Bicam Day 2

Repu blic of t h e Ph ilippin es
CONGRESS OF THE PHILIPPINES

SENATE
Pasay City
BICAMERAL CONFERENCE COMMITTEE

ON THE DISAGREEING PROVISIONS OF
SENATE BILL NO. 2282 AND HOUSE BILL NO. 5286
(FAIR COMPETITION ACT OF 2015)
DATE : Thursday, June 4, 2015
TIME : 12:00 noon
VENUE : Committee Room No. 1, 2nd Floor

Senate of the Philippines Financial Center
Roxas Boulevard, Pasay City
AGENDA : Disagreeing Provisions of Senate

Bill No. 2282 and House Bill No. 5286
(Fair Competition Act of 2015)
ATTENDANCE
SENATE PANEL:
HON. PAOLO BENIGNO “BAM” AQUINO IV - Chairman

HON. AQUILINO “KOKO” L. PIMENTEL III
HON. CYNTHIA A. VILLAR
HON. SERGIO R. OSMEÑA III
HON. TEOFISTO L. GUINGONA III
HOUSE PANEL:
HON. DAKILA CARLO E. CUA - Chairman

HON. RUFUS B. RODRIGUEZ
HON. XAVIER JESUS “XJ” D. ROMUALDO
HON. ANTHONY G. DEL ROSARIO
HON. IBARRA “BARRY” M. GUTIERREZ III
HON. ANTONIO L. TINIO
1
BICAMERAL CONFERENCE COMMITTEE ON THE DISAGREEING
PROVISIONS OF SENATE BILL NO. 2282 AND HOUSE BILL NO. 5286
Thursday, June 4, 2015
Page 2
GUEST/RESOURCE PERSON:
Dir. Heiddi Veneccia Barrozo - Department of Justice (DOJ)
SENATORS’ STAFF:
Ms. Vina Vargas - O/S Aquino

Ms. Amy Padilla - O/S Aquino
Ms. Cecile Palines - O/S Aquino
Ms. Tiffany De Guzman - O/S Aquino
Ms. Liza Castañeda - O/S Aquino
Ms. Katherine Purugganan - O/S Aquino
Ms. Carole Malenab - O/S Aquino
Mr. Keith Geamoga - O/S Aquino
Ms. Lin Eyana - O/S Villar
Mr. Ryan Martin T. Macalatan - O/S Pimentel
Atty. Elbert Cruz - O/S Pimentel
Atty. Catherine T. Manahan - O/S Pimentel
Ms. Sheila Gonzales - O/S Angara
Ms. Isha Lim - O/S Guingona
Mr. Mark Robert Dy - O/S Guingona
Mr. Levia Bayocot - O/S Guingona
Atty. Lezel De Villa-Andaman - O/S Sotto
Ms. Claro Sampaga - O/S Osmeña
Mr. Raul Gonzalez - O/S Osmeña
SENATE SECRETARIAT:
Mr. Joey M.Tunac, MNSA - Committee Secretary

Ms. Jingle C. Allam - Committee Secretary
Ms. Christine M. Nery - Committee Stenographer
Ms. Nida A. Mancol - Committee Stenographer
Ms. Rosemarie J. Ortiz - Committee Stenographer
Ms. Sherill M. Villadiego - Committee Stenographer
Ms. Cindell B. Gealan - Committee Stenographer
Ms. Jo B. Cadaing - Committee Stenographer
Ms. Maribel P. Mendoza - Committee Stenographer
Ms. Merlene J. Palaganas - Committee Stenographer
Ms. Carolina F. Driz - Committee Stenographer
Ms. Ma. Emperatriz L. Novero - Committee Stenographer
Mr. Rommel P. Alger - Committee Stenographer
2
PROVISIONS OF SENATE BILL NO. 2282 AND HOUSE BILL NO. 5286
Thursday, June 4, 2015
Page 3
Ms. Norma G. Dizon - Committee Stenographer

Ms. Gina Rowena Nortez - Legislative Page
Mr. Reginald Mendoza - Legislative Page
Ms. Mildred C. Fisico - Committee Clerk
Mr. Jeffrey Padrejuan - Committee Clerk
Mr. Marino C. Baltazar - Committee Clerk
Mr. Arsenio P. Buena Jr. - Audio Technician
REPRESENTATIVES’ STAFF:
Ms. Rasiele Rellosa - Office of Rep. Romualdo

Ms. Marve A. Lintogonan - Office of Rep. Romualdo
Ms. Mae Chatto - Office of Rep. A. Del Rosario
Ms. Maria Concepcion B. Mendoza Baldueza- Office of Rep. Gutierrez
HOUSE OF REPRESENTATIVES SECRETARIAT:
Ms. Jannalinna Alladas - Committee Secretary

Ms. Lina Nortega - Service Director
Ms. Neria B. Aguila - SLSO II
Ms. Joefina Fontanilla - SLSO II
Mr. Filomena Sambilay - SLSO II
Ms. Ma. Cristina Sulaik - SLSO II
Ms. Erlinda T. Blanco - LSO VI
Mr. Renato G. Romero - LSO VI
Ms. Evangeline M. Almeyda - LSO VI
Ms. Preciosa V. Baldonaza - LSO VI
Mr. Romeo Guanzon -
Ms. Grace Odin -
(For complete list, please see attached Attendance Sheet.)
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PROVISIONS OF SENATE BILL NO. 2282 AND HOUSE BILL NO.
5286 (FAIR COMPETITION ACT OF 2015)
CMNERY I-1 June 4, 2015 12:40 p.m. 1
AT 12:40 P.M., HON. PAOLO BENIGNO “BAM”

AQUINO IV, CHAIRMAN OF THE SENATE PANEL, AND
HON. DAKILA CARLO E. CUA, CHAIRMAN OF THE
HOUSE PANEL, CALLED THE MEETING TO ORDER.
THE CHAIRMAN (SEN. AQUINO). So we resume the
Bicameral Conference on both the Senate and House’s version on the
competition bill.
Just for the record, we’d like to thank again our colleagues from
Congress for attending and making the trip here.
We’re hoping that we can finish today and we can tackle all the
salient points and important points. And we wish everyone a healthy
discussion on all of the different points we had parked from the past
bicam.
Chairman.
THE CHAIRMAN (REP. CUA). Yes. Thank you, Senator Bam,
Senator Villar and Senator Osmeña, for welcoming the House panel.
We likewise thank you for the sumptuous lunch that we had
which has energized us to be ready for the discussions on the parked
provisions and we hope as well that we finish it by today.
THE CHAIRMAN (SEN. AQUINO). We would like to reiterate
our previous ruling that in the room will only be the panel, the
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CMNERY I-1 June 4, 2015 12:40 p.m. 2
respective committee secretariats, the staff of the senators and
congressmen and officially designated experts on the matter.
So we request everyone else to please vacate the room.
All right. So, shall we begin?
So we shall go sequentially.
I think the House has proposal for Section 3, “Scope and
Application.”
THE CHAIRMAN (REP. CUA). Yes, Mr. Chairman, we propose
to combine the Senate and House versions and if possible to remove
the proviso on MSMEs.
THE CHAIRMAN (SEN. AQUINO). May we request that the
portion be read into the record?
THE CHAIRMAN (REP. CUA). “Scope and Application. – This
Act shall be enforceable against any person or entity engaged in any
trade, industry and commerce in the Republic of the Philippines. It
shall likewise 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.
“This Act shall not apply to the combinations or activities of
workers or employees nor to agreements or arrangements with their
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CMNERY I-1 June 4, 2015 12:40 p.m. 3
employers when such combinations, activities, agreements, or
arrangements are designed solely to facilitate collective bargaining in
respect of conditions of employment.”
THE CHAIRMAN (SEN. AQUINO). So the proposal is to
combine the two provisions and just delete the “nor to any micro,
small and medium-sized enterprises or MSMEs.”
May I know the reason for this deletion—for this proposal?
THE CHAIRMAN (REP. CUA). Mr. Chairman, members of the
Senate panel, we pray that you see the wisdom that the carving out of
any segment of the economy is ideal since the spirit of the bill is really
to promote competition in all levels of the economy, so which is why
this is the proposal.
THE CHAIRMAN (SEN. AQUINO). For the benefit of my co-
senators, Senator Ejercito who had proposed this was willing to let go
of this provision.
So we are inclined to accept unless there are objections from my
panel.
Okay. We move on.
THE CHAIRMAN (REP. CUA). Thank you.
SEN. VILLAR. For the record, I do not agree with this because
I think as a proponent of entrepreneurship, we really would like to give
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CMNERY I-1 June 4, 2015 12:40 p.m. 4
special consideration to micro, small and medium enterprises. But
since we will have so many conflicts in this bill, I think they will not be
penalized naman because they are small in the long run.
So I’m willing to agree on this and I will just make other
recommendation on other parts of the bill.
THE CHAIRMAN (SEN. AQUINO). Thank you, Senator Villar.
THE CHAIRMAN (SEN. AQUINO). So for “Definition of
Terms,” shall we go letter by letter?
THE CHAIRMAN (REP. CUA). Yes.
THE CHAIRMAN (SEN. AQUINO). For letter (a), we propose
to adopt the House version.
THE CHAIRMAN (REP. CUA). We accept.
THE CHAIRMAN (SEN. AQUINO). For letter (b)—
I think you still have to accept, tama, ‘di ba?
THE CHAIRMAN (REP. CUA). [Off-mike] Yeah.
THE CHAIRMAN (SEN. AQUINO). For letter (b), we propose
the—this is actually the same. It’s really more of style, the way it was
written.
For letter (b), the House version.
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CMNERY I-1 June 4, 2015 12:40 p.m. 5
THE CHAIRMAN (SEN. AQUINO). Maybe we can have some
discussion on letter (c) which is “cartel.” Or shall we get back to
“cartel” after the “anti-competitive agreements.”
THE CHAIRMAN (REP. CUA). Yes, Mr. Chairman, we will see
later if such definition is still needed in the bill.
THE CHAIRMAN (SEN. AQUINO). So we park letter (c).
Letter (d), we propose to accept the House version.
Accepted?
THE CHAIRMAN (SEN. AQUINO). For letter (e), we had
parked this previously. Are we ready to decide on this? I think DOJ
wanted us to consider another definition of competition.
THE CHAIRMAN (REP. CUA). Yes. I think aside from the DOJ
version there was also a recommendation from the DOJ, the option of
deleting the definition entirely.
THE CHAIRMAN (SEN. AQUINO). Would you want to discuss
this now or shall we move on to the other definitions first?
THE CHAIRMAN (REP. CUA). We suggest we park it.
THE CHAIRMAN (SEN. AQUINO). Accepted.
For letter (f), “Confidential Business Information.”
We have some proposals for CBI.
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CMNERY I-1 June 4, 2015 12:40 p.m. 6
THE CHAIRMAN (REP. CUA). Mr. Chairman, may we propose
to reconsider the House version subject to certain amendments.
THE CHAIRMAN (SEN. AQUINO). Please do so.
THE CHAIRMAN (REP. CUA). May I elaborate on the idea, Mr.
Senator?
The idea of the CBI or Confidential Business Information is not
for it to be used as a defense of entities from disclosing data to the
commission. The purpose of this definition is to define what data that
the commission gathers are not allowable to be shared with the public
or third parties.
THE CHAIRMAN (SEN. AQUINO). Yes.
THE CHAIRMAN (REP. CUA). So ang ibig sabihin, Mr.
Senator, this provision does not limit the scope of investigation of the
commission. In fact, no information should be withheld from the
commission. That is requested. Pero it prevents the commission from
disclosing information sensitive to the business to the third parties or
to the public.
THE CHAIRMAN (SEN. AQUINO). In their legal opinions and
decisions, if I’m not mistaken.
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CMNERY I-1 June 4, 2015 12:40 p.m. 7
THE CHAIRMAN (SEN. AQUINO). So may I solicit the
proposal from the House, please?
Yes, Senator Villar.
SEN. VILLAR. Mr. Chairman, you’re supposed to disclose
everything to the commission?
THE CHAIRMAN (REP. CUA). Yes, information requested by
the—
SEN. VILLAR. What kind of information? Maybe we should
define those information kasi if it will endanger naman the
competitiveness of the company or things that they learn through time
that are helping them to be able to compete, tapos padi-disclose mo,
medyo mahirap din naman iyon.
Let’s define what you’re supposed to disclose. What are these
information ba needed to do your work? Hindi naman lahat ng
information you need to do your work.
THE CHAIRMAN (SEN. AQUINO). I have a legal question,
maybe Congressman Romualdo…/cmn
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Mancol II-1 June 4, 2015 12:50 p.m. 1
THE CHAIRMAN (SEN. AQUINO). … maybe Congressman
Romualdo can help us. The commission has the power for subpoena
duces tecum.
SEN. VILLAR. Let us define what they can subpoena. Kasi
iyong mga things naman are not related to the investigation should—
hindi puwede nating sabihin lahat puwede niyang tanungin, ‘di ba?
THE CHAIRMAN (SEN. AQUINO). There’s actually a provision
there. If I can ask the secretariat to point us to the provision defining
what information can be retrieved.
REP. GUTIERREZ. Mr. Chair, if I may.
REP. GUTIERREZ. That’s on Page 17, the power to issue
subpoena duces tecum. The standard that we already provide in the
said section is that the data must relate to any matter relevant to the
investigation and person and, well, is pending before the commission.
So, the standard is relevancy to the investigation.
THE CHAIRMAN (SEN. AQUINO). Okay. I don’t think it would
be very difficult to make it more specific than that considering that we
cannot anticipate the scope of an investigation that the commission
may undertake. Or do we think that this is a sufficient standard?
There’s always a defense that a person who is subjected to a subpoena
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Mancol II-1 June 4, 2015 12:50 p.m. 2
under this provision can raise that the matters actually sought to be
inquired into are not relevant. They have no bearing whatsoever on an
investigation, and that will be a matter for a court to decide.
SEN. VILLAR. So, we have to be specific so there will be legal
option for the company, ‘di ba? We should provide for that.
THE CHAIRMAN (SEN. AQUINO). Who would you wish to
write that up, Senator Villar?
SEN. VILLAR. Maybe we can put it on hold and we can rewrite
the provision, ano ba iyon.
THE CHAIRMAN (REP. CUA). Okay. We are willing to park it,
Senator.
THE CHAIRMAN (SEN. AQUINO). Senator Villar, do you wish
to park even this provision or that provision? Because what you are
referring to is a provision in a later chapter.
SEN. VILLAR. If it is related, then we park it.
THE CHAIRMAN (REP. CUA). Okay.
THE CHAIRMAN (SEN. AQUINO). I guess we can park it, ‘no.
SEN. VILLAR. Oo, para consistent tayo. Baka this provision is
like that and the other provision is not. We might as well make it
consistent, ‘di ba?
THE CHAIRMAN (REP. CUA). We subscribe.
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Mancol II-1 June 4, 2015 12:50 p.m. 3
THE CHAIRMAN (SEN. AQUINO). All right. Let’s move on to
the next definition which is “Control of an entity.”
Okay. We are actually discussing just the language, not the
intent. And if I may reiterate our discussion the other day, we agreed
that the basic definition of control refers to the ability to substantially
influence or direct the actions or decisions of an entity whether by
contract, agency or otherwise. And then, we started to enumerate
different reasons, different standards by which control of an entity can
be understood. Now, one issue raised was that, by enumerating these
specifities, we might be skewing the ability of the commission to
determine further standards. So, we had asked the secretariat for
better language. Unfortunately, we haven’t yet found better language,
unless anyone would like to propose better language now.
Senator Guingona, do you have a suggestion?
SEN. VILLAR. Parked ito, ‘no. Parked din ito.
THE CHAIRMAN (SEN. AQUINO). We parked this before. But
maybe we can tackle it already. Initially, i think we have “including
but not limited to,” but people were a little hesitant to use “including
but not limited to.”
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Mancol II-1 June 4, 2015 12:50 p.m. 4
THE CHAIRMAN (REP. CUA). Mr. Chairman, maybe we should
wait till we have further possible language and keep it parked in the
meantime.
THE CHAIRMAN (SEN. AQUINO). All right. I have a
procedural question, Mr. Chairman. I guess when we park, we will
take it up later again—later today, ‘no. Just making sure, later
tonight.
Now, we also agreed in the previous hearing that we will define
“control of a market” to differentiate “control of an entity,” so there’s
no confusion. And we will propose the language or DOJ might propose
the language for “control of a market”.
Do you want to take this up now or we’ll take it up with “control
of an entity”?
THE CHAIRMAN (REP. CUA). Yes. Perhaps later, Mr. Senator.
In fact, most of the definitions will be subject to refinement after we
decide on the more…
THE CHAIRMAN (SEN. AQUINO). Substantive parts, all right.
THE CHAIRMAN (REP. CUA). … the bigger issues at hand.
THE CHAIRMAN (SEN. AQUINO). Okay.
So, for letter (h), we propose the Senate version.
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Mancol II-1 June 4, 2015 12:50 p.m. 5
THE CHAIRMAN (REP. CUA). Mr. Chairman, we’re skipping
“dominant position”?
THE CHAIRMAN (SEN. AQUINO). Ah, we’re skipping it.
Okay.
SEN. VILLAR. Park.
THE CHAIRMAN (SEN. AQUINO). So, we’re parking that also.
For letter (i) “Entity,” we propose to adopt the House version.
THE CHAIRMAN (REP. CUA). We agree, of course.
THE CHAIRMAN (SEN. AQUINO). I just want it for the record,
Mr. Chairman.
For “Goods and services,” we propose to delete the sub-
paragraph.
THE CHAIRMAN (REP. CUA). Okay. So, that’s in the House
version “k” and items 1 and 2.
THE CHAIRMAN (SEN. AQUINO). For letter (j) “Market”, well,
Congress does not have a version so will you accept our Senate
version for definition of “market”?
THE CHAIRMAN (REP. CUA). Yes, we accept.
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Mancol II-1 June 4, 2015 12:50 p.m. 6
THE CHAIRMAN (SEN. AQUINO). We propose to delete
“market concentration” as it is not used in the bill.
THE CHAIRMAN (SEN. AQUINO). For mergers, we propose to
adopt the House version.
THE CHAIRMAN (SEN. AQUINO). We propose to delete
“monopoly” as it is also not used in the bill.
THE CHAIRMAN (REP. CUA). Yes, we agree.
THE CHAIRMAN (SEN. AQUINO). For potential letter (l)
“Relevant market,” we propose that we accept the Senate version.
THE CHAIRMAN (SEN. AQUINO). Thank you. That’s a
significant chapter that we have moved through.
For the next chapter, Chapter V, “Philippine Competition
Commission,” may I know which one was parked here? Ah, “term of
office.” We parked the “term of office” pending some discussion. So, I
think we left the discussion with the Senate panel stating that 14 years
is too long and—or Senator Villar, would you wish to expound on this
provision or some concerns raised for the record?
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Mancol II-1 June 4, 2015 12:50 p.m. 7
SEN. VILLAR. For the Senate, we just want to follow iyong
tradition na seven years because I think when they recommended
seven years in most of the legislation, they have a reason for that, and
it’s a good length of time to serve. And at the same time, we want
also to give chances to others who are in the commission to be able to
head the commission or be a commissioner for those who are working
in the commission for a long time. Kasi maganda rin sa company that
there is room for promotion, ‘di ba? Because you won’t be
encouraging people to work for an institution that there’s no room for
promotion. And at the same time, I think 14 years is too long. Kung
hindi siya magaling ang performance niya, then we’ll suffer for seven
years. But I don’t think we can suffer for another—Remember, this is
an appointive position. Hindi naman ito ano. So, puwede siyang ma-
appoint na hindi naman maganda ang performance niya. It’s relative
to the appointing body. But we want to make sure na hindi naman
maa-abuse iyong length of service. I don’t know why you’re so
particular that they have to serve for a long, long time. Bigyan naman
natin ng chance ang others to show their capability. And I think it is
good also kasi sometimes, when you stay in a position for so long, you
become stale. Hindi ka na open. . . (nam)
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RJOrtiz III-1 June 4, 2015 1:00 p.m. 1
SEN. VILLAR. …hindi ka na open to changes. And I think seven
years is a long time. Naano naman natin iyan sa Comelec, sa other
position in government na puro sila seven years with no
reappointment. And wala naman tayong nadidinig na complaint about
it, di ba?
THE CHAIRMAN (SEN. AQUINO). Can we get a response
from the House panel?
REP. GUTIERREZ. The comments of Senator Villar are very
well taken. We agree with the idea that maybe staying too long would
provide for a certain level of staleness in the commission. So we
propose that we comply with the language of the Constitution with
respect to the bar on reappointment. So if you look at the relevant
provision in the Constitution, for example, in the Commission on
Elections, “The chairman and the commissioner shall be appointed by
the President for a term of seven years without reappointment.” So
that’s a clear prohibition on reappointments. And, actually, that is
what we provided in the original House version. So maybe, if the
Senate is willing, then we can abide by that language.
SEN. VILLAR. If it’s, let say, chairman—if you are appointed a
commissioner and then you became chairman, that’s another seven
years or it’s within seven years?
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REP. GUTIERREZ. According to the, well, constitutional text as
worded, if you are appointed, let’s say, as commissioner for the seven
years, technically you can still qualify to be chair and that’s actually
consistent with what is practiced in the constitutional commissions.
SEN. VILLAR. You can be appointed commissioner for seven
years and chairman for another seven years?
THE CHAIRMAN (SEN. AQUINO). [Off-mike] No, five years
and seven years—12 years.
SEN. VILLAR. Twelve years. Sa Comelec?
THE CHAIRMAN (SEN. AQUINO). [Off-mike] Sa Comelec
pwede ba iyon?
REP. GUTIERREZ. Sa Comelec pwede, yes. There have been
instances where a commissioner—
THE CHAIRMAN (REP. CUA). CRC—CSC.
