tariff restrictions;the restrictions imposed by economic agents
or by their associations; and the time required to supply the market from those areas;
(c) The cost and probability of users or consumers seeking other markets; and
(d) National, local or international restrictions which limit access by users or consumers
to alternate sources of supply or the access of suppliers to alternate consumers. [Sec. 24]
67. Consideration in determining control or dominance of market

In determining whether an entity has market dominant position, the Commission shall consider
the following:

1. The share of the entity in the relevant market and whether it is able to fix prices
unilaterally or to restrict supply in the relevant market;
2. The existence of barriers to entry and the elements which could foreseeably alter
both said barriers and the supply from competitors;
3. The existence and power of its competitors;
4. The possibility of access by its competitors or other entities to its sources of inputs;
5. The power of its customers to switch to other goods or services;
 6. Its recent conducts; and
7. Other criteria established by the regulations. [Sec. 27]

68. Presumption of Market Dominance

Presumption of market dominant position if the market share of an entity in the relevant market
is at least fifty percent (50%), unless a new market share threshold is determined by the
Commission for that particular sector.

69. How to Determine Existence of Anti-Competitive Conduct

In determining whether anti-competitive agreement or conduct has been committed, the

Commission shall:
1. Define the relevant market allegedly affected by the anti-competitive agreement or conduct
2. Determine if there is actual or potential adverse impact on competition in the relevant market
caused by the alleged agreement or conduct, and if such impact is substantial and outweighs the
actual or potential efficiency gains that result from the agreement or conduct;
3. Adopt a broad and forward-looking perspective, recognizing future market developments, any
overriding need to make the goods or services available to consumers, the requirements of large
investments in infrastructure, the requirements of law, and the need of our economy to respond
to international competition, but also taking account of past behavior of the parties involved
and prevailing market conditions;

70. Is there a retroactive application of the PCA?

Yes. An existing business structure, conduct, practice or any act that may be in violation of the
Act shall be subject to penalties only if it is not cured or is continuing upon the expiration of 2
years after the effectivity of the act (Sec. 53, RA 10667).

NOTE: Criminal violations committed prior to the Act shall be penalized under Article 186 of the
Revised Penal Code (Sec. 55, RA 10667).

71. What composes the PCC?

The Commission is headed by a Chairperson and four Commissioners (Sec. 6, RA 10667) who
enjoy a seven-year security of tenure.

The Chairperson and Commissioners, who shall have the rank equivalent of cabinet secretary
and undersecretary, respectively, shall be appointed by the President.

72. What is the Single Economic Entity Doctrine

 An entity that controls, or 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 (Sec. 14, RA 10667).

E.g. parent company and its subsidiary

73. Difference between upstream market and downstream market

Upstream market- From the perspective of the entity, this is the relevant market from the
supply side, e.g., the market for bottlers, canners and other container suppliers.

Downstream market- From the perspective of the entity, this is relevant market from the
distribution side, e.g., the market for distributors and retailers.

74. What are the elements of Anti-Competitive Conduct?

Elements:
1. The entity must have market power;
2. The entity commits abusive conduct;
3. The conduct must have substantial foreclosure effect on the relevant market; and
4. There is no objective justification for the conduct.

75. What is the prescriptive period for criminal and civil actions

The Act provides a five-year prescriptive period reckoned, as follows:

a) For criminal actions, from the time the violation is discovered by the offended party, the
authorities, or their agents; and
b) For administrative and civil actions, from the time the cause of action accrues (Sec. 46,
RA 10667).