REP. GUTIERREZ. CSC. Same rule for all commissions—Civil
Service.
SEN. VILLAR. [Off-mike] So ang maximum natin … it hasn’t
happened? I don’t know of anybody who has done that in Comelec. I
know that if you are appointed commissioner and you are appointed
chairman later on, they serve for seven years. I haven’t heard of
anybody serving beyond seven years.
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THE CHAIRMAN (SEN. AQUINO). Okay. So we can check?
We can ask the secretariat to check?
SEN. VILLAR. Yes, we can check. Park na lang.
THE CHAIRMAN (SEN. AQUINO). Okay. May we request the
secretariat to check the actual provision?
SEN. VILLAR. Kasi in practice I haven’t heard of somebody.
REP. RODRIGUEZ. Mr. Chairman?
THE CHAIRMAN (SEN. AQUINO). Yes, Cong.
REP. RODRIGUEZ. The Constitution is very clear, it has the
word “reappointment.” If you are a commissioner and you are
appointed as chairman, it is not a reappointment, it is another
appointment. That’s why they are really allowed but it’s not been a
practice. But our Constitution is very clear that it says “without
reappointment.” And an appointment to chairmanship, if you come
from the commissioner level, is not a reappointment but a new
appointment.
THE CHAIRMAN (SEN. AQUINO). So just to put on the
record, it is allowed but it hasn’t been done. Okay, so it’s allowed but
it hasn’t been done, to be fair to the discussion.
SEN. VILLAR. Our lawyer is saying that this is not a
constitutional commission.
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THE CHAIRMAN (SEN. AQUINO). No, definitely not.
SEN. VILLAR. So maybe we can just say, “No reappointment
seven years.”
REP. RODRIGUEZ. I think it will be very, very clear but really
since a person holds, for example, he is a commissioner, he is not the
chairman, then certainly it is something to aspire for to be appointed if
he does well. Because if you will notice, the first set will be five years,
three years, so there can be a chance that he can go up to a higher
level as chairman.
SEN. VILLAR. We don’t want naman to deprive him to become
chairman except that we want to limit it to seven years.
THE CHAIRMAN (SEN. AQUINO). [Off-mike] Five plus two,
if ever.
SEN. VILLAR. Yes. Or any, if he’s reappointed—he has stayed
only for three years and ano basta ang limit is seven years.
REP. RODRIGUEZ. Because when you limit it, Mr. Chairman,
precisely he is appointed to a different position by promoting him, he
should be given the chance to have a full seven years to implement
what he should as chairman. Because as commissioner, it has
different—you are merely part of the collegial body. So that is why it’s
difficult to limit--
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SEN. VILLAR. You are now saying that he can be a
commissioner for seven years…
REP. RODRIGUEZ. Yes.
SEN. VILLAR. …and a chairman for another seven years, that’s
even longer.
THE CHAIRMAN (SEN. AQUINO). Sorry. Commissioner for
five years—because the commissioners are only for five years. So five
years plus seven years. So, just to put on the record, the maximum
would have been 12 years, ‘no?
SEN. VILLAR. Ang commissioner ba five?
THE CHAIRMAN (SEN. AQUINO). Five.
REP. RODRIGUEZ. Seven years ang commissioner.
REP. ROMUALDO. Mr. Chairman?
SEN. OSMEÑA. I don’t see the reason why this is a sticky
point. If we just follow what they’ve been doing with Comelec, CSC,
why are we inventing a new animal? I mean, they must have
debated—I have not studied this at length—but they must have
debated this endlessly during the ConCon. And I think there are
reasons. Five years--I object to five years because if there’s a
reappointment and you only have a five-year term, the President
appointing you will effectively have gotten 10 years. So a presidential
22
term is six years so we always go beyond that so she cannot, you
know, have control of that position for longer than the seven years.
REP. ROMUALDO. Mr. Chair, we would just like to state for the
record the reason why the House of Representatives followed the
example of the constitutional commissions that there shall be seven
years without reappointment. Because, well, this will be the very first
comprehensive competition law in the country and there are only very
few, if we can find them, you know, experts in competition law. So that
was the reason why we would allow a situation where a commissioner
becomes chairman considering that during his time in the commission,
he will probably get training, the government will spend for his training
and he will learn a lot of new things with regard to implementing the
law. So that was the reason why we would like to allow a situation
where there could be continuity, you know, to make the commission
more effective.
THE CHAIRMAN (REP. CUA). May I, Mr. Chairman, subscribe
to the statement of Senator Osmeña inasmuch that we believe as well
that it should be seven-year terms. In fact, our appreciation of the
wordings is different from yours inasmuch that we thought it’s really
seven-year terms, precisely, so that the president—appointing
authority, may not appoint to the same position more than once. So I
23
think the confusion lies wherein there is a five-year term for the initial
set to staggerdize the terms of the commissioners para hindi sabay na
nauubos, para may continuity, just like the desire of the Senate.
THE CHAIRMAN (SEN. AQUINO). May I propose a
suspension so we can talk freely? Suspension?
THE CHAIRMAN (REP. CUA). Okay, suspension.
[THE HEARING WAS SUSPENDED AT 1:08 P.M.]…/rjo
24
5286 (FAIR COMPETITION ACT 2015)
SMVilladiego IV-1 June 4, 2015 1:10 p.m. 1
[THE MEETING WAS RESUMED AT 1:12 P.M.]
THE CHAIRMAN (SEN. AQUINO). May we solicit the
wordings, please, from the Congress panel?
Thank you.
THE CHAIRMAN (REP. CUA). Okay. Mr. Chairman, the term
of office in the House version is—that is page 12. Section 7. “Term of
Office. The Chairperson and the Commissioner shall be appointed by
the President of the Philippines.” The term of office—wait, we deleted
that na kasi previously there is—
THE CHAIRMAN (SEN. AQUINO). Maybe you can just read it
into the records, Chairman, instead.
THE CHAIRMAN (REP. CUA). That one. Okay. Section 7.
“Term of Office. The term of office of the Chairperson and the
Associate Commissioners shall be seven years, provided that they shall
be”
THE CHAIRMAN (SEN. AQUINO). No.
THE CHAIRMAN (REP. CUA). No hindi na nga iyan.
THE CHAIRMAN (SEN. AQUINO). May we direct you to the
House? The House version actually is closer.
THE CHAIRMAN (REP. CUA). Yes. Wala, wala. Mali. Iyong
second column po, letter (a)--
25
THE CHAIRMAN (SEN. AQUINO). Sorry, Mr. Chairman. We
are resuming. Just for the record, we are resuming the session.
THE CHAIRMAN (REP. CUA). Yes, we resume as well.
“Term of Office. The Chairperson and the Commissioner shall--”
We take out that statement “be appointed by the President” because it
already state—previously stated. “The term of office of the
Chairperson and the Commissioner shall...”
THE CHAIRMAN (SEN. AQUINO). It is the whole first
sentence.
THE CHAIRMAN (REP. CUA). “...be seven years.”
VOICE. Delete the first sentence.
THE CHAIRMAN (REP. CUA). Yes, delete the first sentence.
“The term of office of the Chairperson and the Commissioner shall be
seven years without reappointment. Of the first set of appointees, the
Chairperson shall hold office for seven years; and of the first four
commissioners, the two shall hold office for a term of seven years; and
two for a term of five years. In case a vacancy occurs before the
expiration of the term of office, the appointment to such vacancy shall
only be for the unexpired term of the predecessor.”
SEN. VILLAR. Walang word na “no reappointment for the
commissioners.” It only says in the chairperson. Ayan nakalagay,
26
“The term of office of the chairperson of the commission—and the
commissioners.” Okay. Without reappointment.
THE CHAIRMAN (SEN. AQUINO). Mr. Chairman, may we
propose that you adopt our last paragraph? If the secretariat can
kindly show the last paragraph. “The Chairperson and the
Commissioners shall enjoy security of tenure and shall not be
suspended or removed from office except for just cause as provided by
law.”
THE CHAIRMAN (REP. CUA). We subscribe.
THE CHAIRMAN (SEN. AQUINO). Thank you.
SEN. VILLAR. Okay na iyon. Hindi, okay na. Without
reappointment.
THE CHAIRMAN (SEN. AQUINO). All right, can we move on?
Thank you for that.
THE CHAIRMAN (SEN. AQUINO). So Section 8 is prohibition
and disqualification. Actually, wasn’t this Senator Pimentel’s
rephrasing so we can ask him? So we will just ask Senator Pimentel
for his rephrasing. So we will park this. But the intent is the same, it
is just a matter of style.
THE CHAIRMAN (REP. CUA). Yes, we park it.
27
May we, Mr. Chairman, go back to Section 8 and discuss further
whether we adopt the two years or the one year?
THE CHAIRMAN (SEN. AQUINO). Oh, yes. My apologies for
skipping that discussion.
For the benefit of the panels, we discuss whether the prohibition
from appearing—“appearing” or “practice” was the term we used
before the commission should be one or two years. We are referring
to--may nag-retire na, natapos na iyong term ng isang commissioner
or chairman, may prohibition for them to appear before the
commission. So the first question was--and we would like to solicit
comments, is it okay if we limit this to the lawyers? Meaning,
appearing before council—appearing before the commission or do we
mean all the commissioners and chairpersons who may be economists,
businessmen or are we just prohibiting the lawyers?
REP. RODRIGUEZ. If we do that, that will be unequal
protection of the laws, immediately.
SEN. VILLAR. Hindi bale na, all.
THE CHAIRMAN (SEN. AQUINO). So we mean, all?
REP. RODRIGUEZ. All na kasi they have been there so they
can influence.
28
THE CHAIRMAN (SEN. AQUINO). Cong Rufus, may we
request for—because the language here is “appear” or “practice” which
would connote lawyers. What would be--
REP. RODRIGUEZ. “Appear” does not connote practice.
Economist appears for a new client that he will have. Because here,
we have mentioned the professions of—the professions that we have
said here are those--the engineers. Let’s go back to economist, right?
Where is that section that says—qualifications.
THE CHAIRMAN (SEN. AQUINO). Which includes commerce,
engineering, etcetera, etcetera.
REP. RODRIGUEZ. Yes, engineering and all that. So the point
here is that we would want to prevent any undue influence and the
conflict really of being there and now they are deciding so everyone
will be--
THE CHAIRMAN (SEN. AQUINO). May I clarify, for the record,
our intent is to appear before the commission in a case or even to be
part of any proceedings that the commission may be adjudicating or
investigating.
REP. RODRIGUEZ. It should be in a proceeding because the
intent is for them not to be able to use their experience there and their
connection in appearing for any proceeding there which may influence
people whom they have worked before. That is the intention.
29
THE CHAIRMAN (SEN. AQUINO). So if an economist has a
position paper, that cannot be construed by the commission?
REP. DEL ROSARIO. Mr. Chairman, just clarification again.
When you say “appear before the commission,” are we saying that
appearing on behalf of the defendant or appearing on behalf of the
commission? Because there are two parties involved, or are we saying
na irrelevant iyong party basta they are not allowed to appear.
Because I don’t see anything wrong if a former commission appears
before the commission on behalf of the commission, right? I mean,
unless there is something wrong with that.
SEN. GUINGONA. Mr. Chairman, yes. Hindi ba, there is a
concept.../smv
30
PROVISIONS OF THE SENATE BILL NO. 2282 AND HOUSE BILL
NO. 5286 (FAIR COMPETITION ACT OF 2015)
CBGealan V-1 June 4, 2015 1:20 p.m. 1
SEN. GUINGONA. …there is a concept, iyong amicus.
THE CHAIRMAN (SEN. AQUINO). [Off-mike] Yes.
SEN. GUINGONA. Friend of the court that the court usually
take in to give them counsel also.
In that case, Mr. Chairman, I think this is for respondents, but
not for the commission, unless, Congressman Rodriguez, you have
objections to that.
REP. RODRIGUEZ. Well, if he is an amicus curiae, for example,
amicus curiae.
SEN. GUINGONA. Yes. In the concept of amicus curiae.
REP. RODRIGUEZ. Then clearly, he should not have any
connection with any of the parties. That is the primary—
SEN. GUINGONA. With any…
REP. RODRIGUEZ. Any of the parties.
SEN. GUINGONA. …private litigants or respondents.
REP. RODRIGUEZ. Yes. The respondents or also even in favor
of the commission.
SEN. GUINGONA. I think that’s clear.
REP. RODRIGUEZ. Yes. Yes. So he should be very objective
and partial of assisting that’s why he is requested to appear.
31
THE CHAIRMAN (SEN. AQUINO). Not even for the
commission?
SEN. GUINGONA. No. He can appear for the commission.
REP. TINIO. Mr. Chair.
In the next paragraph pertaining to spouses or relatives, the
language may appear as “counsel or agent on any matter pending
before the Commission” is used. So appear as counsel or agent. So
maybe we can adopt that for the commissioners, to former
commissioners to make it clear that their prohibition is for appearances
in behalf of involved parties.
THE CHAIRMAN (SEN. AQUINO). If I may clarify, “they shall
not be allowed to appear as counsel or agent before the Commission
for X years,” that’s the proposal?
Yeah. I’m okay with that.
REP. TINIO. Mr. Chair, further, “they shall not be allowed to
appear or practice”—perhaps, since it gives the impression that this
only refers to lawyers, we can say, “practice their profession.”
THE CHAIRMAN (REP. CUA). Only on competition-related
matters, I assume. The “practice their profession” is—
REP. TINIO. The phrase after that is, “before the Commission,”
or “in matters involving the Commission.”
32
THE CHAIRMAN (SEN. AQUINO). Even a consultant, we are
barring them even as a consultant of the commission.
REP. TINIO. Yes.
THE CHAIRMAN (SEN. AQUINO). For(?) fear, ano—
THE CHAIRMAN (REP. CUA). And hypothetically, Mr.
Chairman, when we do that, it also means that once you retire from
the commission and you are now a member of the Board of Directors
of a corporation who suddenly becomes the subject of a competition
investigation…
THE CHAIRMAN (SEN. AQUINO). You have to recuse.
THE CHAIRMAN (REP. CUA). …you will have to resign or
recuse.
THE CHAIRMAN (SEN. AQUINO). No. Maybe not resign.
THE CHAIRMAN (REP. CUA). Ganoon ba?
THE CHAIRMAN (SEN. AQUINO). You just have to recuse
yourself.
THE CHAIRMAN (SEN. AQUINO). Inhibit or recuse.
THE CHAIRMAN (REP. CUA). Okay. If that’s the consensus,
we—
33
THE CHAIRMAN (SEN. AQUINO). Okay. May we solicit
suggestion for the language?
REP. TINIO. “They shall not be allowed to appear or practice
their profession as counsel or agent on any matter pending before the
Commission.”
THE CHAIRMAN (SEN. AQUINO). Okay. All right.
Secretariat, were you able to get—
Could you kindly repeat it, Congressman Tinio? Kindly repeat for
the Secretariat.
REP. TINIO. “They shall not be allowed to appear or practice
their profession as counsel or agent on any matter pending before the
Commission.”
SEN. GUINGONA. But that one, Mr. Chairman, that one, iyong
amicus curiae nawawala. Baka confusion iyon, “on any matter before
the Commission.”
REP. TINIO. “As counsel or agent”—
SEN. GUINGONA. “Of the litigants.”
REP. TINIO. Oho. That does not imply that—
34
SEN. GUINGONA. Yeah. What does it say, counsel or agent—
REP. TINIO. “On any matter pending before”—
SEN. GUINGONA. “Of any of the litigants or repondents.”
What do you call them, respondents? Litigants?
THE CHAIRMAN (SEN. AQUINO). Kinasuhan. Okay.
SEN. GUINGONA. Parties.
THE CHAIRMAN (SEN. AQUINO). No. The question here is—
maybe Congressman Tinio can clarify—the question here is, once
under investigation or even as an expert witness of the commission or
talagang bawal siya talaga?
SEN. GUINGONA. Mr. Chairman.
REP. TINIO. Mr. Chair, would an amicus curiae be covered by
counsel or agent?
THE CHAIRMAN (SEN. AQUINO). [Off-mike] Yes.
SEN. GUINGONA. Yes.
Mr. Chairman—
REP. TINIO. Okay. If so, then we have to further specify.
THE CHAIRMAN (SEN. AQUINO). May I say something?
I think Senator Villar’s intent is any party bawal.
SEN. VILLAR. [Off-mike] Yes.
35
THE CHAIRMAN (SEN. AQUINO). Yeah. Any party. And,
anyway, it’s only for two years.
REP. GUTIERREZ. Mr. Chair.
REP. GUTIERREZ. I would just like to point out, my
understanding of our intention in introducing this provision is to
prevent an abuse of network. Because you were a former member of
the commission, then you might have established relationships with
the employees, and so on, that you can abuse if you are representing
a party. But I don’t think it’s to absolutely prevent you from using
your expertise. I mean, if the commission sees fit to make you a
consultant, shouldn’t we allow that? Or, for example, if you are a
consultant to a particular corporation, not appearing as counsel but to
advise them how to avoid, for example, violations of the law, shouldn’t
we allow that? I mean, so long as there is no abuse of the network,
there is no abuse of the relationship.
THE CHAIRMAN (SEN. AQUINO). Senator Osmeña wishes to
say something.
SEN. OSMEÑA. There’s an interesting point brought up earlier
by Congressman Tinio, and I think it was adopted and it inserted the
words, “practice his profession.”
36
Now, I think, that begins to limit the scope of the sentence
because he might be a lawyer so he can say, “I’m not practicing law.
So, therefore, I can lobby, be somebody’s agent with the commission.”
So maybe we should remove that phrase, “practice his profession.”
Secondly, there’s such a thing as being able to implement the
laws. So congressman is right here when he says that you can’t stop
them from advising in secret in their offices in Makati or wherever, but
we just don’t want them to be able to lobby, meaning, physically go
there, or call up, or badger or pressure his former colleagues in the
commission. We have to spare the current commissioners also from
that kind of pressure, na tatawagan ka ng kaibigan mo, “Boss, I voted
for you last year so can you vote—”
So that’s the spirit of the law. “He should not be allowed to
lobby and appear before the Commission,” I think, is broad enough.
THE CHAIRMAN (SEN. AQUINO). Senator, both ways.
Whether for or against the commission, both ways.
SEN. OSMEÑA. Yeah.
SEN. OSMEÑA. But this will not stop the commissioners from
asking him for his opinion.
37
THE CHAIRMAN (SEN. AQUINO). Ah, okay. So the
commission may ask for an opinion from the person?
SEN. OSMEÑA. Oh, I’m sure, because, you know…
THE CHAIRMAN (SEN. AQUINO). Unofficially.
SEN. OSMEÑA. …institutional memory is very important.
Minsan nakakalimutan, “Anong nangyari last year? Tawagan nga natin
ito.” That’s permissive.
THE CHAIRMAN (SEN. AQUINO). Okay. So this language
does not bar them from doing that, that’s what you’re saying, Senator?
SEN. OSMEÑA. Correct.
THE CHAIRMAN (REP. CUA). So tanggalin iyong “practice of
his profession”?
THE CHAIRMAN (SEN. AQUINO). If Congressman Tinio is
okay with that. Yeah.
And then I got word also that when we say, “profession,” it
refers to a licensed profession. So economists do not have licenses.
Okay, “provided they shall not be allowed to appear or practice
as counsel or agent on any matter pending before the Commission for
two (2) years.” The Senate panel’s position is two years.
SEN. GUINGONA. So, Mr. Chairman—
38
SEN. GUINGONA. I just like to inquire, so that means that bars
them also as appearing as friends of the commission? Amicus?
THE CHAIRMAN (SEN. AQUINO). Officially.
SEN. GUINGONA. Wala tayong ganyan?
THE CHAIRMAN (SEN. AQUINO). Wala.
SEN. GUINGONA. We won’t allow that practice?
THE CHAIRMAN (SEN. AQUINO). Yes. We will not.
SEN. GUINGONA. Okay.
THE CHAIRMAN (SEN. AQUINO). So our position is two
years. Would you be willing to agree to two years?
THE CHAIRMAN (REP. CUA). You have any plans? [Laughter]
REP. ROMUALDO. Yes. Well, the reason why the House
version only provides for one year was during our discussions in the
Committee, we felt that, you know, barring them from practicing for
two years would discourage very good practitioners from accepting
appointments to the commission because when they’re gone, they
would be barred for two years. So that was the reason why we wanted
one year. But then, I think we would be amenable to yielding to the
Senate proposal.
THE CHAIRMAN (REP. CUA). Yes. We accept…/cbg
39
JTBCadaing VII-1 June 4, 2015 1:30 p.m. 1
THE CHAIRMAN (REP. CUA). …Yes, we accept.
So, Mr. Chairman, ang refinement na lang for this section would
be on the wording on the SK and barangay.
THE CHAIRMAN (SEN. AQUINO). Okay. I want to complicate
matters further. Binulong sa akin, this is important.
What if there is a criminal case—because that’s not the
commission anymore, it’s a regular court—can a former commissioner
or chairman appear for a defendant, let’s say, of the OFC in a criminal
case? They can because they have no more influence. That’s fine.
Just to be clear, we’re just talking about the commission.
Okay, all right.
REP. ROMUALDO. Mr. Chair, just to add one more.
I would like to propose that we add “personally” before “appear
or practice.” “They shall not be allowed to personally appear or
practice.”
That formulation comes from the prohibition on members of
Congress to personally appear before courts and quasi-judicial bodies.
The reason for that is because there might be an interpretation that a
member, when she or he is a member of a firm, your entire firm is
barred. I think that would be unreasonable.
40
So just pattern it after the prohibition on members of Congress.
So we add the word “personally.”
SEN. VILLAR. Baka ang meaning naman—
THE CHAIRMAN (SEN. AQUINO). Virtually? [Laughter]
SEN. VILLAR. If you are not appearing personally, baka
allowed na iyon, hindi ba?
SEN. VILLAR. Hindi ba, baka may other meaning iyon.
THE CHAIRMAN (SEN. AQUINO). First of all, procedurally,
may we ask the secretariat to wait for the approval before it’s typed
in.
Chairman?
THE CHAIRMAN (REP. CUA). I would like to defer to the
wisdom of the lawyers. That was my bar topnotcher speaking so I
subscribe if your panel will subscribe.
REP. ROMUALDO. Mr. Chair.
THE CHAIRMAN (SEN. AQUINO). So he can sign the
pleadings.
REP. ROMUALDO. No, no. He can’t. But the danger is that
there might be an interpretation, for example, if you were a former
commissioner. You were part of a firm, you joined the commission
41
and so when you left the commission, you go back to your law firm.
There might be an interpretation that your entire law firm will be
barred from practicing before the commission. That is why for
members of Congress, we’re allowed to still remain with our law firms
but, you know, we personally can’t appear before courts; but our law
firms can.
So that is the importance of the word “personally.”
THE CHAIRMAN (SEN. AQUINO). And personally is not
physically. Personally is not physically. You’re not talking about the
physical appearance, you’re talking about if you wrote the pleadings.
REP. ROMUALDO. Yes.
THE CHAIRMAN (SEN. AQUINO). It’s not the physical
appearance.
SEN. VILLAR. When you say “personally,” what comes in to my
mind is you appear personally.
THE CHAIRMAN (SEN. AQUINO). Physically.
SEN. VILLAR. Physically, oo.
THE CHAIRMAN (SEN. AQUINO). We don’t mean that.
SEN. VILLAR. So “personally” ba is a good word?
REP. ROMUALDO. That is how the Constitution phrases it for
the prohibition on members of Congress.
42
SEN. VILLAR. Kasi sa akin parang personally, you come
personally, physically.
THE CHAIRMAN (SEN. AQUINO). Just for the record, we
don’t mean physically. We mean the “personally” as reflected in the
Constitution. All right.
So can we accept this? My panel is okay. If that’s the intent. So
can we approve this already with the caveat that if Senator Pimentel is
able to provide cleaned-up language which he had said he would
provide, we can just get back to it.
But in the meantime, can we approve it anyway?
THE CHAIRMAN (SEN. AQUINO). Yes?
THE CHAIRMAN (REP. CUA). Yes. Approving it, Mr.
Chairman, pending the wording on the SK and barangay election
portion.
THE CHAIRMAN (SEN. AQUINO). All right, thank you. So it
shall look like that.
Chairman, just for the record, we accepted all of this?
THE CHAIRMAN (SEN. AQUINO). Yes, okay. All right.
43
For Section 13, I suggest we park this pending the discussion on
parallel action or sequential action.
THE CHAIRMAN (REP. CUA). Section?
THE CHAIRMAN (SEN. AQUINO). 13, the OFC powers and
functions.
Or would you wish to tackle that discussion now, Mr. Chairman?
Because the wording will depend on whether we will agree to the
executive’s request for parallel actions.
THE CHAIRMAN (REP. CUA). We request that we move on
first to other matters and park this first.
THE CHAIRMAN (SEN. AQUINO). Okay. Section 13, we park.
And maybe so our colleagues can start ruminating about the possible
solution—
THE CHAIRMAN (REP. CUA). Mr. Chairman.
THE CHAIRMAN (REP. CUA). Are we already finished with
Section 9? Is it already agreed upon, Section 9, Section 10?
THE CHAIRMAN (SEN. AQUINO). In my records, Mr.
Chairman, we approved this in our last bicam.
THE CHAIRMAN (REP. CUA). Okay. All right.
44
THE CHAIRMAN (SEN. AQUINO). So just a point on parallel
action. There is a current request from the secretary of Justice that
the OFC be allowed to pursue cases in parallel to the commission. And
just to clarify, the commission’s penalties are administrative and the
OFC will be tackling criminal cases. That much, we have agreed.
The difference is, currently, our procedures state that the
commission must endorse a case to the OFC for them to pursue
criminal action. What the request from the DOJ is, is that they be
allowed to pursue things in parallel. Meaning, they don’t need to have
an endorsement from the commission to pursue cases. Okay.
That’s up for discussion and I’m acceding to the request of the
secretary of Justice that we, at least, discuss this further and be very
clear about our intent.
REP. TINIO. To clarify the DOJ position, they want the power
to initiate their own investigation and not just when you say “parallel,”
it means that there must be a similar investigation in the commission,
but there could be a case where it’s only the DOJ that has initiated an
investigation.
45
THE CHAIRMAN (SEN. AQUINO). May we allow the DOJ
representative to also speak in case—I don’t want to speak solely for
them.
Heidi, if you can join us?
REP. DEL ROSARIO. Mr. Chairman.
REP. DEL ROSARIO. Before the lovely lady from DOJ—I
already added adjective “lovely.”
THE CHAIRMAN (SEN. AQUINO). Lovely, okay.
REP. DEL ROSARIO. Para hindi masyadong sumama ang loob.
May we first hear the position of the House, to be stated by
Congresman Gutierrez?
REP. GUTIERREZ. Before we proceed to the DOJ position, Mr.
Chair, we just like to state for the record the position of the House
panel on this issue.
It has been our strong position from the start that we should not
have a parallel system. Our reasoning is simple. At present, the
existence of the OFC is based on the fact that we do not really have a
full-fledged competition law. Now that we are in the process of
enacting a law that will redefine and clarify the framework for
46
competition policy and provide for its enforcement through the
creation of a specific commission, we feel that it is very important that
if we retain the OFC in such a context, there should be a clear
delineation of responsibilities between the two offices. It would be
very, very confusing not only for firms or entities which might
potentially be affected by the provisions of this law as well as ordinary
citizens who would want to file complaints if there are two offices
essentially exercising similar functions with respect to investigation.
So our position is, fine, let’s leave the criminal prosecution
aspect to the Department of Justice through the OFC. But with respect
to general investigations, particularly initiatory investigations of
looking into the behavior of firms, that should be the ambit of the
commission. And if in the course of the commission’s investigation it
finds that there is basis for filing a criminal complaint, then they can
refer the same to the Department of Justice for preliminary
investigation and the filing of appropriate criminal cases in court. But
there should be a primacy of jurisdiction with respect to the
commission.
That is our position, Mr. Chair. Thank you.
SEN. GUINGONA. Mr. Chairman. I also would like to inquire
that if we allow parallel investigations, then there is a possibility of
47
having conflicting findings wherein the OFC says there’s no violation
and then the DOJ says there’s a violation of law. So you’ve got a very
confusing situation.
THE CHAIRMAN (SEN. AQUINO). Senator Villar.
SEN. VILLAR. I just want to comment …/jbc
48
MPMendoza VII-1 June 4, 2015 1:40 p.m. 1
SEN. VILLAR. …I just want to comment that it’s okay if the
case is administrative that there will be no investigation on the part of
the OFC of DOJ. But if it is criminal, they take over. Do they take the
findings of the Commission as final or they can do their own
investigation if they are filing criminal?
REP. GUTIERREZ. Our understanding, Mr. Chair, Madam
Senator, is that if in the course of the commission’s investigation they
find there is basis for criminal complaint, they will then refer it to DOJ.
DOJ can conduct its own investigation. They are not bound, of course.
SEN. VILLAR. Okay. That is my question, oo. Their finding
with regards to criminal is not final.
REP. GUTIERREZ. Yes.
SEN. VILLAR. The DOJ can conduct another investigation, if it
is criminal.
THE CHAIRMAN (SEN. AQUINO). And in fact, Senator Villar,
the Commission will not rule on criminal cases. They only rule on
administrative cases and then the DOJ rules on criminal cases.
The question now really is, can they initiate their own
investigations and preliminary investigation or do they need an
endorsement from the Commission to commence a formal—correct me
49
if I am wrong with the language—formal preliminary investigative
proceedings?
So that is up for discussion. Do you wish to—yes.
REP. TINIO. To clarify. The discussion is actually about
whether or not DOJ and the Commission will have concurrent powers
to investigate on matters pertaining to competition law, not parallel.
Kasi pag parallel parang kailangan they act in consonance with each
other and that they are still the same.
THE CHAIRMAN (SEN. AQUINO). No. Parallel means they
don’t need to act in consonance.
REP. TINIO. Okay.
SEN. GUINGONA. Mr. Chairman.
THE CHAIRMAN (SEN. AQUINO). One second, Mr. Senator.
SEN. GUINGONA. I am sorry.
THE CHAIRMAN (SEN. AQUINO). The reason that Secretary
De Lima gave which is a reason that keeps on coming up when we put
in safeguards. Because we have a number of safeguards in this law to
try to protect from—in the case that the Commission becomes corrupt
or has tries to harass is that at least there is a redundancy. Just to put
50
on the record what Secretary De Lima had shared with us, that in the
case where there is regulatory capture, there wouldn’t be a situation
where no criminal cases would ever emanate because the Commission
has been captured. That is the reason that Secretary De Lima gave.
Now, again, it’s up for us to decide on the matter but I just want
to put it on the record and have it open for discussion, the concerns of
DOJ. And, of course, if the wisdom of the body is to go one way or the
other, it’s really a matter of choice because different countries have
different procedures and it’s up to us to decide what procedure we
think is best.
Yes, Senator Guingona.
Does the DOJ want to speak for itself or on any matter?
MS. BARROZO. No need.
SEN. VILLAR. I just want to clarify. What you said is if it is not
endorsed by the Commission, then there will be no criminal case.
SEN. VILLAR. So it has to be endorsed by the Commission.
What the DOJ is saying that it might be a corrupt institution, that
nothing will be endorsed to them anymore.
SEN. VILLAR. Okay.
51
SEN. GUINGONA. Mr. Chairman, I just want to clarify iyong
where Congressman Tinio was trying to clarify the phrase “parallel
investigation.” I think the best phrase was used by Congressman
Gutierrez iyong “primacy of jurisdiction.” And then as they go along, if
they see there is a possibility that there is criminal offense, then they
endorse it to the Department of Justice.
SEN. VILLAR. If there is no investigation, there is no
endorsement.
SEN. GUINGONA. Yes. If we do not allow that, there will be no
investigation without endorsement.
THE CHAIRMAN (SEN. AQUINO). All right. We have
discussed this. Is it okay if we park this in the meantime? This will
affect the disposition of cases and enforcement provisions later on. So
I suggest we skip Chapter XIII as it is—
REP. TINIO. Mr. Chair, if I may just—
REP. TINIO. The House has stated its position. Does the
Senate have a position on the matter at this point?
THE CHAIRMAN (SEN. AQUINO). No. But in any case,
Congressman Tinio, this is referring to a proviso in Chapter VII so may
I suggest that since we’re going sequentially, we take it up in Chapter
52
VII and park Chapter XIII in the meantime, as Chapter XIII will be
affected by our decision in Chapter VII.
THE CHAIRMAN (REP. CUA). Okay. We will tackle them hand
in hand.
So now we go to the more difficult portions. So we haven’t
actually gotten to the more difficult portions.
May I suggest that we tackle abuse of dominant position first,
Mr. Chairman, the Section 15 and park Section 14. Because Section
14, there are some harmonization that still needs to be finalized. But
Section 15, actually I think we have come to an agreement already
among the senators.
THE CHAIRMAN (REP. CUA). Yes, we agree. Let’s proceed to
abuse of dominant position.
THE CHAIRMAN (SEN. AQUINO). Okay. Section 15, Page 23
in the matrix.
So my proposal is this, Section XV shall read as follows, “Abuse
of dominant position”—Page 23.
THE CHAIRMAN (REP. CUA). Twenty-four sa amin.
THE CHAIRMAN (SEN. AQUINO). Well, it goes from 23 to
twenty—Okay, my fonts are wrong. Can I use the better font?
53
It should read as follows—Actually, we are proposing the Senate
version—
SEN. VILLAR. Iyong sale of goods and services below cost?
THE CHAIRMAN (SEN. AQUINO). Yes, with the intent of—
Maybe I should just read it into the—because we are using parts of the
House version as well. Okay.
“It shall be prohibited for one or more entities to abuse their
dominant position by engaging in any of the following acts that would
unreasonably or substantially”—this is not “and,” this is “or”—“or
substantially prevent or restrict competition: (a) Selling goods or
services below cost with the intent of driving competition out of the
relevant market: Provided, that in the commission’s evaluation of this
fact it shall consider whether the price is established 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.”
SEN. VILLAR. Mr. Chairman, how do you solve the problem of
these sale items? Like for example, if you determined the wrong
quantity of inventory and you have too many and there is no more
chance for you—and it’s going out of fashion and if there is no more
54
chance for you to be able to sell it at that price. Sometimes you sell it
below cost just to get rid of inventory.
SEN. VILLAR. So how do you make exceptions to that?
Because that is a general practice of companies, hindi ba?
THE CHAIRMAN (SEN. AQUINO). The exception there,
Senator, is that that will not seriously restrict competition because—
which is the sale price.
SEN. VILLAR. That can be abused also, hindi ba?
THE CHAIRMAN (SEN. AQUINO). We also have another
proviso on that. In the disposition of cases, we will be putting
reasonable commercial justification—justifiable commercial reason.
And in case law that includes sale prices, expiring goods, obsolescence.
So there is case law already that we are referring to.
SEN. VILLAR. So it is not here but it is in the—
THE CHAIRMAN (SEN. AQUINO). We will be placing it in
Chapter V, Disposition of Cases.
SEN. VILLAR. So this will be taken in consonance with Chapter
V?
SEN. VILLAR. There is ano—
55
THE CHAIRMAN (SEN. AQUINO). Actually, Senator, we will
be moving some parts of the House version to Chapter V as a
compromise to the House panel.
So if I may repeat. (a) Selling goods or services below cost—
THE CHAIRMAN (REP. CUA). Before we move to (a), just a
minor suggestion. Instead of “engaging in acts,” can we use the word
“conduct” as we have defined the term “conduct” in the definition of
terms?
THE CHAIRMAN (REP. CUA). That’s it, Mr. Chairman.
THE CHAIRMAN (SEN. AQUINO). “By conduct that would.”
THE CHAIRMAN (SEN. AQUINO). Okay, we accept. …/mpm
56
MJPalaganas VIII-1 June 4, 2015 1:50 p.m. 1
THE CHAIRMAN (SEN. AQUINO). …Okay. We accept.
Secretariat, please reflect that in the record. Okay.
If I may go to letter (a) “Selling goods or services below cost
with the object…”—because we had used “object” already previously so
we don’t want to introduce a new term, which is “intent”—“…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 price is established 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;”
Do we accept?
THE CHAIRMAN (REP. CUA). I would like to highlight, Mr.
Chairman, that the important part here is “to meet.” It means the
dominant player does not initiate, they only react.
THE CHAIRMAN (REP. CUA). And they meet the price. They
don’t go below the price.
THE CHAIRMAN (SEN. AQUINO). Yes. That is reflected in
the wordings, Mr. Chairman.
THE CHAIRMAN (REP. CUA). Yes. Just to highlight into the
record, Mr. Chairman.
57
THE CHAIRMAN (SEN. AQUINO). Okay. So do we—
REP. RODRIGUEZ. Mr. Chairman, just—
REP. RODRIGUEZ. I have no objection to the Senate version
except that probably, we can also include, just the phrase which is
found in our proposed provision, and that is to include the words, “that
in the Commission’s evaluation of this fact.” And this is the big change
that we have, which we are accepting…
REP. RODRIGUEZ. …on the Senate version. It shall consider
whether the entity or entities have no such object and the price is
established in good faith.
Because there are two requirements in the selling below cost:
that is the object, and then you are selling it to drive competition.
REP. RODRIGUEZ. So just to be able to put in what we had
earlier in our version, just include, “whether that in the Commission’s
evaluation of this fact, it shall consider whether the entity or entities
have no such object and the price is established…”
THE CHAIRMAN (SEN. AQUINO). Yes. Thanks.
REP. RODRIGUEZ. So back to the same thing.
58
THE CHAIRMAN (SEN. AQUINO). Thank you for that,
Congressman.
May you please direct the secretariat to edit the wordings
directly so they can capture it? If you may repeat, please.
In the proviso, it will now read as follows: “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 is established in
good faith to meet or compete…”—
THE CHAIRMAN (SEN. AQUINO). One second, sir.
“…And the price is established—
REP. RODRIGUEZ. Yeah, the same thing.
“…And the price is established in good faith,” the Senate version
already.
THE CHAIRMAN (SEN. AQUINO). Okay. “…To meet or
compete…”
REP. RODRIGUEZ. “…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.”
THE CHAIRMAN (SEN. AQUINO). We accept, Mr. Chairman.
REP. TINIO. Mr. Chair, just—
59
THE CHAIRMAN (SEN. AQUINO). Yes. Go ahead.
REP. TINIO. I was just going to suggest, instead of “object”
use “intent” because in the previous clause the word “intent” was used.
REP. RODRIGUEZ. They already proposed a change. It’s
already “object.”
REP. TINIO. Sorry.
REP. RODRIGUEZ. But I have no question if it is “intent.” In
fact, the more precise word is “intent.” The “intent” is always the—the
intent, the scienter.
THE CHAIRMAN (SEN. AQUINO). Yes. But we just received
the word that “intent” is a legally murky water—of course, we have
used “object” previously as object or effect of unreasonably and
substantially driving competition out of the market. I mean, we can
use “intent” but “object” actually is a term we have already used.
THE CHAIRMAN (REP. CUA). Mr. Chairman, can we ask for a
suspension?
Suspension.
[THE MEETING WAS SUSPENDED AT 1:54 P.M.]
60
THE CHAIRMAN (SEN. AQUINO). All right.
THE CHAIRMAN (REP. CUA). We resume.
THE CHAIRMAN (SEN. AQUINO). Maybe you would like to
read your proposal, Chairman?
THE CHAIRMAN (REP. CUA). “Section 2. 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 or restrict competition.”
THE CHAIRMAN (SEN. AQUINO). All right. We accept.
THE CHAIRMAN (REP. CUA). We accept as well.
And, letter “(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 was established
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.”
THE CHAIRMAN (SEN. AQUINO). Yeah. We accept, Mr.
Chairman.
61
THE CHAIRMAN (SEN. AQUINO). May I just propose that
we add one word to the first paragraph? Can we make it
“…substantially prevent, restrict or distort competition…”? These are all
economic terms that qualify the word “competition.”
“Prevent, restrict”—please don’t put it until they approve.
“Prevent, restrict or distort.”
THE CHAIRMAN (REP. CUA). Yes. We accept.
THE CHAIRMAN (REP. CUA). Can we re-word the “price”—
letter (a) “…object and the price established in good faith…”
THE CHAIRMAN (SEN. AQUINO). One second.
They accepted “distort”?
THE CHAIRMAN (SEN. AQUINO). Okay. And then we go
down—
Yes, sir. Please go ahead…/mjp
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CFDriz IX-1 June 4, 2015 2:00 p.m. 1
THE CHAIRMAN (SEN. AQUINO). …Yes, sir. Please go ahead.
THE CHAIRMAN (REP. CUA). Interchange “was” and then
“established.” Dapat yata mauna iyong “established.”
THE CHAIRMAN (SEN. AQUINO). The price established was in
good faith.
THE CHAIRMAN (REP. CUA). “Is in good faith” or “was in
good faith”?
THE CHAIRMAN (SEN. AQUINO). “Was established.” We just
interchange “established” and “was.” “The price established was in
good faith.”
THE CHAIRMAN (REP. CUA). Yeah, that’s the suggestion.
THE CHAIRMAN (SEN. AQUINO). So we accept.
So, Mr. Chairman, I take it that paragraph (a) as stated on the
board is your proposal?
THE CHAIRMAN (SEN. AQUINO). We accept.
THE CHAIRMAN (SEN. AQUINO). Letter (b), we propose
using the term “imposing various to entry.”
REP. RODRIGUEZ. Mr. Chair.
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CFDriz IX-1 June 4, 2015 2:00 p.m. 2
REP. RODRIGUEZ. As I have stated the previous meeting, we
see that there are natural, legal and permissive barriers to entry which
you cannot fault these particular firms which prevent the coming. And
for example, one of that is the legal rights granted to the cooperative.
There are certain legal rights given to some entities wherein certainly
there can be a barrier to the entry of some goods. And that is why I
have an amendment here to make sure that not all barriers to entry
may cause to the abuse--a criminal prosecution.
So I would suggest that it will add “except those that develop in
the market as a result of or arising from superior product or process.”
Because when you have that, then certainly, it has a barrier for other
products to come because you already have a better superior process
and products. But we should not fault the companies for having that.
And then secondly, because of business acumen, they are able to
really--the others are stopped because they have a very good
business model. That they have the efficiency. So these are natural.
And then, of course, legal rights or laws that come about that protects
this particular firm and their goods and their services.
So this is something that is also used in other jurisdiction
because not all barriers to entry would result to abuse of dominant
position.
64
CFDriz IX-1 June 4, 2015 2:00 p.m. 3
THE CHAIRMAN (SEN. AQUINO). Mr. Chairman, if I may
clarify with Congressman Rodriguez. I think the operative word here is
“imposing.” So if I have business acumen or efficiency or any of these,
or even legal rights given to me, I am not imposing any barriers to
entry. I have gotten these advantages legally and because of my
competitiveness, so to speak. So I get the need to clarify but I am
just posing the question by having those legal rights or even being a
better company than the rest. We are not technically imposing a
barrier to entry.
REP. RODRIGUEZ. Mr. Chair, when that happens, when these
things arise, then it is already as if there’s an imposition of the entry
because these are provided by rights, by laws and your efficiency and
so forth. So I think you have to clarify this because if not, then the
problem is you are now penalized for being able to get a much better
product than the others, especially goods from abroad. So we just
protect our local entrepreneurs.
THE CHAIRMAN (SEN. AQUINO). May I suggest that we type
it up so we can read it?
SEN. VILLAR. Mr. Chairman, I think we should clarify. It’s too
vague. For me, it’s too vague when I read it for the first time, what is
this? So let’s clarify. Okay.
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CFDriz IX-1 June 4, 2015 2:00 p.m. 4
THE CHAIRMAN (SEN. AQUINO). And are you saying that
Congressman Rodriguez’ suggestion is clarification enough? So may I
suggest, Congressman, if you can give the wordings to the secretariat?
REP. RODRIGUEZ. I can now state. “(b) Imposing barriers to
entry 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 that really gives--”
THE CHAIRMAN (SEN. AQUINO). Sir, can we slow down?
REP. RODRIGUEZ. “…except those.” So again, “imposing
barriers to entry 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--”
THE CHAIRMAN (SEN. AQUINO). Napagod po iyong
computer. Ayun, okay bumalik na.
REP. RODRIGUEZ. So there’s really a recognition-- “or laws;”
THE CHAIRMAN (SEN. AQUINO). A-W-S. Can we put on
record what legal rights are, what do we mean by legal rights?
REP. RODRIGUEZ. IP, intellectual properties are you’re your
trademark rights, your other rights--intellectual property. And then
some laws. There are some companies, corporations or cooperatives
that are granted by laws some protection.
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CFDriz IX-1 June 4, 2015 2:00 p.m. 5
SEN. VILLAR. Sometimes you build a business because of a
contract. And then you will have competitor when you were provided
by law to be able to build--In-encourage ka to build a business by
some incentives and then hindi ka magbi-build para mabawi mo iyong
whatever investment you have and then there comes somebody who
will build, legal right mo iyon so--
THE CHAIRMAN (SEN. AQUINO). All right. We are willing to
accept this if that’s the pleasure of the body.
THE CHAIRMAN (REP. CUA). Yeah. We are willing to accept it.
THE CHAIRMAN (SEN. AQUINO). All right. So this is your
proposal actually. So we accept your proposal, Mr. Chairman.
Letter (c) “Subjecting a transaction--” Sorry, if I may repeat.
“Making a transaction subject to acceptance by other parties of
other obligations which, by their nature or according to commercial
usage have no connection with the transaction;”
REP. TINIO. Mr. Chair, just to clarify. “Making a transaction
subject to acceptance by the other parties”?
THE CHAIRMAN (SEN. AQUINO). “Or by other parties.” We
can take out the “the” as a matter of style.
REP. RODRIGUEZ. Riders. There are riders which would--
These are agreements and then you will demand them to have other
obligations aside from the transaction. A rider in the agreement
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CFDriz IX-1 June 4, 2015 2:00 p.m. 6
because you are in dominant position. So you impose on them
through other obligations that are not part of the contract. Well, you
can also stop them and you can require them certain fees.
SEN. VILLAR. Just an example. If you have dominant position
in mall, you cannot enter this mall unless you enter in all the malls.
Ganun ba? Is that under this Act?
THE CHAIRMAN (SEN. AQUINO). No it’s not.
SEN. VILLAR. It’s not. It’s relevant to the transaction. Dapat
no connection with the transaction.
REP. RODRIGUEZ. There is a connection, you vote for this
candidate. No obligation, you may--I give you this transaction, you
vote for this candidate.
REP. TINIO. No, no, Mr. Chair. In that case, if that if that’s the
sense, then the “the” should be restored. The other parties, it has to
be restored.
THE CHAIRMAN (SEN. AQUINO). It is “the” talaga. Okay.
REP. TINIO. Because you are referring to the dominant player
transacting with the other parties and requiring that that other party
accept another obligation.
THE CHAIRMAN (SEN. AQUINO). Yes, thank you,
Congressman. I was just relying on your wisdom that’s why we
accepted deletion.
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CFDriz IX-1 June 4, 2015 2:00 p.m. 7
So this is our proposal. May we solicit an answer?
Letter (d). Actually we are not amending our letter (d). I may
just read it anyway.
“Letter (d) Setting prices or other terms or conditions that
discriminate…/cfd
69
MELNOVERO X-1 June 4, 2015 2:10 p.m. 1
THE CHAIRMAN (SEN. AQUINO). …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 competitor; or maybe
we can make it “furnished by a competitor”—and (4) price changes in
response to changing market conditions, market availability of goods
or services or volume.”
It’s actually roughly the same as the Congress version, Mr.
Chairman.
THE CHAIRMAN (REP. CUA). We accept it.
70
Letter (e), we propose the Congress version. It’s actually a
matter of style.
THE CHAIRMAN (REP. CUA). Yes, Letter (e)—
THE CHAIRMAN (SEN. AQUINO). Yes, it’s the same. It’s
just a different style. So we propose that we accept the style of the
House version which has the (e), proviso (1), (2). So can we—
THE CHAIRMAN (REP. CUA). To clarify, what is permissive
franchising and also to clarify the second paragraph?
THE CHAIRMAN (SEN. AQUINO). Can you cut and paste
the House version, please, so it can be clearer?
THE CHAIRMAN (REP. CUA). We agree.
THE CHAIRMAN (SEN. AQUINO). And then we have one
proposal, Mr. Chairman, which is to include “exclusive merchandizing
agreements.”
THE CHAIRMAN (REP. CUA). We agree as well.
THE CHAIRMAN (SEN. AQUINO). Okay, thank you.
We can just put it below and then just strike through the old
letter (e).
Letter (e), thank you.
And then No. 1, include “licensing, exclusive merchandizing
agreements.”
71
Sorry, no more “agreements” kasi it will be redundant.
“Exclusive merchandising or exclusive distributorship agreements.”
All right, thank you.
As proposed, Mr. Chairman, as is on the board?
THE CHAIRMAN (REP. CUA). [Off-mike]. We accept.
THE CHAIRMAN (SEN. AQUINO). All right. Letter (f)
“making supply of particular goods or services dependent upon the
purchase or other goods or services from the supplier which have no
direct connection, with the main goods or services to be supplied;
and—”
Yeah, you have the same actually. You accept, ano?
Letter (g), “analogous agreement similar in nature in gravity.”
I’m sorry. Yes, there’s an (f).
Mr. Chairman, before letter (g), we propose a new letter (f)—
THE CHAIRMAN (REP. CUA). A new letter (g).
THE CHAIRMAN (SEN. AQUINO). Sorry. Yes, a new letter
(g) which we will take from the letter (f) of the House version, “directly
or indirectly imposing unfairly low purchase price for the goods or
services of, among others, marginalized agricultural producers, fisher
folk, micro, small, medium skilled enterprises and other marginalized
service providers and producers.”
72
We accept this, Mr. Chairman.
THE CHAIRMAN (REP. CUA). Thank you. We accept and
agree.
SEN. VILLAR. And this letter (g)?
THE CHAIRMAN (SEN. AQUINO). The letter (g),
Congressman Del Rosario, care to explain the intent or the wisdom
behind letter (g)?
SEN. VILLAR. Kasi mayroon na ditong letter (g).
THE CHAIRMAN (SEN. AQUINO). That letter (g). Okay.
Yes.
Analogous agreement similar in nature and gravity. This is
because during our deliberations and with the evolving case law on
abuse of dominant position, there might be cases where it is similar
but not exact to what we had put. So this is just a general, a catchall
that says that similar things to these will also be considered abuses of
dominant position.
SEN. VILLAR. I don’t agree with that. Huwag tayong
maglagay ng vague, baka that would be subject to abuse.
REP. GUTIERREZ. Mr. Chair.
73
REP. GUTIERREZ. Mr. Chair, I support the position of Senator
Villar. The problem with including a catchall provision in a law which
has administrative penalties is that it can be subject to—well, attack
constitutionally. Because the idea here is you’re imposing a penalty
but you’re basing the penalty on a vague provision of law. There
should be a certain degree of specificity here.
REP. GUTIERREZ. So that persons who may be subject to the
penalties have a solid guide on what behavior and acts to avoid. But if
you say “all analogous circumstances,” that’s not a sufficient standard
for—
SEN. VILLAR. Hindi ko nga maintindihan, how can we follow?
REP. TINIO. If I may just ask Congressman Gutierrez, doesn’t
the phrase “analogous agreements” already provide the standard?
REP. GUTIERREZ. The problem there is when you talk about
penal provisions and when I say “penal provisions,” that’s not
confined—
THE CHAIRMAN (SEN. AQUINO). Congressman, let me
clarify. This is only administrative. There is no criminal—
REP. GUTIERREZ. Yes. But, as I said, even with respect to a
penal provision with no criminal penalties, strictly speaking,
74
imprisonment and so on, if there is a penalty in the form of a fine and
there will be fines and other administrative penalties here, we still
have to abide by the same rule on clarity. And I don’t think analogous
will be a sufficient standard because, at the end of the day, a person
who might be subject to this does not know at a particular point in
time when he or she is committing the act whether it will be
considered later on by the commission as analogous or not.
So let’s just stick to the specific enumeration to be fair to
everybody who will be covered by this law. If the concern is in the
future, we make specific acts and the remedy is for Congress to pass
an amendatory law.
THE CHAIRMAN (SEN. AQUINO). Not exactly. Actually, Mr.
Congressman, I see the wisdom here. I’ve asked the Secretariat to
actually—if we’re not agreeing to (g), we will further list down specific
cases and we will exhaust all the case law on abuses of dominant
position so we can let go of letter (g).
So we will get back to (g), (h), (i), (j) if need be.
SEN. VILLAR. Tanggalin na natin iyon, that’s vague.
THE CHAIRMAN (SEN. AQUINO). All right, let’s take out
letter (g) and with the intent of going—
SEN. VILLAR. Yeah.
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THE CHAIRMAN (SEN. AQUINO). Just letter (g) and
probably getting back to that once we’ve named other provisions.
SEN. VILLAR. You’re getting better.
THE CHAIRMAN (SEN. AQUINO). We’re getting faster,
actually.
SEN. VILLAR. You’re getting better. You’re removing the
vagueness.
THE CHAIRMAN (SEN. AQUINO). And I propose that we
keep the “Provided” of the Senate version instead, “Provided, that
nothing in this Act shall be construed or interpreted as a prohibition on
a dominant position in a relevant market legitimately acquired prior to
the approval of this Act; Provided, further, 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.”
So we propose this proviso, Mr. Chairman. …/meln
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RPALGER XI-1 June 4, 2015 2:20 p.m. 1
THE CHAIRMAN (SEN. AQUINO). … this proviso, Mr.
Chairman.
THE CHAIRMAN (REP. CUA). Mr. Chairman, we don’t have
any objection to the spirit but I think ang puno’t dulo ng provision na
ito is that if you were dominant previously before the act, then—
THE CHAIRMAN (SEN. AQUINO). You will not be broken up
because of status.
THE CHAIRMAN (SEN. AQUINO). I think that’s clear. You will
be broken up because of an act that you have done.
THE CHAIRMAN (REP. CUA). May we propose a language if it
is palatable?
REP. RODRIGUEZ. Mr. Chairman, the House panel can—we
have our own proposed provisions which also define what is a
threshold.
THE CHAIRMAN (SEN. AQUINO). As a matter of procedure,
Mr. Chairman, can we take up our provisos then your provisos ‘cause
they are different naman. We can combine if need be.
THE CHAIRMAN (SEN. AQUINO). Yes, Mr. Chairman.
THE CHAIRMAN (REP. CUA). Mr. Chairman, may we—
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THE CHAIRMAN (SEN. AQUINO). We would like to recognize
Senator Pimentel first, Mr. Chairman.
THE CHAIRMAN (REP. CUA). Yes. May we propose wording as
follows:
THE CHAIRMAN (REP. CUA). “Provided, finally that nothing in
this Act shall be construed or interpreted as a prohibition on being
dominant regardless of how the dominance was achieved prior to the
effective date of this Act or on acquiring and maintaining thereafter a
dominant position in the relevant market as long as the provisions of
this Act are not thereby violated.”
THE CHAIRMAN (SEN. AQUINO). Can we put that on the
board if that’s possible so we can study it?
THE CHAIRMAN (SEN. AQUINO). And I think the term
“legitimately acquired” is also very important.
Senator, this is a proposal. It’s not yet there.
THE CHAIRMAN (REP. CUA). And, Mr. Chairman, I think our
conferee also has another proposed provision.
THE CHAIRMAN (SEN. AQUINO). Proviso. Maybe we go step
by step?
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THE CHAIRMAN (SEN. AQUINO). All right. We request the
secretariat to put the proposal of the House on the screen.
Mr. Chairman, may we request an explanation why this wording
is being proposed as opposed to what we had proposed already?
THE CHAIRMAN (REP. CUA). I think, Mr. Chairman, it clearly
puts that it is a clearer description of the intent that upon the
effectivity of this Act, the manner by which the dominance was
acquired is irrelevant. In other words, this law is prospective and
doesn’t punish being dominant as long as nothing is violated after the
effectivity. So, I think it puts it into better order, the ideas clearer.
SEN. VILLAR. Parang this is not retroactive.
THE CHAIRMAN (SEN. AQUINO). No, we all agree it’s not
retroactive.
Can we put the Senate version side by side with the proposed
version? So, you can just cut and paste that and put it beside, up, up,
up. There, the first proviso. No, on the first column, until “Act,” only
until—the first “Act.” So, we are comparing the provisions. Diyan na
lang. Mahirap. You can just take up…/rommel
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NGDizon XII-1 June 4, 2015 2:30 p.m. 1
THE CHAIRMAN (SEN. AQUINO). … You can just take out the
“strike through” because the “strike through” naman is the Congress
version. There.
So we are comparing these two. Okay. That’s good enough. I
think the main difference is regardless of how that dominance was
achieved and legitimately acquired. My concern with regardless of how
the dominance was achieved—Although I admit that this is
prospective, my concern is that it may seem like we are condoning
former illegal acts.
THE CHAIRMAN (REP. CUA). We are willing to refine it further
and remove that phrase.
[Informal Discussion]
THE CHAIRMAN (SEN. AQUINO). Is there a counterproposal,
Mr. Chairman?
Mr. Chairman, the Senate version mentions of dominant position
in a relevant market legitimately acquired. Is that a qualifier?
VOICE. So, pwedeng mag-look back—
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THE CHAIRMAN (REP. CUA). Kaya nga. Parang it creates look
back if it’s legitimately acquired.
THE CHAIRMAN (SEN. AQUINO). No, actually, it’s the reverse
because we’re saying, “nothing in this act shall be construed or
interpreted as a prohibition on dominant position legitimately
acquired.”
So if you’re legitimately dominant, no problem tayo, ‘di ba? But
my concern is that even though I think the intent is not to excuse but
the interpretation might seem like we are excusing dominance that
was acquired through illegal means.
THE CHAIRMAN (REP. CUA). Yes. And I see the fault in that
kind of wording but it arose in trying to clarify the Senate version by
mentioning “legitimately acquired.” Can we just be silent on that and
just put “acquired” and we can we adopt the Senate version? Because
it connotes that if it’s illegitimately acquired, then nothing in this act
doesn’t apply.
THE CHAIRMAN (SEN. AQUINO). No, but it if was
illegitimately acquired previously, there might be current cases
pending on—No. I think we all agree there’s no retroactivity to this
provision. However, we do all agree that there are current cases that
are currently filed on competition matters using Articles 186. So
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those cases if ruled negatively for the defendants would have been
illegitimately acquired. So we don’t want to create a loophole or a legal
defense for any current cases. That’s why we restricted it to
legitimately acquired.
THE CHAIRMAN (REP. CUA). But for those cases that the DOJ
or the OFC have filed in competition related matters, I was informed by
my colleague that we intend to put a saving clause somewhere in the
law just to protect those cases. So this does not really apply to them.
Yes.
REP. ROMUALDO. Because I recall, Mr. Chair, there were
discussions on what would happen if we repeal those provisions on the
Revised Penal Code dealing with monopolies and combinations in
restraint of trade. Well, there were discussions and proposals that we
put a saving clause that even if you repeal those provisions in the
Revised Penal Code, the cases pending with the DOJ would continue.
So I think that would address the situations.
THE CHAIRMAN (SEN. AQUINO). But we just don’t want to
create a misconception as it may that we are condoning abuses
illegitimately done before. We’re just very careful with that. That’s why
we put “legitimately.”
Senator Osmeña.
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SEN. OSMEÑA. Yes. Let me ask a rough example, question.
Suppose I obtain my dominant position by smuggling, does that
protect the guy now from having to explain his side?
THE CHAIRMAN (REP. CUA). My take, Senator, is that if it
was done before the act, then there was no law—Well, another law
applies to it, not the competition law.
SEN. OSMEÑA. That’s why the Senate has the qualifier
“legitimately acquired.” It can be through intellectual property right. It
could be just because some are smarter than others. But that might be
used as a loophole when you put a phrase “regardless of how that
dominance was achieved.” We’re scared of opening up a loophole na,
“Oo nga nag-i-smuggle ako pero regardless naman iyan.”
THE CHAIRMAN (REP. CUA). We see how it seems that way,
Senator, and we agree. That is why we are reverting back to the
Senate version but proposing the consideration of the word
“legitimately” which may create confusion that when the dominance
was achieved in a questionable manner, then the law can be applied
retroactively or with look back.
THE CHAIRMAN (SEN. AQUINO). If you remember, we
approved an effectivity clause. Was it effectivity? But it specifically
said there’s no retroactive application to this law. So I think there is
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no question that this law is retroactive. We explicitly stated it already.
I’m just afraid that, you know, we’re deleting quite an important word.
I mean—
REP. RODRIGUEZ. Mr. Chairman, I think the compromise
really there is that we will not insist. Because really, the words
“regardless of how that dominance was achieved” certainly connotes,
you know, condonation of what has happened before this bill. At the
same time, why do you have to mention “legitimately” when we are
saying that there is no retroactive effect? So the best way is to be
silent about it and, you know, let the law now go to implementation on
if they maintain their illegitimate way of having dominant position and
getting that market share. Then, that’s the time that we will have the
implementation of the bill. This were clear that it will not retroact. So
putting the words “legitimately” will just likewise, you know, create
confusion because we are already saying that nothing done before will
be subject to prosecution because we are prospective. So the best
remedy here is to just be silent and we follow your statement that
relevant market dominant position acquired prior to this act shall not
be construed to be prohibited. Kasi dalawang stream tayo.
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THE CHAIRMAN (SEN. AQUINO). Okay. Just for clarity. The
House is proposing to accept the Senate version, the first proviso, but
delete “legitimately.” Is that the House’s proposal?
REP. RODRIGUEZ. Yes, because the law does not look back. In
a prospective law, it does not look back and you don’t define
“legitimate,” “illegitimate.” That’s something that is already history.
But if they will continue and do it again, they will be prosecuted.
SEN. VILLAR. I-silent na lang.
THE CHAIRMAN (SEN. AQUINO). Senator Pimentel.
SEN. PIMENTEL. Question. What are we prohibiting, the
dominant position …/ngdizon
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CMNERY I-2 June 4, 2015 2:40 p.m. 1
SEN. PIMENTEL. …the dominant position or the abuse?
Precisely. So why are we so worried about dominant position?
There’s nothing in this Act which prohibits dominant position
because that is not illegal.
REP. ROMUALDO. That’s right.
SEN. PIMENTEL. So why do we have this proviso in the first
place? What are we worried about? We are after the abuse, not the
dominant position.
REP. ROMUALDO. Mr. Chair, I recall during deliberations in
the House, there were proposals precisely to include those provisions
because there was a fear that it would mean that the law would be
misinterpreted by those who will read it as a prohibition on dominance.
When, in fact, you know, all businesses aspire to be dominant and we
are not penalizing dominance—the abuse of dominance. That is why to
comfort those concerns, those provisions were inserted in the House
version.
REP. RODRIGUEZ. Yes. I think we can have this kind of
statement but we do not anymore qualify legitimately or illegitimately
because we are prospective. At the same time, it preserves precisely
the dominant position that has been acquired before this law has been
done. We do not look back anymore because if we put “legitimately,”
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CMNERY I-2 June 4, 2015 2:40 p.m. 2
we are again going back which cannot be reached because we are
prospective.
So the proposal is just retain this, Senator Pimentel, but then
just be silent on “legitimately” because, you know, our proposal is
regardless of whether how the dominant—
SEN. PIMENTEL. Delikado iyon.
REP. RODRIGUEZ. Ang proposal kasi namin is regardless of
how they arose.
THE CHAIRMAN (SEN. AQUINO). Sige. I think the proposal
to just delete “legitimately acquired prior to the approval of this Act—”
We can just delete “legitimately acquired prior to the approval of this
Act.”
SEN. PIMENTEL. Mr. Chairman, the other side of the co-in
here, let’s say, tanggalin mo lang iyong legitimately, can this Act be
interpreted as prohibiting a dominant position after the approval of this
Act?
THE CHAIRMAN (SEN. AQUINO). No.
REP. RODRIGUEZ. That’s why I have an amendatory again to
add to this, I have amended the language to really provide that
nothing can stop getting more market share through superior skills,
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CMNERY I-2 June 4, 2015 2:40 p.m. 3
rendering superior service, producing quality products and all that.
…first with this so we will include that.
THE CHAIRMAN (SEN. AQUINO). Congressman, also known
as legitimate acquisition of dominant share.
THE CHAIRMAN (SEN. AQUINO). That is a legitimate way to
get a dominant position, right?
REP. RODRIGUEZ. Yes. So that will be addressed, that
concern na we are not really stopping our companies. Can you
imagine if we stop the initiative of our companies to get more share
through means that are legal? Probably, if we can… that I can go now
to the amendment after the amendment.
THE CHAIRMAN (SEN. AQUINO). Wait, one second, Mr.
Chairman, if I may just confer with my colleagues for a second.
THE CHAIRMAN (SEN. AQUINO). All right. Sa statement of
principle, we can just end that market. I think that’s more acceptable.
Anyway, that really is the principle of the bill.
THE CHAIRMAN (REP. CUA). [Off-mike] We accept.
THE CHAIRMAN (SEN. AQUINO). Okay. So we are
proposing that we put the first proviso as “Provided, that nothing in
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CMNERY I-2 June 4, 2015 2:40 p.m. 4
this Act shall be construed or interpreted as a prohibition on a
dominant position in a relevant market.”
REP. RODRIGUEZ. Mr. Chairman, my problem is that the
reason why we put additional amendatory language is we are
representing two situations: dominant position prior to the Act and
companies being able to acquire and increase and maintain a market
share after the Act but through means or manner not violative of the
law such as but not limited to having superior skills of its employees,
rendering superior service, producing or distributing quality products,
having business acumen and excluding others from the enjoyment or
use of their intellectual property rights.
So we envision here in this proviso that prior to the Act, the
dominant position is recognized and is not illegal. And then after that,
that’s why we have “or”—that’s why if you can see at our provision,
there is a statement after we used your words here of “relevant
market prior” but without any “legitimate” statement “and maintaining
thereafter a dominant positon in a relevant market as long as the
provisions are not violated.”
So now we are saying that we have now your version but it
should refer rightly to those prior to the Act because after the Act, we
are saying, yes, we support the companies in being able to acquire
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CMNERY I-2 June 4, 2015 2:40 p.m. 5
market share which may result in some dominant position because we
are not against that through means not violative of the Act which such
as not limited to having superior skills, rendering superior service,
producing or distributing quality products, having business acumen and
excluding others from the enjoyment of the use of intellectual property
rights because they could not.
So these are the things which will complete the picture. After
the “relevant market,” I hope to restore to be clear about being the
“prior.” “Prior to” should be restored because wala nang balance. We
are talking about of the future and we don’t have the past.
THE CHAIRMAN (SEN. AQUINO). Mr. Chairman, just to
clarify. This is not currently in the provision you have in the House
version. This is a new provision.
REP. RODRIGUEZ. No, it’s in the House.
THE CHAIRMAN (SEN. AQUINO). It is in the House.
REP. RODRIGUEZ. Kindly read this.
“Provided, finally, that nothing in this Act shall be construed or
interpreted as a prohibition on maintaining a dominant position in a
relevant market acquired prior to the approval of the Act.”
So this is the portion of the “prior to.” But then, we would like to
state to the whole world that while we have this Competition Law, it is
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CMNERY I-2 June 4, 2015 2:40 p.m. 6
not a chilling effect on good businesses that would be able to acquire—
acquiring and maintaining market share through means or manner not
violative of this Act.
So we will try to have the symmetry here, there’s some sort of a
balance.
THE CHAIRMAN (SEN. AQUINO). So you’re suggesting, Mr.
Chairman that we add iyong “acquired pior to” after iyong what we
agreed on already. So dugtungan natin.
REP. RODRIGUEZ. Yes. We should go back to “acquired prior
to approval of the Act” because the other “or” now is on the future. So
iyong “prior” okay na tayo doon kasi to assure them that—
THE CHAIRMAN (SEN. AQUINO). Secretariat, can you do
that? Can you cut the House version “acquired”? Iyan. And then put
it after the proviso we approved so people can look at it together.
Don’t delete that, just put it under.
SEN. PIMENTEL. [Off-mike] Sa continuation.
THE CHAIRMAN (SEN. AQUINO). Sa continuation.
So if we approve this, the phrase continues.
So I take it this is the right proposal, Mr. Chairman.
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CMNERY I-2 June 4, 2015 2:40 p.m. 7
REP. RODRIGUEZ. So if you will read what we have now
“acquired prior,” yes. We restore the “acquired prior to this Act” and
then “or on acquiring…”…/cmn
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Mancol II-2 June 4, 2015 2:50 p.m. 1
REP. RODRIGUEZ. … “or on acquiring, increasing and
maintaining market share.” So, that is our addition there, which is
really part of our previous one except that this is more detailed. So,
you can add after the approval of this Act, “or on acquiring,” doon tayo
sa first paragraph, “or on acquiring, increasing and maintaining market
share through means or manner not violative of this Act such as, but
not limited to, having superior skills, rendering superior service,
producing or distributing quality products, having business acumen and
excluding others from the enjoyment or use,” or “having business
acumen and excluding others from the enjoyment and use of protected
intellectual property rights.”
THE CHAIRMAN (SEN. AQUINO). May I solicit comments
from my colleagues?
REP. GUTIERREZ. In the interest of actually attaching it to the
previous provision that we already adopted, Mr. Chair, perhaps, after
“relevant market,” we can transform the period (.) into a comma (,)
and then proceed from “or on acquiring, increasing and maintaining
market share,” and so on. So, in other words—
REP. RODRIGUEZ. There has to be some symmetry. There is
a recognition of those dominant positions prior and now we are now
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Mancol II-2 June 4, 2015 2:50 p.m. 2
talking of the maintaining or, in the future, acquiring through hard
work of our Filipino entrepreneurs.
REP. GUTIERREZ. Yes but I think that in our current
formulation of the first part of this proviso where we just said “Nothing
in this Act shall be construed or interpreted as a prohibition on a
dominant position in a relevant market,” that covers both prior,
present, future. So, all we’re adding is with respect to the increase in
market share because that is not yet covered in the “dominant
position” clause.
So, that’s my proposal, Congressman.
REP. RODRIGUEZ. I accept that. I agree that it will refer
also— I agree that after “relevant market,” then “maintaining,
increasing or acquiring market share.”
THE CHAIRMAN (SEN. AQUINO). Senator Pimentel, I think,
has a comment.
SEN. PIMENTEL. So, the situation is the dominant player
increases market share further?
REP. RODRIGUEZ. We are not prohibiting having a dominant
position. And it is defined by us 50 percent plus one.
SEN. PIMENTEL. Kaya nga. So—
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Mancol II-2 June 4, 2015 2:50 p.m. 3
REP. RODRIGUEZ. And so, they can as long as they are not
able to abuse that dominant position. That is the point. So, if they are
so good in their organization, their businesses are good, because
otherwise, we will not have a fair competition, actually, when you limit
our companies who are doing good from being able to increase market
share.
SEN. PIMENTEL. Yeah. A dominant player, who increases
market share, remains to be the dominant player. So, we’re talking
about dominant position pa rin. So, it doesn’t matter. We are making
clear that having, possessing, maintaining a dominant position is not
illegal. Klaro iyon. Iyon ang klaro that—Kaya natin nilalagay ito rito
as last paragraph because the title of the section is “Abuse of dominant
position.” So, puwedeng ma-misinterpret nga that we are penalizing
the dominant position, not the abuse, that’s why kina-clarify natin sa
baba. But let us be clear. Let us be direct to the point kung
pupuwede. If that is all we want to say, then let us be economical with
our words. To be direct to the point.
REP. GUTIERREZ. But we are saying that what is the means or
the manner that would lead to additional market share that’s why we
gave an enumeration “but not limited to” here.
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Mancol II-2 June 4, 2015 2:50 p.m. 4
SEN. PIMENTEL. Hindi kasi ako expert dito but the manner
that you enumerated are those allowed in the law. So, we can. Kasi
nakasulat ba diyan “not limited to.” So, hence, there may be some
other techniques or manners found in the law. So, we can capture all
of these by being consistent with this law, a phrase na consistent with
this law or not violative of this Act. Puwede na. We don’t need to
enumerate. I mean, that’s my point.
REP. GUTIERREZ. Ang akin lang is that these are examples
because sometimes, the law, when you say “other means or manner
not violative of the law,” that’s quite vague, we don’t have an idea,
that’s why we gave some of the examples which are not really
exclusive. So, that’s the reason why we have that to make some
clarification what is “other means and manner not violative of the law.”
So, we would like to have that so that, at least, may clear examples
tayo na we will award those who have these particular advantages that
they have.
THE CHAIRMAN (SEN. AQUINO). I’m sorry. I was discussing
something else. Is there a proposal or that was just a query? It’s a
query.
I have a suggestion, Congressman. Can we, since we took out
legitimately previously, can we bring it back, and this may be a
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Mancol II-2 June 4, 2015 2:50 p.m. 5
redundancy, but there are means which, just maybe to be sure, we
can say “increasing and maintaining market share through legitimate
means not violative of this Act.”
REP. RODRIGUEZ. That will be acceptable. That will be on
the—“legitimate” means true. Yes, I would accept that. Accepted.
THE CHAIRMAN (SEN. AQUINO). And this is also a
suggestion, ‘no. May I propose something else, Mr. Chairman? Okay.
Not to be a stickler, but since we’re introducing this phrase and it
might have an unintended effect down the line, maybe instead of “not
violative of this Act,” or alongside “not violative of this Act,” we can put
“means or measures that will not substantially restrict—unreasonably
or substantially restrict, distort or lessen competition.”
REP. RODRIGUEZ. We’ll accept that. Yes.
THE CHAIRMAN (SEN. AQUINO). So, we are sure that any of
these things legitimately acquired will not defeat the purposes of the
Act also.
REP. TINIO. Mr. Chair, does that mean we delete the
enumeration “such as but not limited to”?
THE CHAIRMAN (SEN. AQUINO). Well, you can propose it if
you want. Of course, this is your proposal, the House proposal.
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Mancol II-2 June 4, 2015 2:50 p.m. 6
REP. TINIO. Well, I mean, to me, what’s gained from making a
partial enumeration? Anyway, I don’t think it’s the business of this law
to be telling business how to do their. . . (nam)
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REP. TINIO. …how to do their business. And also, personally,
I think that phrase about “excluding other from enjoyment of” parang
hindi maganda ang dating, you know. But, you know, with all due
respect to the--
THE CHAIRMAN (SEN. AQUINO). So may I know the
pleasure of the House panel?
THE CHAIRMAN (REP. CUA). Well, Mr. Chairman, we stand
by the proposal inasmuch that the wisdom, I believe, is to give
businessmen assurance that their sound and legitimate practices will
not be subject to scrutiny.
THE CHAIRMAN (SEN. AQUINO). Okay. Can we suspend for
one minute? One minute lang.
[THE HEARING WAS SUSPENDED AT 3:01 P.M.]
[THE HEARING WAS RESUMED AT 3:05 P.M.]
THE CHAIRMAN (SEN. AQUINO). Okay. Mr. Chairman, do
you have a proposal? Ay, wala pala si—who is acting chairman? May
we know the proposal currently being discussed?
REP. RODRIGUEZ. Mr. Chairman?
REP. DEL ROSARIO. Yes, go ahead, Congressman Rufus.
REP. RODRIGUEZ. Thank you.
We will now have this amendment. “After the relevant market
or on acquiring, increasing and maintaining market share through
99
means or manner not violative of this Act.” And then, “Such those
limited should now be transferred to market dominant position,”
Section 26, where it says, “The Commission shall find time to
determine and publish the threshold for dominant position or minimum
level of share.” And state that, “Acts such as having superior skills
rendering shall not be a violation of the dominant position.”
THE CHAIRMAN (SEN. AQUINO). May we suggest that
instead of “violative of this Act” we say, “shall not restrict, lessen--”
“…unreasonably or substantially restrict, lessen or distort competition”?
THE CHAIRMAN (SEN. AQUINO). (Comma) “…and not
violative of this Act.”
REP. RODRIGUEZ. Correct, that can be included. It should
not be violative of that.
THE CHAIRMAN (SEN. AQUINO). Because we use the main
standard for distortion in the market which is “unreasonably or
substantially restrict, lessen or distort competition.”
REP. TINIO. Sir?
REP. TINIO. Just for consistency. I remember earlier the word
“unreasonably” was deleted.
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THE CHAIRMAN (SEN. AQUINO). Yes, that’s right. Just
“substantially,” no more “unreasonably or.” That’s right.
Can we reinstate “legitimate means”?
REP. ROMUALDO. Mr. Chair?
REP. ROMUALDO. Just to add one more word to make it, I
think to sound better.
REP. ROMUALDO. “Provided, that nothing in this Act shall be
construed or interpreted as a prohibition on a dominant position.”
Could we add a verb before “prohibition on” and then a verb maybe
“having” or “maintaining a dominant position”? “Having” na lang—
pwede “having--” “on having a dominant position”?
THE CHAIRMAN (SEN. AQUINO). Okay. So 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, increasing and
maintaining market share through legitimate means or manner that do
not substantially prevent, restrict or distort--” walang “lessen.” That’s
the language that we used, “prevent, restrict or distort competition.”
May “violative” pa “of this Act,” or that’s enough already? I think we
can—period na sa “competition,” Cong, if that’s all right?
101
REP. RODRIGUEZ. Okay. Then remove the other statement
about maintaining or acquiring market share which will not violate the
abuse of dominant position in the section on market dominant position,
Section 26.
THE CHAIRMAN (SEN. AQUINO). Okay. We shall park that,
Mr. Chairman, and get back to that.
REP. TINIO. Mr. Chair?
REP. RODRIGUEZ. With the correction.
REP. TINIO. Just a question here, is it necessary to retain “or
manner--” “legitimate means or manner that do not--”?
THE CHAIRMAN (SEN. AQUINO). How about “means” na
lang po?
REP. TINIO. Kaya nga, pwede ba? Tanggalin na lang iyong
“or manner.”
THE CHAIRMAN (REP. CUA). I subscribe.
REP. TINIO. Nakakagulo pa doon sa subject verb agreement.
THE CHAIRMAN (SEN. AQUINO). Is that the proposal?…/rjo
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THE CHAIRMAN (SEN. AQUINO). ...Is that the proposal, Mr.
Chairman?
THE CHAIRMAN (SEN. AQUINO). Okay. We accept, Mr.
Chairman. Okay.
SEN. PIMENTEL. And, Mr. Chairman, can we switch the
position of “increasing” and “maintaining”?
THE CHAIRMAN (SEN. AQUINO). We may.
SEN. PIMENTEL. Then switch sila--“acquiring, maintaining and
increasing.”
THE CHAIRMAN (SEN. AQUINO). Yes, because there is a
sense of growth. That is nicer.
All right.
REP. RODRIGUEZ. From our bar topnotchers so that it will
always be valid.
THE CHAIRMAN (SEN. AQUINO). What are the grades of our
bar topnotchers, if I may?
Okay, is this the proposal? We both have a hybrid so we are
okay with this proposal.
THE CHAIRMAN (REP. CUA). We will accept, Mr. Chairman.
Thank you.
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THE CHAIRMAN (SEN. AQUINO). Okay. Do you have another
proviso that you wish to add, Mr. Chairman?
REP. RODRIGUEZ. Yes. There should also be, “Provided,
further, that any conduct which contributes”—it is in our proposal
which was lost in translation—“Provided, further that any conduct...”
this is on Page 28.
REP. RODRIGUEZ. To restore this... “That any conduct which
contributes to the 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.”
VOICE. That is the second proviso of the House version.
REP. RODRIGUEZ. Yes, that is the House version because we
have deliberated on this and there are other actions that improve it
and it should not be “abuse of dominant position.”
THE CHAIRMAN (SEN. AQUINO). We will accept, Mr.
Chairman.
REP. RODRIGUEZ. Thank you.
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THE CHAIRMAN (SEN. AQUINO). All right. Is that the
entirety of your provisions, Mr. Chairman? Because I have one more.
Maybe you can go ahead.
REP. ROMUALDO. Mr. Chair, just a question on the provision
inserted by Congressman Rodriquez. It would become not necessarily.
So does that mean that, you know, these kinds of contract could
actually be considered an abuse of dominant position or would it be
proper if you delete “necessarily?”
REP. RODRIGUEZ. I agree to the wisdom of another bar
topnotcher that we delete “necessarily”--unnecessary. This word
“necessarily” is unnecessary.
REP. DEL ROSARIO. Mr. Chairman.
REP. DEL ROSARIO. The next lawyer that will make another
suggestion, I think he should buy us all halo-halo.
THE CHAIRMAN (SEN. AQUINO). [Laughter]. Is this the
pleasure for halo-halo? Can we ask our secretariat to buy Chowking
halo-halo for merienda? Seriously. Where is my staff here? Can we
buy Chowking halo-halo?
REP. DEL ROSARIO. Ang galing ng chairman natin.
THE CHAIRMAN (SEN. AQUINO). Okay. We accept. If this
will allow us to stay until 11 p.m., we will provide halo-halo.
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Yes, we accept the deletion of “necessarily,” Mr. Chairman.
REP. ROMUALDO. Okay. Thank you.
THE CHAIRMAN (SEN. AQUINO). Is there another proviso,
Mr. Chairman?
THE CHAIRMAN (REP. CUA). I believe, none.
VOICE. Oh, ayaw nyo na palang--walang gustong bumili ng
halo-halo.
THE CHAIRMAN (SEN. AQUINO). No, we will buy. Marami
ito, 100 halo-halo ito. Maraming tao dito.
REP. RODRIGUEZ. Mr. Chairman, if we can go back to the one
I proposed the other day about the control, about the entity which is
under competitive agreements on entity because your version states
about a parent, another corporation under his control. So I have a
proposal here, after letter (b) of entity, another section which I--
THE CHAIRMAN (SEN. AQUINO). Mr. Chair, this is anti-
competitive agreements, ‘no.
THE CHAIRMAN (SEN. AQUINO). We parked--
REP. RODRIGUEZ. Ah, park na muna ito?
THE CHAIRMAN (SEN. AQUINO). Yes. We were in “grave
abuse of dominant position” first.
REP. RODRIGUEZ. Okay. After that we can go back.
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THE CHAIRMAN (SEN. AQUINO). Yes, we will still go back to
that because we have a hybrid proposal.
Are there any other proposals for provisos in abuse of dominant
position?
REP. ROMUALDO. Mr. Chair, in the House version there is a
provision on providing for—as a defense to those entities who may be
charged with abuse of dominant position, there is a provision that
would allow them to raise certain defenses. It is in the House version.
We will just like to manifest that the House will no longer propose this
in this part of the law but we do intend to put it in Chapter V on the
disposition of cases. We will just like that to be noted, Mr. Chair.
THE CHAIRMAN (SEN. AQUINO). Okay. Thank you for the
manifestation, Mr. Chairman.
We have actually one more proviso that we want to suggest. It’s
actually in the last “Provided” in our version and this is again just a
safety provision. “Provided”—finally na ito siguro—“Provided, finally,
that the foregoing...”—meaning, all of these provisos”...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”
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Mr. Chairman, I just got words from our experts that—
SEN. VILLAR. May I ask?
THE CHAIRMAN (SEN. AQUINO). Yes. Yes, please.
SEN. VILLAR. Then it is not anymore just regulatory.
THE CHAIRMAN (SEN. AQUINO). No. What we refer here,
Senator, is because some regulators also have a competition mandate.
So they are referring to a relevant regulator apart from the
commission.
SEN. VILLAR. Alin? Iyong “The commission or the relevant
regulator...”
THE CHAIRMAN (SEN. AQUINO). No. Again, Senator
Pimentel, it is merely a safety provision that we noted down some of
these possible exemptions, then in the end we say, but just to be
clear, that the commission or the relevant—nothing will stop them
from pursuing measures that will promote fair competition.
SEN. PIMENTEL. Yes...
SEN. VILLAR. I thought that the commission is a regulator.
THE CHAIRMAN (SEN. AQUINO). Yes, to an extent it is a
regulator of competition matters. But we are referring here to other
regulators such as the ERC, the NTC, the SEC that may also have a
competition mandate. Not original and primary, Senator Villar, but
they also have it in their mandate. So it just means that with all of
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these examples of dominance and legitimate means, the commission
will still promote fair competition. It is really more of a caveat.
SEN. PIMENTEL. Mr. Chairman.
THE CHAIRMAN (SEN. AQUINO). Yes, Senator.
SEN. PIMENTEL. Isn’t that such an important concept that we
should promote it actually?
THE CHAIRMAN (SEN. AQUINO). No, it is the declaration of
policy actually.
SEN. PIMENTEL. Kaya nga. So I think we should promote it
from a mere proviso to a section, to its own section, kasi overarching
principle siya. It applies to all.
THE CHAIRMAN (SEN. AQUINO). Okay. I am okay with that.
SEN. PIMENTEL. Hindi lang siya doon sa abuse of dominant
position.
THE CHAIRMAN (SEN. AQUINO). No. Well, to be fair,
Senator, that is in the declaration of policy.
SEN. PIMENTEL. Kaya nga. Ang mangyayari kasi, Mr.
Chairman, kung nagbabantay tayo parati, we will keep on inserting
that in each and every section na may enumeration tayo na may
loophole ilalagay natin. So we can make that as a separate section by
itself. As an--
SEN. VILLAR. Important policy.
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SEN. PIMENTEL. Policy siya, very important.
THE CHAIRMAN (SEN. AQUINO). Let me take a look at the
declaration of policy.
SEN. PIMENTEL. Hindi, iyong policy kasi declaration of policy.
Ito, ano ito parang empowerment ito.
SEN. PIMENTEL. You are now granting actually the power to
the commission.
SEN. VILLAR. And to a relevant regulator.
THE CHAIRMAN (SEN. AQUINO). Yes. It is in the powers and
functions. It is in the declaration of policy but the intention of putting
it here is just to put it side by side with all of the possible exemptions
that we had stated.
SEN. PIMENTEL. Hindi nga. Kaya nga. But it is not
particularly for that section. It is a general overarching principle nga
that is why--
THE CHAIRMAN (SEN. AQUINO). And that has been stated in
the declaration of policy and in the powers and functions.
SEN. PIMENTEL. Okay. Iyan. Okay na. So I think that should
take care of it, Mr. Chairman.
THE CHAIRMAN (SEN. AQUINO). So are you saying, Senator,
it is redundant?
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SEN. PIMENTEL. Nandoon na siya.
THE CHAIRMAN (SEN. AQUINO). It is there. I can assure
you of that. It is just that we want this here so that taken side by side
with the other provisos. It is just a safety provision.
THE CHAIRMAN (REP. CUA). I think the redundancy is the
desired effect. Iyon iyong gustong mangyari.
THE CHAIRMAN (SEN. AQUINO). Yes. For clarity.
THE CHAIRMAN (REP. CUA). But, Senator--
SEN. VILLAR. It is so important that if you want to emphasize
it, tama siya, do a chapter or a section on it and then sabihin mo iyong
gusto mo lahat gawin to promote fair competition.
THE CHAIRMAN (SEN. AQUINO). It is already in the powers
and functions and declaration of policy, ma’am.
SEN. VILLAR. Okay. So hindi na kailangan.
THE CHAIRMAN (REP. CUA). Ang question ko lang, why is
there relevant regulator...
THE CHAIRMAN (SEN. AQUINO). Because there are some
regulators that have to promote competition as well.
SEN. VILLAR. Bakit hindi mo sinabi.../smv
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SEN. VILLAR. …Bakit hindi mo sinabi doon sa ibang chapter?
THE CHAIRMAN (REP. CUA). Maybe that portion should be in
the mother section or—
THE CHAIRMAN (SEN. AQUINO). Uh-huh.
THE CHAIRMAN (REP. CUA). That one kasi, parang applies to
the commission lang in this section. So parang iyong for the sector
regulators, might as well just put it in the general section and limit this
one proviso for the competition.
THE CHAIRMAN (SEN. AQUINO). May I ask for a suspension,
Mr. Chairman?
[THE HEARING WAS SUSPENDED AT 3:21 P.M.]
[THE HEARING WAS RESUMED AT 3:22 P.M.]
THE CHAIRMAN (SEN. AQUINO). All right. Mr. Chairman, as
is, is our proposal on that last proviso.
Mr. Chairman, I’m sorry to bring this up but we just want to
raise the point, the question on “necessarily,” because it actually might
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be necessary. “Any conduct which contributes to improving”—because
if I remember correctly, it was the Senate President that inserted the
word “necessarily” in our debates so I just don’t want to delete it as
fast.
Does the meaning change drastically with “necessarily”?
THE CHAIRMAN (REP. CUA). It makes it a hard and fast rule
without “necessarily.”
THE CHAIRMAN (SEN. AQUINO). And we want to make this a
hard and fast rule?
REP. RODRIGUEZ. Well, we have no objection especially to the
Senate President. I think it becomes necessary now because the
Senate President has asked that so it just become necessary. So let’s
restore it.
THE CHAIRMAN (SEN. AQUINO). Thank you, Congressman.
I remember the first version of this did not have “necessarily,”
but it was the Senate President who insisted this.
REP. RODRIGUEZ. He might look for this when we have this
approved in the plenary, in your case.
REP. RODRIGUEZ. So, Mr. Chairman.
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THE CHAIRMAN (REP. CUA). We accept the restoration of
“necessarily.”
Are there other provisos that we wish to tackle for abuse of
dominant position? None?
On our part, there is none also.
THE CHAIRMAN (REP. CUA). Okay. Let’s move on.
Thank you.
This is a major accomplishment, Mr. Chairman.
THE CHAIRMAN (REP. CUA). Yes. Big section.
THE CHAIRMAN (SEN. AQUINO). It only took us two hours
for this provision.
The Halo-halo is on its way, by the way, to my colleagues.
Okay. Chapter III, Mergers and Acquisition.
The only issue here, Mr. Chairman, is, well, we are proposing the
Senate version, if that’s okay.
THE CHAIRMAN (REP. CUA). Well—
THE CHAIRMAN (SEN. AQUINO). Future Section 16.
We had defined the mergers already in definition of terms, and
we had accepted that already.
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THE CHAIRMAN (REP. CUA). Mr. Chairman, can we put on the
screen the definition of mergers in the definition of terms, just to
compare with the House version?
Secretariat, can we please put the definition of mergers so we
can compare.
Mr. Chairman, it’s more or less the same, ano?
THE CHAIRMAN (REP. CUA). Mr. Chairman, may we bring
your attention to the House version? Kasi we feel that it might be
necessary for the proceeding sections.
THE CHAIRMAN (SEN. AQUINO). Iyong “for purposes”?
THE CHAIRMAN (REP. CUA). “The following transactions to
the extent”—Page 29, column 2—“The following transactions to the
extent that they are above the minimum threshold stipulated in this
Chapter or otherwise fall within other criteria such as increased market
share in their relevant market in excess of minimum thresholds, to be
promulgated by the Commission pursuant to this Chapter, shall be
subject to the review by the Commission.”
THE CHAIRMAN (SEN. AQUINO). Period?
THE CHAIRMAN (REP. CUA). Yeah. We believe that that’s
important.
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THE CHAIRMAN (SEN. AQUINO). So in short, you are
proposing just the prefatory of your Section 7?
THE CHAIRMAN (REP. CUA). Yeah.
THE CHAIRMAN (SEN. AQUINO). No. Oo nga ano?
THE CHAIRMAN (REP. CUA). Yeah. That’s why you will have
to put up the enumeration again.
THE CHAIRMAN (SEN. AQUINO). But we have defined it na
kasi.
THE CHAIRMAN (REP. CUA). Yes. But the one I read about
the thresholds is not in the definition of terms.
THE CHAIRMAN (SEN. AQUINO). As defined? We can say “as
defined,” “the following transactions as defined.”
THE CHAIRMAN (REP. CUA). Well, an option is to take out the
first two words, “The following,” and just begin with, “Transactions to
the extent that they are above the minimum threshold, transactions
that are above the minimum threshold stipulated in this chapter or
otherwise fall within other criteria such as increased market share in
the relevant market in excess of minimum thresholds to be
promulgated by the Commission pursuant to this Chapter, shall be
subject to review by the Commision.”
THE CHAIRMAN (SEN. AQUINO). Period?
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THE CHAIRMAN (REP. CUA). Puwedeng ganon po.
REP. TINIO. Instead of “transactions,” to use the term
“mergers,” so that, you know, it’s clear that it refers to the terms
defined, ‘di ba? So in other words, pag ginamit mo iyong merger,
automatically magre-refer iyon doon sa definition of terms.
Bam, may threshold.
THE CHAIRMAN (SEN. AQUINO). Yeah. We need to have
mergers in this—
THE CHAIRMAN (REP. CUA). Okay. We subscribe to his
suggestion.
THE CHAIRMAN (SEN. AQUINO). So, Congressman Tinio,
how would that go? Mergers—
REP. TINIO. In the definition of terms, mergers and acquisition
is defined as one, together or separately?
THE CHAIRMAN (SEN. AQUINO). It says “mergers,” actually.
REP. TINIO. Walang definition ng acquisitions?
THE CHAIRMAN (SEN. AQUINO). No, it’s under the definition
of mergers already. So maybe we should even take out all and
acquisitions, ano?
Can we check, secretariat, if we refer to acquisitions anywhere
else?
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SEN. VILLAR. [Off-mike] How come it’s mergers and
acquisition?
THE CHAIRMAN (SEN. AQUINO). When we define merger,
mayroon kasing ano, one entity takes control of the whole or part of
another. So in the definition of merger, there is already an acquisition.
Yes.
SEN. PIMENTEL. Chairman, the other way around. Can there
be an acquisition which is not a merger?
A merger is an acquisition, but is there an acquisition which is
not a merger?
REP. TINIO. [Off-mike] Yes.
SEN. PIMENTEL. And we want an acquisition which is not a
merger still reviewable by the commission? Some, at least
some?…/cbg
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JTBCadaing VI-2 June 4, 2015 3:30 p.m. 1
SEN. PIMENTEL. …Some, at least, some? So importante,
mahiwalay.
REP. TINIO. Maybe then, there might have to be a definition of
acquisitions?
THE CHAIRMAN (REP. CUA). I think kasi these are both legal
terms. So, perhaps, the solution will be to change the definition to
“mergers and acquisitions” since in the definition text it already
contains “acquisition.” So ilagay na lang natin doon sa definition na
“mergers and acquisitions.”
REP. TINIO. Acquisitions, instead of merger.
THE CHAIRMAN (SEN. AQUINO). Sorry ha. What are we
discussing now, Mr. Chairman?
THE CHAIRMAN (REP. CUA). Senator Pimentel asked if all
mergers are acquisitions and if all acquisitions are mergers.
THE CHAIRMAN (SEN. AQUINO). Technically not.
THE CHAIRMAN (REP. CUA). So it seems that there is a
subset that’s not covered. So the proposed amendment is to amend
as well the definition.
THE CHAIRMAN (SEN. AQUINO). To split it.
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THE CHAIRMAN (REP. CUA). Since the text already contains
“acquisitions,” we just define the title as “Definition of Mergers and
Acquisitions.”
THE CHAIRMAN (SEN. AQUINO). All right, okay.
THE CHAIRMAN (REP. CUA). So that the whole text applies
as mergers and acquisitions.
THE CHAIRMAN (SEN. AQUINO). Okay. And then we make
sure in the text, it’s always “mergers and acquisitions” as a phrase.
THE CHAIRMAN (REP. CUA). So is that an omnibus
amendment?
THE CHAIRMAN (SEN. AQUINO). Yes. We direct the
secretariat to make sure that “mergers” and “acquisitions” are always
together in a phrase. That we don’t refer to “mergers” solely or
“acquisitions” solely. It’s always “mergers and acquisitions.” Then we
change the definition of “mergers” in the Chapter II to “mergers and
acquisitions.”
Is that taken by the secretariat? Yes?
SEN. PIMENTEL. That’s correct, Mr. Chairman. But we have
to add the definition of an acquisition.
THE CHAIRMAN (SEN. AQUINO). It’s already in the definition
of mergers right now.
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SEN. PIMENTEL. Hindi. Baka nga hindi.
THE CHAIRMAN (SEN. AQUINO). It is, sir.
SEN. PIMENTEL. Baka nga iyong definition ng mergers is the
merger.
THE CHAIRMAN (SEN. AQUINO). No. Senator, it’s in the
enumeration. One entity takes control of the whole or part of another
is an acquisition actually.
SEN. PIMENTEL. No. 2?
SEN. PIMENTEL. That’s acquisition?
SEN. PIMENTEL. Okay, that’s good.
Are we sure?
THE CHAIRMAN (REP. CUA). So the question now is—
THE CHAIRMAN (SEN. AQUINO). Sure, sure.
REP. TINIO. So, Mr. Chair, the rewording—Sorry.
THE CHAIRMAN (REP. CUA). If the definition of “mergers”—
just to clarify and to improve further—the “mergers” now refers to
both mergers and acquisitions. And if we don’t amend the definition
portion to “mergers and acquisitions” and maintain “mergers,” then we
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can just keep everything as “mergers” and delete “acquisitions” in the
text.
Is that simpler or—?
THE CHAIRMAN (SEN. AQUINO). No, because “M and A” is
accepted terminology already.
THE CHAIRMAN (REP. CUA). But is it consistent with the SEC
definition?
THE CHAIRMAN (SEN. AQUINO). I think so. Corporation
Code, I think, Mr. Chairman.
So we can just amend this to “mergers and acquisitions” as a
phrase.
THE CHAIRMAN (SEN. AQUINO). And then we make sure
that “mergers” and “acquisitions” are never seen separately, always as
the phrase “mergers and acquisitions.” Okay.
THE CHAIRMAN (SEN. AQUINO). Mr. Chairman, we just
have a slight question.
We’re restricting the review of the commission to all mergers
and acquisitions above the threshold. Does this mean that the
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commission cannot look into mergers and acquisitions below the
threshold? We just want to be clear.
Or does the commission have the power to review all mergers
and acquisitions?
REP. TINIO. Or otherwise fall within the other criteria? So
there’s another case.
THE CHAIRMAN (SEN. AQUINO). No, because the wording in
our version, Mr. Chairman, is just broad.
REP. DEL ROSARIO. From what I recall, the reason why we
qualified the section with regard to reviewing of mergers and
acquisitions to include a minimum threshold is because we were
concerned that every single mergers and acquisitions would have to be
reviewed by the commission. And we did not want that because that
would interrupt in the investment opportunities of the companies.
So if they do not reach the threshold, then why bother reviewing
them in the first place?
THE CHAIRMAN (REP. CUA). I do see your point, Mr.
Chairman, that although the commission is empowered to set the
thresholds, adjust thresholds, put additional criteria, in the event that
they see a merger that is beyond the threshold or below the threshold,
do they still have the power to review the merger?
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THE CHAIRMAN (SEN. AQUINO). Mr. Chairman, my
understanding is that the threshold is for notification. It’s not for
approval. So meaning, to approve or disapprove is basically because
of the potential effect of lessening competition in the market. So our
threshold is really for notification; it’s not for approval. The approval
shouldn’t be based on the threshold. It should be based on whether
the market will be infringed or not.
So we should not confuse the threshold as approval or not
because in this case, they will only approve—like in the example given
by Congressman Del Rosario before. In a relevant market, which could
be a smaller market, there’s a possible dominant player. But because
it’s a municipality, it will not hit one billion. But definitely the
commission can still look into that case.
So maybe we should just keep it as broad like in the Senate
version, Mr. Chairman.
THE CHAIRMAN (REP. CUA). Are you amenable, Mr.
Chairman, to add another, perhaps, paragraph stating the process that
the commission shall promulgate threshold?
THE CHAIRMAN (SEN. AQUINO). But that can be in the
notification because we want to keep the definition of review of
mergers and acquisitions, Mr. Chairman.
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Do you want to suspend first, Mr. Chairman?
REP. TINIO. The purpose of notification is automatically—
THE CHAIRMAN (SEN. AQUINO). Is to make the life of the
commission easier. Because if it’s large, there’s an understanding
that this will likely affect the market, then they will approve yes or no
or they will say na this is not possible.
So it’s not approval or disapproval. It’s notification.
REP. TINIO. For purposes of review by the commission.
REP. TINIO. So, you know, every merger over one billion will
automatically have to be reviewed by the commission.
THE CHAIRMAN (SEN. AQUINO). Yes, notification. And then
they will determine—
REP. TINIO. And the commission does not automatically have
to act?
THE CHAIRMAN (REP. CUA). Yes, they do. The threshold is
actually a trigger, a filter so that it’s easy for the commission. Alangan
namang babantayan nila lahat ng nagme-merge. But it’s automatic na
lahat kayong above the trigger, you have to report to us before you
merge.
SEN. VILLAR. Not necessarily it’s bad.
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THE CHAIRMAN (REP. CUA). Not necessarily bad.
THE CHAIRMAN (SEN. AQUINO). Yes, not necessarily bad.
SEN. VILLAR. But what is the basis of one billion? How did you
determine one billion?
THE CHAIRMAN (SEN. AQUINO). One billion in Section 8 is
the initial threshold until the commission changes.
SEN. VILLAR. How did you determine one billion?
SEN. PIMENTEL. Wala, ma’am. Sila lang.
REP. TINIO. Let me just pursue the point. The purpose of this
section is to automatically mandate the commission to review mergers
over the notification threshold.
THE CHAIRMAN (SEN. AQUINO). No, no. That’s in the
notification area.
REP. TINIO. No, because it says, “To the extent that they are
above the threshold, the commission shall be subject to review by the
commission.”
THE CHAIRMAN (SEN. AQUINO). That’s why we are
challenging that and saying that the amount of the merger—the
commission can look into any merger if it does restrict competition in
the market. But the notification just makes it easier for them because
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there’s a presupposition that if you are that size, it will have an effect
on the market.
REP. TINIO. But what it says here is there shall be mandatory
review if above the threshold.
REP. TINIO. Or otherwise fall within other criteria. But there
are also other factors that could trigger a review.
REP. TINIO. Okay. So that actually addresses your concern
that a merger that may fall below that threshold may still be reviewed
based on this other criteria.
SEN. VILLAR. Maliit na nga ang one billion.
THE CHAIRMAN (SEN. AQUINO). So okay lang iyan.
SEN. VILLAR. Parang ang basa ko rito…/jbc
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SEN. VILLAR. …Parang ang basa ko dito, you notify at 1B. But
after 30 days wala namang sinabi iyong Commission, you go ahead
with the mergers.
THE COMMITTEE SECRETARY (SHENG-OLLADAS). [Off-
mike]
SEN. VILLAR. Oo. But if he doesn’t say anything, you can go
ahead with the merger.
REP. TINIO. Pero ang sinasabi rin dito, ma’am, pagka over 1B,
automatically kailangang i-review ng Commission.
SEN. VILLAR. No. Notify lang, notify.
REP. TINIO. No, no, no.
SEN. VILLAR. No. It says here, notification.
REP. TINIO. Shall be subject to review by the Commission.
SEN. VILLAR. No, wala.
THE CHAIRMAN (SEN. AQUINO). Sorry. Can we suspend for
a minute, please? Suspend muna tayo.
[THE MEETING WAS SUSPENDED AT 3:41 P.M.]/mpm
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THE CHAIRMAN (SEN. AQUINO). Mr. Chairman.
THE CHAIRMAN (SEN. AQUINO). Colleagues, we will
resume.
Okay. So just to recap our slight detour—hindi naman detour
into insanity, ‘di ba?—slight detour. There was some misconception
regarding two sections which we have synchronized and harmonized.
And just for the record, what we mean is that, the Commission
has the power to review all mergers and acquisitions and bar this if it
will substantially lessen competition in the market. That is clear. That
is a separate standard from the notification feature, which is basically,
if transaction is so large, in our case, one billion, or other criteria that
may be identified in the future, those companies need to notify the
Commission. And it doesn’t also necessarily mean that it’s bad. They
just need to notify, the Commission will review and will decide if that
has a potential harm to the market. Okay.
Now, that being said, it is important that we state the
power of the Commission to review mergers and acquisitions. So I
think Congress has a proposal already for our potential Section 16.
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Mr. Chairman.
THE CHAIRMAN (REP. CUA). Maybe, Mr. Chairman, as a
working language, may I try to articulate the proposal?
“The Commission shall have the power of review over
mergers and acquisitions…”
THE CHAIRMAN (SEN. AQUINO). We actually bought halu-
halo for everyone. But it will trickle in, so mauna na muna kami.
[Laughter] But it is going to trickle in because it will melt.
So please go on.
THE CHAIRMAN (REP. CUA). “…to determine whether…”
REP. TINIO. “…in order to protect fair competition,”
something like that.
THE CHAIRMAN (SEN. AQUINO). Yes, Mr. Chairman.
THE CHAIRMAN (SEN. AQUINO). And these powers are
already stated sa powers and functions.
Can we check—they are stated, ‘di ba? They are explicitly
stated?
130
Can we look at the powers and functions of the
Commission? And can we pinpoint the specific one that points to
mergers and acquisitions?
Can you search for mergers and acquisitions there?
Wala ano? Ayun—hindi. Wala. Baka we need to put that. Sige,
maybe we need to—
THE CHAIRMAN (REP. CUA). So “The Commission shall have
the power…/mjp
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CFDriz IX-2 June 4, 2015 4:00 p.m. 1
THE CHAIRMAN (REP. CUA). …the commission shall have the
power to review mergers and acquisitions, set notification thresholds--
require and set notification thresholds--and the last one is to--and
approve or disapprove--
THE CHAIRMAN (SEN. AQUINO). Or “approve” na lang.
THE CHAIRMAN (REP. CUA). “And approve proposed--”
THE CHAIRMAN (SEN. AQUINO). Or do you want to park this
muna and have them write it up first?
THE CHAIRMAN (REP. CUA). Yes, I think it’s best to have
them write it up.
THE CHAIRMAN (SEN. AQUINO). Okay, sige.
THE CHAIRMAN (REP. CUA). Basta, Mr. Chairman, those are
the three elements of that section.
REP. TINIO. Mr. Chair, will it be necessary to include
something on mergers and acquisitions in the powers and functions?
THE CHAIRMAN (SEN. AQUINO). I think so. Just to be clear.
Even though here it’s an implied power, maybe we need to--No, to be
frank, what we have is a listing of functions in the powers and
functions. More than powers. The powers are implied. Anyway, we
can tackle this later. Let’s park this first.
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CFDriz IX-2 June 4, 2015 4:00 p.m. 2
THE CHAIRMAN (REP. CUA). Can we move forward to the next
section, Mr. Chairman?
THE CHAIRMAN (SEN. AQUINO). Yes. All right.
What is the next one to tackle, Mr. Chairman? Is it section 12?
Ito muna, Section 21. Can we go to proposed Section 21,
currently called permissible mergers and acquisitions?
THE CHAIRMAN (SEN. AQUINO). So we started the
discussion on this in the last bicam. May I ask for some silence,
please.
So we talked about this in the previous bicam that this is not
actually permissible merger and acquisition. These are exemptions
from prohibited mergers and acquisitions. And I think the title created
some confusion. So our suggestion or our proposal is to push for the
Senate version which deletes (c) and (d), which are not prohibited
mergers and acquisitions. In fact, they are legal mergers and
acquisitions and then folds (e) into a provided. Just to compare the
two. So may I solicit the pleasure of the Congress panel?
REP. GUTIERREZ. Mr. Chair, if I may. As we stated during the
last bicameral conference meeting, Mr. Chair, our proposal is to retain
(c), (d) and (e). As you explained last time, these are substantially
similar wordings extracted from the Clayton Act of the United States.
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And even if we say that (c), (d) and (e) are already technically allowed
under our law, we would want that it would be clear that these are not
to be covered by the prohibition on certain types of mergers and
acquisitions. Just for the guidance of business entities, Mr. Chair.
THE CHAIRMAN (SEN. AQUINO). That’s the pleasure of the
Congress panel.
Mr. Chairman, in that case just to save us from further
confusion, I don’t think it should be in the listing because maybe we
can still have it somewhere but it’s not in the listing. Maybe as a
proviso just reminding us that these are not illegal. But by putting it
here, we are saying that they are prohibited mergers and acquisitions.
REP. RODRIGUEZ. These are exceptions. It’s not a violation of
this Act.
THE CHAIRMAN (SEN. AQUINO). We refer to Section 20
which are prohibited mergers and acquisitions. We adopted this
already, by the way. The previous section. “Mergers or acquisition
agreements that will prevent or substantially lessen competition in the
relevant market or in the market for goods and services as may be
determined by the commission shall be prohibited.” This is actually the
power. Ito iyong hinahanap natin. This is the power of the
commission. So we are saying ito iyong prohibited, Section 20. Now,
we are saying Section 21, what are the exemptions to that?
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So one, the concentration has brought about or is likely to bring
about the…inefficiencies that are greater than the effects of any
limitation on competition that result or likely to result from the merger
or acquisition.
Yes. A party to the merger or acquisition agreement is faced with
actual or eminent financial failure and the agreement represents the
least anti-competitive arrangement among the known alternative uses
for the failing entities’ assets. Yes. The acquisition of the stock or
other share capital of one or more corporations is solely for investment
and not using the same for voting or otherwise to bring about or in
attempting to bring about the substantial lessening of competition.
So the way it is stated, unlike (a) and (b), (a) and (b) clearly
points to a case which would have been prohibited but we are
exempting it. How is (c) prohibitive?
REP. RODRIGUEZ. Mr. Chairman, it shows that when there is
an act of acquisition of the stock or other capital solely for investment
and not using the same for voting, then precisely, that’s an exemption
to the prohibition on mergers and acquisitions that’s why--
SEN. VILLAR. Parang holding company ba ito? Parang holding
company? You acquire the stock for investment, not really to operate
the company, hindi ba?
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CFDriz IX-2 June 4, 2015 4:00 p.m. 5
REP. RODRIGUEZ. Yeah, this are also preferred stocks which
are not voting.
SEN. VILLAR. Okay.
THE CHAIRMAN (SEN. AQUINO). Okay. I think what you are
saying is if an agreement--No, because our wording is mergers and
acquisitions prohibited under Section 5 of this chapter may nonetheless
be exempt from prohibition. So buying a stock is not prohibited in
Section 5. Unless we are saying that--I think there’s a meaning that
you want to--
REP. GUTIERREZ. My understanding, Mr. Chair, is this.
Section 20 which is the Section 5 referred to here but approved as
Section 20 in our version, is a relatively broad definition. It simply
says that merger or acquisition agreements that will prevent or
substantially lessen competition in the relevant market shall be
prohibited. So to a large extent there is a huge amount of discretion
on the part of the commission to determine when a particular merger
or acquisition is bad for competition.
THE CHAIRMAN (SEN. AQUINO). Agree.
REP. GUTIERREZ. Our point is, now, with the proposed Section
21, we are creating certain badges, which if present in the nature of
the merger acquisition, then they should be exempted. In other
words, it’s a guide to the commission that if it’s for the purpose, let’s
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CFDriz IX-2 June 4, 2015 4:00 p.m. 6
say, of investment, then you cannot consider it as actually being in
restriction of competition. So it’s a clear set of guidelines that will
direct the commission in its determination of when a particular merger
acquisition can be considered as violative under Section 20.
THE CHAIRMAN (SEN. AQUINO). Senator Villar.
SEN. VILLAR. I think it’s a guideline that will lessen their work.
Iyong ide-determine muna iyong mga transaction na hindi naman
talaga anti-competition, hindi ba? Para madali na sa kanila. Lahat ng
ganun hindi na kasali iyon.
THE CHAIRMAN (SEN. AQUINO). Agree.
SEN. VILLAR. So we will enumerate those automatic conditions
para hindi na sila hirap.
THE CHAIRMAN (SEN. AQUINO). Okay, question.
So the previous section states that there are mergers and
acquisitions that prohibit competition. And these are prohibited. Now,
we’re saying we’re allowing certain mergers and acquisitions that
prohibit competition. And there are exemptions. Correct? So, let’s
say may nag-merge, pero it’s because one entity is failing. Even if it
lessens competition, okay lang. Okay, that’s what it means, right?
Now, what we’re saying here is that--So we’re saying…/cfd
137
THE CHAIRMAN (SEN. AQUINO). …so we’re saying, a
merger of two entities that will lessen competition is okay if it’s only
for investment. That’s basically what we’re saying. Right?
I’m not sure if that’s okay.
SEN. VILLAR. Usually, yung competition will result from
operating a company. But if you are a company buying just the
ownership, you’re not the one operating, control lang, you’re not
practicing unfair competition. Iyong company na binili mo, siya dapat
yung babantayan natin if—kasi operational company. Holding
company will not be practicing unfair competition. Holding lang sila,
they own the shares and stocks.
REP. RODRIGUEZ. Holding is… —Madam Senator. Tama
iyon, you are not voting. You are not getting—you take control of the
company to compete, mere investment lang.
SEN. VILLAR. Oo, mere investment.
REP. RODRIGUEZ. And then letter (b) is the holding company
or a transaction that will create a subsidiary.
SEN. VILLAR. Yes.
REP. RODRIGUEZ. That’s why—
SEN. VILLAR. You’re not operating. You’re not competing in
the market. You’re just an investor, hindi ba?
138
REP. RODRIGUEZ. That’s the point.
SEN. VILLAR. Ang kino-control natin, yung mga operating
company that are really competing in the market, hindi ba?
THE CHAIRMAN (SEN. AQUINO). Are we saying for Letter
(d), the subsidiary and the parent company are not operating in the
same market?
REP. RODRIGUEZ. Even in the same market because it will
have… [off-mike]
THE CHAIRMAN (SEN. AQUINO). The transaction is to form
a subsidiary. So we have one company with 40 percent market share
and we have another company with 30 percent market share, they
bought each other with the intention of making one a subsidiary, we’re
saying that’s allowed as a merger?
REP. RODRIGUEZ. We’re saying that these are lawful
businesses that they are doing. So that’s why it’s not in a—it does not
create unfair competition.
THE CHAIRMAN (SEN. AQUINO). No, but in that case,
Congressman, you will end up with a mother company and the
subsidiary with 70 percent of the market. That wouldn’t have been—
so in short, we wouldn’t have allowed it if they became one company
but we allowed it if they became a subsidiary.
139
SEN. VILLAR. Mr. Chairman, if you will investigate, you
investigate the subsidiary which is the operating company. Baka iyong
mother company is just the owner. It’s the company operating which
is practicing unfair competition.
THE CHAIRMAN (SEN. AQUINO). That’s why the
presupposition there, Senator, is that they are not operating in the
same market.
SEN. VILLAR. Yes.
THE CHAIRMAN (SEN. AQUINO). Okay. Meaning, a
holding company. That’s another matter. Because the way Letter (d)
is worded, you can have a subsidiary in the same market. You can
have a subsidiary in the same market or in the same business. So you
have a sub-brand or another company. Now, if I’m buying a
competitor and then we’re becoming one company, bawal. But if I’m
buying a company and make it my subsidiary, pwede.
Now, just take note that in anti-competitive agreement, we will
be defining single economic entity which says that subsidiaries are
under the same control. So there’s a contradiction here because either
they are not competitors, which is I think the wish of the panels
because they are single economic entities, subsidiaries and parent
companies, or—so meaning, they are considered one entity, then in a
140
transaction, they should be considered possibly detrimental to the
market.
THE CHAIRMAN (REP. CUA). Can we suspend?
THE CHAIRMAN (SEN. AQUINO). Yes, we may.
[THE MEETING WAS SUPENDED AT 4:14 P.M.]…/meln
141
THE CHAIRMAN (SEN. AQUINO). Mr. Chairman, the Senate
panel is okay for day three if ever it comes to that. But if your stamina
is strong, then our stamina is strong also.
SEN. VILLAR. By 6 o’clock, wala na tayong isip. We might as
well rest.
THE CHAIRMAN (SEN. AQUINO). Sige. Can we make that a
rule of thumb, 6 o’clock? Okay.
SEN. VILLAR. Oo.
THE CHAIRMAN (SEN. AQUINO). Maybe just to be fair rin to
ourselves and to the law.
SEN. VILLAR. Yeah.
THE CHAIRMAN (SEN. AQUINO). I think we can finish in one
and a half hours.
All right. Mr. Chairman, there is some compromise that we
have—
THE CHAIRMAN (REP. CUA). Yes, Mr. Chairman, if the Senate
panel will accept the proposal of the House panel, we are amenable to
deleting letter (d) and that somehow moving letter (c) as a proviso
under Section 20.
142
THE CHAIRMAN (SEN. AQUINO). Mr. Chairman, may I
suggest that we just accept the Senate version of Section 21? There is
the proviso.
THE CHAIRMAN (REP. CUA). Yeah. Kasi iyong (e) iyon iyong
proviso nila. So, it’s basically the same. Yes.
THE CHAIRMAN (SEN. AQUINO). So, w can accept Section
21? Then we now reopen Section 20.
SEN. VILLAR. I cannot find Section 21. Where is Section 21?
Okay. Let’s read.
THE CHAIRMAN (SEN. AQUINO). All right. Can we go to
Section 20? Mergers or Acquisitions. Merger or acquisition agreements
that will prevent or substantially lessen competition in the relevant
market or in the market for goods or services as may be determined
by the Commission shall be prohibited, provided, that the acquisition of
the stock or other share capital of one or more corporations is solely
for investment and not using the same for voting, control or otherwise
to bring about, or attempting to bring about the object or effect”—just
the “effect.” Ah, hindi na. Okay. “…to bring about substantially”—
THE CHAIRMAN (REP. CUA). “Bring about” is actually object,
hindi ba, or effect? Hindi.
143
THE CHAIRMAN (SEN. AQUINO). “To bring about the
prevention, restriction or distortion of competition in the market.”
REP. GUTIERREZ. “…is not prohibited.
THE CHAIRMAN (SEN. AQUINO). “…shall not be prohibited.”
SEN. VILLAR. “…or restriction of competition.”
THE CHAIRMAN (SEN. AQUINO). Oo. “… of competition in the
market shall not be prohibited.” Okay. And this saves the investments.
Okay. But to be clear, for the record, it is not for voting, control or
otherwise to bring about or attempting to bring about the distortion,
lessening or restriction of the market.
REP. GUTIERREZ. May we propose some grammatical
corrections, Mr. Chair?
REP. GUTIERREZ. “Provided that the acquisition of the stock or
other share capital for one or more corporations that is solely for
investment and not used for”—wala na iyong “the same”—not used for
voting, control or—
THE CHAIRMAN (SEN. AQUINO). “…exercising control”—
REP. GUITTEREZ. “…exercising control or to otherwise bring
about” or attempt to bring about the prevention, distortion or
restriction of competition in the market shall not be prohibited.”
144
THE CHAIRMAN (SEN. AQUINO). Okay. I accept, Mr.
Chairman.
THE CHAIRMAN (REP. CUA). I accept. Yes, can we put
“relevant in the market,” before “market?”
THE CHAIRMAN (SEN. AQUINO). Yes. We accept again, Mr.
Chairman.
And so, we have already accepted Section 21.
Can we move—
SEN. VILLAR. --20 iyon.
THE CHAIRMAN (REP. CUA). --20 and also 21.
SEN. VILLAR. Twenty iyon, then we go Section 21.
THE CHAIRMAN (SEN. AQUINO). Can we look at Section 20
again, please, one last look? “…or not to otherwise bring about and
not”—Okay, tama. “…for investment and not used for voting or
exercising control and not to otherwise bring about”—you can take out
the comma after “voting.”
Congressman Tinio…/rommel
145
THE CHAIRMAN (SEN. AQUINO). … Congressman Tinio, are
we okay with this line(?)?
THE CHAIRMAN (REP. CUA). Do you prefer having it here than
in the later section, Mr. Chairman? Because personally, I think it
looks better under the exemptions than a proviso under the
prohibition. I mean, it kinda looks awkward—
THE CHAIRMAN (SEN. AQUINO). Sa Provided, not in the
enumeration?
VOICE. Hindi kasi. The Proviso here is an exemption which is
the subsequent section.
REP. DEL ROSARIO. Parang it doesn’t look coherent but we
are willing to—whereas in the previous wording, nasa letter (c) siya.
Let’s just leave it that way.
THE CHAIRMAN (SEN. AQUINO). Yes, I understand. Can I just
confer with my colleagues here, one second?
[Parties conferring with each other]
THE CHAIRMAN (SEN. AQUINO). Yes, Mr. Chairman, actually
the proviso in Section 21 is also about shares. So we can add that as a
proviso before this proviso that we have in Section 21 because Section
21 refers to shares acquired prior to the act.
146
So we have a proviso on shares that’s not intended for control
and a proviso on shares acquired prior. So we agree to move it to
Section 21 as a proviso. So we can make the second one Provided
further or that can be the Provided further—Provided further, and then
to Section 21—at the end of Section 21.
SEN. VILLAR. So umikli na iyong prohibited merger and
acquisition.
THE CHAIRMAN (SEN. AQUINO). Then we put the exemptions
in Section 21.
SEN. VILLAR. In Section 21. Okay.
THE CHAIRMAN (SEN. AQUINO). Anyway, Mr. Chairman, we
have one-and-a-half hours to go. We can continue.
SEN. VILLAR. Humihina na ang ulo ko.
THE CHAIRMAN (SEN. AQUINO). Ako rin.
THE CHAIRMAN (SEN. AQUINO). Okay. I hope the halo-halo
is giving energy to everyone.
147
REP. TINIO. The wording probably could use some cleaning(?)
act.
REP. TINIO. Okay. Could we have the text of the—
THE CHAIRMAN (SEN. AQUINO). Down, down.
REP. TINIO. “Provided further that the acquisition of the stock
or other share capital of one or more corporations solely for
investment and not for voting or exercising control and not to
otherwise bring about.”
So there are two. Hindi “or.” It’s an “and.” “And not to otherwise
bring about or attempt to bring about the prevention, distortion or
restriction of competition in the relevant market shall not be
prohibited.”
So we take out the “shall not be prohibited.” Teka.
THE CHAIRMAN (SEN. AQUINO). We have to keep it.
REP. TINIO. So I suggest that we just remove—Let’s remove
“that is.”
VOICE. Before “solely.”
REP. TINIO. Yes. “That is solely for investment and not used for
voting or exercising control and—” I think it’s “and.” So there are two
conditions.
148
THE CHAIRMAN (SEN. AQUINO). Two conditions to make it
exempt. So it’s a stricter ano—not for strict(?) competition and not for
control. So “and” siya. All right.
Thank you, Mr. Chairman.
Just to review, we adopted Section 22. We are now at Section
23.
SEN. VILLAR. No. Basahin natin iyong Section—
THE CHAIRMAN (SEN. AQUINO). This is 21 po.
SEN. VILLAR. This is?
THE CHAIRMAN (SEN. AQUINO). Twenty-one.
SEN. VILLAR. Twenty-one iyong exemptions.
SEN. VILLAR. Pwede ba natin basahin iyong exemptions?
THE CHAIRMAN (SEN. AQUINO). We adopted the Senate
version po kasi.
SEN. VILLAR. Iyong Senate version is (a), (b).
THE CHAIRMAN (SEN. AQUINO). Yes, proviso and then we
added this new proviso that we are talking about.
SEN. VILLAR. (a), (b) lang?
THE CHAIRMAN (SEN. AQUINO). Yes, with the proviso.
THE CHAIRMAN (REP. CUA). (c) is the new proviso.
149
THE CHAIRMAN (SEN. AQUINO). Yes. Now, (a), (b)
“Provided.” Then, we added this new “Provided further” at the end. So
in the Senate version plus a new Proviso which came from letter (c) of
the House version.
Shall we move on? Okay.
Section 22, we have adopted.
Section 23 and let me explain. There might have been some
confusion to this section. But this is really what we call the “touch
move” provision otherwise known as the Gutierrez amendment which
basically says if the commission decides already on a case, they cannot
overturn themselves. And this is really for protection of the business
sector that they won’t be harassed. If a merger had already gone
through, hindi pwedeng palitan or balikan. However, in our previous
discussion because we were lobbying this with the House panel and
this is in the Senate version, we agreed to delete letter (b) and just
stick to letter (a). So may I suggest it reads as follows: “Mergers or
acquisition agreements that have received the favorable ruling from
the Commission, except when such ruling was obtained on the basis of
fraud or false material information, may not be challenged under this
Act.”
150
So we take out the prefatory—“may not be challenged under this
Act.”
What is material, Congressman Barry?
REP. GUTIERREZ. It relates to the substantial purpose for
which it was submitted.
THE CHAIRMAN (SEN. AQUINO). Is that a legal term?
[Parties conferring with each other]
THE CHAIRMAN (SEN. AQUINO). All right. Wala ring (a).
There is no letter (a) also.
VOICE. May we ask why (b) was taken out?
THE CHAIRMAN (REP. CUA). Mr. Chair, if I recall, iyong (b)
kasi creates an idea that the commission only has one year. Parang
after a year has passed, they cannot anymore go after a merger that
has been consummated. So it incentivizes firms or entities that are
about to merge to not notify the commission and wait for the one year
period to lapse. At least, it creates the idea, Mr. Chair.
REP. TINIO. But my understanding is that this applies to
mergers that fall below the notification threshold. Meaning, less than
one billion. Meaning, if we remove this, aren’t we taking away the
power of the commission to review such?
151
THE CHAIRMAN (SEN. AQUINO). We are taking away the
non-contestability of those. Because it says here if you’re below one
billion and one year has passed, the commission cannot review you. So
we took that away because we want the commission to be able to
review any merger that can affect the market negatively.
SEN. VILLAR. Ito lang pag nag-decide na sila, it cannot be
contested anymore.
SEN. VILLAR. When there’s falsehood.
THE CHAIRMAN (SEN. AQUINO). Except when there’s
falsehood.
Letter (b) actually does not limit. Initially, it limited the power of
the commission. So we expanded it again.
REP. ROMUALDO. Mr. Chair.
Just a thought with regard to the deletion of letter (b). Because
earlier, it was clarified that even those mergers or acquisitions that are
not subject to compulsory notification may be reviewed by the
commission. So, let’s say, two companies merged and they are not
subject to the notification requirement. And then, you know, a
substantial time, amount of time passes by and then suddenly the
commission would come in and say: “Actually, it turns out” … /ngdizon
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CMNERY I-3 June 4, 2015 4:40 p.m. 1
REP. ROMUALDO. …it turns out, let’s say, after five years
and six years. Your merger is actually anti-competitive.
Wouldn’t that be a bit unfair if we remove that non-contestable
provision?
THE CHAIRMAN (REP. CUA). Mr. Chair, if I may, we
subscribe to the comment of our topnotcher. Talaga naman he’s the
one we look up to. Kasi in the complexity of thresholds and
notification requirements, hindi lang naman iyan one billion. One
billion is how we define it today but the commission may adjust the
threshold and put different combinations and apply certain thresholds
for certain markets and industries, so magiging maraming threshold
iyan. Two large entities that will merge may one day claim na, “Hindi,
hindi kami pasok kasi there’s one criteria that we didn’t fall under,”
maybe it will be the subject of legal question whether or not they were
within the threshold to begin with.
Although we subscribe, I guess, maybe we can reconsider, Mr.
Chairman, so long as there is better wording. I think the language
right now is—
REP. ROMUALDO. Or, Mr. Chair, could it we—well, at least,
make it of record na we have a provision of statute of limitations, the
five-year—so would that be the applicable period of time to give those
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CMNERY I-3 June 4, 2015 4:40 p.m. 2
businessmen a comfort na, “Well, after five years, more or less, we’re
safe already.” Would that apply the situation?
REP. GUTIERREZ. I think that would be the case here because
even if we remove paragraph (b) in this particular section, the
limitation under the provision on statute of limitations will still apply.
So after five years from the merger, then that particular doors close
forever. In fact, that’s the purpose of statute of limitations to put a
reasonable limit on the timing within which actions can be brought.
Afterwhich, regardless of the illegality or legality of the merger, you
have to respect that it has actually already been perfected.
SEN. VILLAR. Mr. Chairman, I just want to clarify what our
Chairman from the House said that you can change that one billion
anytime. If it’s in the law, they cannot change it, ‘di ba?
THE CHAIRMAN (REP. CUA). Ma’am, we have wording that
expressly grants the commission the power to adjust the threshold.
SEN. VILLAR. Mayroon. Saan?
REP. GUTIERREZ. Page 34 po, Section 19, “Notification
threshold.” The approved Section 19.
THE CHAIRMAN (SEN. AQUINO). This was adopted in the
previous bicam.
SEN. VILLAR. Okay. I was not here.
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CMNERY I-3 June 4, 2015 4:40 p.m. 3
REP. RODRIGUEZ. Mr. Chairman, I would tend to support our
Senate Chairman because we cannot make any—there has been no
notification because it’s below one billion, how about if there is
undervaluation of the transaction and there has been no discovery
until some future time? So if we have something like this, then wala
na, that can pass already.
That is my fear that we are limiting the opportunity of the
commission to be able to correct and to make sure that they follow the
law. Because two transacting entities, they will undervalue the
document instead of one billion, it’s actually over one billion but they
undervalue the same. But later on, it is discovered by whistleblowers,
by others and it can be seen that really the transaction is worth one
billion and would require notification.
So that’s why I would tend to agree that in that particular
situation even it’s only for five years if it is not yet discovered, it
should really be again corrected.
THE CHAIRMAN (SEN. AQUINO). Which is why, Mr.
Chairman, we agreed to delete it.
So may I know the proposal of the panel?
SEN. VILLAR. [off-mike] Hindi, mayroon doon. If it is
fraudulent, then they can be questioned.
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CMNERY I-3 June 4, 2015 4:40 p.m. 4
THE CHAIRMAN (SEN. AQUINO). Okay. Thank you.
Any other concerns with Section 23? Can we move on?
THE CHAIRMAN (REP. CUA). Mr. Chairman, may I just
request the secretariat to find more suitable title?
THE CHAIRMAN (SEN. AQUINO). Non-contestable?
THE CHAIRMAN (REP. CUA). Because it’s like flip-flopping in.
We don’t really call the commission contesting its own action. So
parang it’s not applicable.
THE CHAIRMAN (SEN. AQUINO). Yes. Maybe we can ask
our lawyers for another phrase to describe the provision where the
commission cannot overturn itself. “Finality of decision.”
SEN. VILLAR. [Off-mike] Non-contestable Acts.
THE CHAIRMAN (SEN. AQUINO). “Finality of review
decision.”
Would that be acceptable, Mr. Chairman?
REP. RODRIGUEZ. Let’s say, we have a ruling from the
commission shall be final except when such ruling was obtained based
on false information.
SEN. VILLAR. [Off-mike] Dito tayo sa “Non-contestable Acts.”
Papalitan daw iyong “Non-contestable Acts” ng better wording.
REP. RODRIGUEZ. Finality of judgment.
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CMNERY I-3 June 4, 2015 4:40 p.m. 5
THE CHAIRMAN (SEN. AQUINO). Okay. On mergers and
acquisitions.
THE CHAIRMAN (SEN. AQUINO). “Finality of judgment on
review of mergers and acquisitions.”
REP. RODRIGUEZ. “Finality of judgment,” yes.
THE CHAIRMAN (SEN. AQUINO). “Acquisitions,” period.
“Decision” lang. “Finality of decision on review of mergers and
acquisitions.”
REP. RODRIGUEZ. Yeah, “Finality of decision.”
REP. TINIO. “Finality of decisions on mergers and acquisitions.”
Why, “review”?
THE CHAIRMAN (SEN. AQUINO). Okay. “Finality of
decisions on mergers and acquisitions.”
MR. RODRIGUEZ. The body used “ruling.” So “Finality of
rulings.”
THE CHAIRMAN (SEN. AQUINO). “Finality of rulings on
mergers and acquisitions.” Better.
Thank you.
THE CHAIRMAN (REP. CUA). Question, Mr. Chairman.
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CMNERY I-3 June 4, 2015 4:40 p.m. 6
THE CHAIRMAN (REP. CUA). The wording of letter (a), are
we to understand that unless there was fraud, the decision, the
approval for merger may not be challenged by the commission or any
other party?
THE CHAIRMAN (SEN. AQUINO). Yes. Or any other party.
THE CHAIRMAN (REP. CUA). Just to clarify.
REP. GUTIERREZ. Sorry, just to add to this discussion.
But I just recalled in the section on compulsory notification that
we approved, there is a provision that provides that if within the period
allotted by law, the commission fails to actually render a decision, the
merger or acquisition shall be considered approved.
REP. GUTIERREZ. Will that be covered under Section 23?
REP. GUTIERREZ. So if it lapsed in the approval, it’s covered.
THE CHAIRMAN (SEN. AQUINO). Yes. The commission
needs to do its job also.
Just to clarify, Congressman.
Chapter V, “Disposition of Cases.”
REP. RODRIGUEZ. With due indulgence, Mr. Chairman.
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REP. RODRIGUEZ. I just like to go back to the word “distort.”
Did we include “distort” in abuse of dominant position?
THE CHAIRMAN (SEN. AQUINO). Yes, we did.
REP. RODRIGUEZ. How do we define that?
Normally, in competition on dominant position, it’s really
restricting or preventing competition because if you put “distort—” I
have not seen a word “distort” on fair competition.
THE CHAIRMAN (SEN. AQUINO). In Competition Law,
specifically in EU standard, there is a definition of “distort” which is
largely accepted.
REP. RODRIGUEZ. What we really generally know is that it
prevents competition, then that’s it. Or restricting but distort. How
can a distortion of—that be a criminal—It’s difficult unless we have to
define “distortion,” that will lead to the power of the commission to
say, “It’s distorted.” What’s the meaning of distorted?
THE CHAIRMAN (REP. CUA). I join my colleague, Mr.
Chairman.
REP. RODRIGUEZ. Then it should be “prevent” or “restrict”.
“Prevent or restrict,” those are the words…/cmn
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REP. RODRIGUEZ. … prevent or restrict. Those are the words.
THE CHAIRMAN (REP. CUA). In the spirit of consistency, can
we just adopt another term that we have previously used.
THE CHAIRMAN (SEN. AQUINO). Can we check? Is that the
only time we used “distort” or have we used “distort” elsewhere?
Apart from this situation, have we used it? Can we check how many
times we used “distort”?
Ah, there, sa “Powers and Functions,” sir, may “distort.” I just
want to know what the jurisprudence definition is. But we can get
back to this, sir.
REP. RODRIGUEZ. You know, words like these that could give
extraordinary powers to the commission will likewise be a cause for
abuse by the commission, not by the entities.
THE CHAIRMAN (SEN. AQUINO). Yes, that’s true.
Sige ho. Can I just get the official new definition of “distort”?
We can get back to that?
REP. TINIO. Going back to the finality of rulings and the point
raised by Congressman Gutierrez, in cases where the commission fails
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to act within 30 days, then the merger comes into effect, and it
becomes legal and noncontestable.
REP. TINIO. Mr. Chair, isn’t there a danger that, you know, by
omission, the commission could just, you know, let a merger that could
be harmful to public interest, if we could just let that go?
THE CHAIRMAN (SEN. AQUINO). I have a question to my
esteemed colleagues, Mr. Chairman, or maybe XJ, who is the lawyer.
Can the commission give itself more time after 30 days?
THE CHAIRMAN (REP. CUA). Sa House version—
THE CHAIRMAN (SEN. AQUINO). No, no, no. On reviews of
mergers.
REP. GUTIERREZ. There’s an absolute limit that in no case
shall a total period for review exceed 90 days.
THE CHAIRMAN (SEN. AQUINO). So, it’s 90 days.
REP. GUTIERREZ. Yes.
THE CHAIRMAN (SEN. AQUINO). It’s not 30 days, ano. It’s
90 days.
REP. GUTIERREZ. It’s 30 days extendible another 60.
THE CHAIRMAN (SEN. AQUINO). Is there a proposal on the
floor, Mr. Congressman?
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REP. TINIO. Mr. Chair, could we have some discussion on this?
THE CHAIRMAN (SEN. AQUINO). Yes, yes.
REP. TINIO. Kasi ang concern ko nga, what if, you know, in
case of regulatory capture and then there’s a merger that would be
inimical to competition, and the commissioner disagrees, “Sige, huwag
na natin aksyunan ito dahil it will become noncontestible,” paano iyong
safeguard doon?
THE CHAIRMAN (SEN. AQUINO). Technically, it’s not an
omission because they allowed it, so they allowed a merger. They can
actively allow it; or by letting it lapse 90 days, they have allowed it,
and they’re subject to scrutiny based on that decision.
Now, the balance here is that you don’t want mergers and
acquisitions to last too long na puwede siyang i-disapprove. That’s the
balancing act/thing to do. But I am open to suggestions from the
Congress panel
REP. GUTIERREZ. I would like to think, Mr. Chair, that insofar
as safeguards are concerned, third parties, for example, who might be
aggrieved by a potential approval of an—otherwise by illegal merger
can file a case for mandamus before an appropriate court to compel
the commission to rule within the 90-day period, if they’re so inclined.
But I am wary of using theoretical regulatory capture as a basis
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because really, if we assume regulatory capture, we’re going to have a
tremendous amount of difficulty coming up with provisions here
because here, we assume that the commission will actually function in
the way that it is intended to function.
I agree. We can put in some minimum safeguards but we can’t
really absolutely cover each and every situation. And I agree that in
this particular case, we’re striking a balance between two
imperatives—a sufficient regulatory mechanism on one hand; and on
the other, a reasonable amount of time and a reasonable level of
stability insofar as the business sector is concerned.
THE CHAIRMAN (SEN. AQUINO). We will entertain proposals,
Congressman, but is 90 days too short? Maybe if it was stuck to 30,
that would have been really short, but if it’s extended to 90, that’s—
THE CHAIRMAN (REP. CUA). Mr. Chairman, I think that’s long
enough. Now, this has been the subject of discussions for maybe a
couple of weeks for the House Committee on Economic Affairs and
Trade, we used to have the same language as the Senate version. The
Senate version, 30 days, and then the commission may ask more
information and they will be granted another 30 days. But the danger
of that is that hindi definite or walang maximum time ang Senate. So,
the commission may give the entities a difficult time by keeping on
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asking several documents one after the other and prolonging the
process thereby costing a lot of money in terms of equity stock prices
for the firms.
THE CHAIRMAN (SEN. AQUINO). If I may add, Mr. Chairman,
the decisions of the commission can still be brought up to the Court of
Appeals, if I’m not mistaken, so there is a review process.
THE CHAIRMAN (REP. CUA). Which is my next question, Mr.
Chairman. I’m not a lawyer that’s why I was concerned about our new
wording na “finality.” Is that a legal term that the Supreme Court
might get angry at. Di ba, finality usually on decisions only belongs to
the Supreme Court? Or is that an acceptable term?
THE CHAIRMAN (SEN. AQUINO). Is that an acceptable term?
REP. RODRIGUEZ. Yes because the Supreme Court is not
ousted by jurisdiction, by laws like these, the Constitution provides for
a judicial review.
THE CHAIRMAN (SEN. AQUINO). All right. So, no problem.
May we continue with Chapter V? We promised to look at
“distort” so we will put that on the table and we will report that out.
Chapter V. Disposition of Cases. May I request that—I think the
congressmen have some modifications in this. May I know which
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sections were—because we adopted already Section 1. Are we
reopening Section 1—ah, sorry, Section 24?
REP. ROMUALDO. Mr. Chair, we would like to propose an
amendment.
THE CHAIRMAN (SEN. AQUINO). You are amending the
agreed already, Congressman?
REP. ROMUALDO. Yes. Section 24, paragraph (e), we would
like to propose to insert additional provision after the word “conduct.”
THE CHAIRMAN (SEN. AQUINO). (e).
REP. ROMUALDO. Yes, paragraph (e). Assess the totality of
evidence. And then we would like to insert after the word “Assess the
totality of evidence on whether it is more likely than not that the entity
has engaged in anti-competitive agreement or conduct.” And we
would propose to insert “including whether the entity’s conduct was
done with a reasonable commercial purpose or as a reasonable
commercial response to the market entry or conduct of a competitor.”
Mr. Chair, the origin of this proposal was in the chapter on abuse
of dominant position. And again, the House panel would like to make
available to entities who are accused of abuse of dominance to come
up with two, to be able to raise certain defenses such as those
mentioned earlier like closure, phasing out of a business, excess
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inventory… or refusing to sell to, you know, customers who do not or
are not credit worthy. I think those would constitute reasonable
commercial purpose and should be allowed.
REP. RODRIGUEZ. And should be enumerated likewise through
clear examples.
THE CHAIRMAN (SEN. AQUINO). Thank you, Congressman.
Do we also have amendment to this portion?
REP. RODRIGUEZ. Yes, yes. It will also include after
reasonable commercial purpose or response, we should put “such as
but not limited to phasing out of a product or closure of. . . (nam)
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REP. RODRIGUEZ. “…or closure of a business.” So give some
example. So shall not be considered as abuse of dominant position.
THE CHAIRMAN (SEN. AQUINO). That’s it?
THE CHAIRMAN (SEN. AQUINO). Sorry, sir, is this the right
place to put the “on the abuse of dominant position”? We have
another portion on that, market dominant position on Section 26.
Okay lang?
REP. RODRIGUEZ. Okay rin dito because it can be—
THE CHAIRMAN (SEN. AQUINO). Kasi conduct is general.
REP. RODRIGUEZ. Conduct, yes.
THE CHAIRMAN (SEN. AQUINO). Sir, I’m sorry, could you
please look at the board and tell us if there is something lacking?
REP. RODRIGUEZ. “…including whether the entity’s conduct
was done with reasonable commercial purpose or as response such as
but not limited to phasing out a product or closure of a business--”
REP. ROMUALDO. Mr. Chair, I would like to suggest the
replacing of the “such as” provision to put it after “purpose.” I think it
would better match “purpose” rather than “response.” Because
reasonable commercial response would be those situations where your
competitor does something and you would like to be able to counter
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your competitor. So “purpose--” the original wording for that was
“reasonable commercial justification” but I propose to change the word
“justification” to “purpose.” So I think that would apply more to
“purpose” rather than “response.”
THE CHAIRMAN (SEN. AQUINO). Could you kindly guide our
secretariat?
Maybe, Congressman, you can--as well as Congressman Rufus’
suggestion--you can guide the secretariat. As is na iyan?
REP. ROMUALDO. Tama na iyan.
THE CHAIRMAN (SEN. AQUINO). Okay. Is this your
proposal, Mr. Chairman?
THE CHAIRMAN (SEN. AQUINO). All right. We accept, Mr.
Chairman.
We’ve accepted Section 25, previously.
We are now at Section 26, Market Dominant Position.
REP. RODRIGUEZ. This is where we will be placing the “to
maintaining, increasing market share--” the one that we did not place
in one part.
THE CHAIRMAN (SEN. AQUINO). Yes. May I solicit a
proposal, Mr. Chairman?
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REP. RODRIGUEZ. Yes. I am looking at the page where that
is. Here. So my proposal is that on the market dominant, it will stay
here. It would say, “The acquiring—increasing, acquiring--” the words
of Senator Pimental—“the acquiring and maintaining and increasing
market share through means or manner not violative of this Act such
as but not limited to.” So we shall include that in the dominant
position, Section 26, Page 40. Include a paragraph here that would—
after the last sentence of Page 42. It will state that, “The commission
shall not consider the acquiring, maintaining and increasing of the
market share through means or manner not violative of the Act such
as but not limited to having superior skills, rendering superior service--
” are we there? Okay.
VOICE. Sir, pakiulit.
REP. RODRIGUEZ. Okay. “The commission shall not consider
the acquiring, maintaining and increasing of market share through
means or manner not violative of this Act such as but not limited to
having superior skills, rendering superior service, producing or
distributing quality products, having business acumen, and the
enjoyment and use of protected intellectual property rights as not
violations of this Act.”
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THE CHAIRMAN (SEN. AQUINO). Okay. May I make a
suggestion, sir?
THE CHAIRMAN (SEN. AQUINO). We repeated “as not
violations of this Act,” ‘no? So the first “as not,” can we instead say
after “manner”?
REP. RODRIGUEZ. “Manner,” yes.
THE CHAIRMAN (SEN. AQUINO). “Not substantially
preventing, restricting or distorting competition in the market.”
REP. RODRIGUEZ. “Not substantially preventing or restricting
competition.”
THE CHAIRMAN (SEN. AQUINO). “Competition in the
market.”
REP. RODRIGUEZ. Yes, “…in the market.”
THE CHAIRMAN (SEN. AQUINO). Let’s put “distorting” first
and then if we agree later to omnibusly take it out, we’ll take it out
omnibus.
REP. RODRIGUEZ. Yes, okay.
THE CHAIRMAN (SEN. AQUINO). But, initially, let’s put—oo,
pwede ninyo nang i-cut and paste iyang linyang iyan kasi that comes
out often. “Competition in the market such as but not limited to.”
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You can delete “violative of this Act” after “market.” Pwede ring
tanggalin iyong “in the market.” Okay, period in the end.
Is this the pleasure of the Congress panel?
Mr. Chairman?
THE CHAIRMAN (SEN. AQUINO). Maybe we can read it as in
toto, Mr. Chairman. Maybe we can read it for the record.
THE CHAIRMAN (REP. CUA). For the record, “The
commission shall not consider the acquiring, maintaining and
increasing of market share through means or manner not substantially
preventing or restricting or distorting competition such as but not
limited to having superior skills, rendering superior service, producing
or distributing quality products, having business acumen, and the
enjoyment and use of protected intellectual property rights as not
violations of this Act.”
THE CHAIRMAN (SEN. AQUINO). “Violative of this Act--”
“as not violative of this Act.”
THE CHAIRMAN (REP. CUA). “As violations of this Act.”
THE CHAIRMAN (SEN. AQUINO). “As not violative of this
Act.”
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THE CHAIRMAN (REP. CUA). “The commission shall not” so
“as violations or violative.” Walang “not” iyong sa baba.
THE CHAIRMAN (SEN. AQUINO). Tama, tama. “As violative
of this Act.” “Shall not consider violations of this Act,” tama.
All right. We accept, Mr. Chairman.
THE CHAIRMAN (SEN. AQUINO). This is Section 25, ‘no?
This is Section 26. All right.
Section 27 is Forbearance.
THE CHAIRMAN (REP. CUA). Before we move forward…/rjo
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THE CHAIRMAN (REP. CUA). ...Before we move forward, Mr.
Chairman, we would like to ask our colleague, Congressman
Romualdo, to expound on one more.
THE CHAIRMAN (SEN. AQUINO). This is forbearance?
THE CHAIRMAN (REP. CUA). No. Still...
THE CHAIRMAN (SEN. AQUINO). Still the same.
THE CHAIRMAN (REP. CUA). ...the same section, market
dominant position.
REP. ROMUALDO. Thank you, Mr. Chair.
With regard to determining whether an entity has dominance in a
market, the House enumerated several things to consider in
determining whether there is dominance. And we would propose that
they be included in Section 26, specifically structure of the market,
degree of integration, technological and financial advantages, and
other factors.
For a while lang, Mr. Chair. Let me just confer to where we can
insert those. Where we propose--
THE CHAIRMAN (SEN. AQUINO). This is in the enumeration
of the letters, no?
REP. ROMUALDO. Yes. Yes.
THE CHAIRMAN (SEN. AQUINO). Okay. We can just add it
maybe after letter (a), if this is all about the market. It is actually in
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the proviso already. Do you want to include that after end-users—
“access to end-users, integration of the market, technology and
financial resources”?
Section 26 pa po tayo.
THE CHAIRMAN (REP. CUA). Yes. Which part?
THE CHAIRMAN (SEN. AQUINO). May we know where you
wish to insert the provisions?
REP. ROMUALDO. Thank you, Mr. Chair.
We would like to insert only “degree of integration.” So we
would like to insert it after “structure of the relevant market.” “So in
such determination, the Commission would consider the structure of
the relevant market, degree of integration,” and then “access to end-
users” and then etcetera.
THE CHAIRMAN (REP. CUA). And, Mr. Chairman, second to
the last line--
THE CHAIRMAN (SEN. AQUINO). I am sorry, Mr. Chairman.
Congressman, could you check if it is correct what the secretariat
had put?
Section 26. Up. There, there, in the paragraph after (g).
Another paragraph after (g). Down. Iyan. Diyan.
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THE CHAIRMAN (REP. CUA). And, Mr. Chairman, further
down that paragraph, third to the last line. “Factors affecting the
control of an entity.” Is that supposed to be “control of a market” or
“control of an entity”?
THE CHAIRMAN (SEN. AQUINO). Market. Yes. Can we
kindly change “entity” to “market”?
THE CHAIRMAN (REP. CUA). “A market.” Not “an.”
THE CHAIRMAN (SEN. AQUINO). “A market,” not “an
market.”
Okay. May we accept Section 26, as amended?
THE CHAIRMAN (SEN. AQUINO). All right. Section 27. We
propose the Senate version. Forbearance.
REP. TINIO. Mr. Chair, just to clarify.
REP. TINIO. In that paragraph “in such determination the
Commission would consider the structure of the relevant market
access to degree of integration”—degree of integration, first of all, of
what? Of the market? Maybe that should be clarified, “access to end-
users, technology and financial resources and other factors affecting
the control of a market as provided in sub-sections A to G of this
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section. So the criteria are actually as enumerated in A to G. And the
paragraph is just restating them or are these additional criteria?
THE CHAIRMAN (SEN. AQUINO). That is a good question, Mr.
Chairman.
THE CHAIRMAN (SEN. AQUINO). Maybe you could answer
because this is your suggestion. Are they new criteria or are they—
They are the--parang the overarching factors or they are—These are —
parang aggravating and mitigating circumstances to A to G, basically.
This is how you understand. By the way this comes from the House
version. This is the House version. For example, if I am to assess
letter (c), the existence and power of its competitors, I will compare it
to the factors that are raised here. So to help me determine A to G, I
look at these factors. They are not factors themselves, they are
prevailing conditions, degree of integration, the structure. Am I right,
Congressman Tinio?
REP. TINIO. Well, if it is clear to you then--
THE CHAIRMAN (REP. CUA). If you review Section 6 of the
House version, those are enumerated as well in the House version in
Section 6.
REP. TINIO. Along with A to G.
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THE CHAIRMAN (REP. CUA). No, the A to G can only be found
in the Senate version.
REP. TINIO. Why don’t we just fully enumerate all the factors
in A to G? So in other words, magdagdag tayo ng H, I, J to include all
of them.
REP. ROMUALDO. Mr. Chair, those factors there in that
provision are not exactly of the same level as those enumerated from
A to G. I think the intention is to consider them when you consider A
to G. I don’t like that.
REP. TINIO. Okay. Sige.
THE CHAIRMAN (SEN. AQUINO). All right. May I suggest we
accept the Senate version for forbearance?
THE CHAIRMAN (REP. CUA). Yes, Mr. Chairman, we are
willing to consider. I just would like to bring up that in the House
version.../smv
177
THE CHAIRMAN (REP. CUA). …in the House version, the
forbearance can only be given for a limited time. And may I further
bring up about a concept that forbearance is not really applied to an
entity, but perhaps to agreements or conduct of entities. Hindi ba,
parang—
THE CHAIRMAN (SEN. AQUINO). Actually, it may even be
applied to an industry, not to an entity per se. Like, there is
forbearance in the, you know, IT industry. It’s not even necessary to
an entity, it’s even to an industry.
Mr. Chairman, we’re happy to accept the, “for a limited time,” if
you so wish. Honestly, I think it’s quite similar. It’s just that our
forbearance, I think, is more clearly stated.
Well maybe, first, Mr. Chairman, we can agree on the version
that we are talking about. So I’m suggesting we amend the Senate
version, if that’s okay, with some of the concepts found in the
Congress version.
THE CHAIRMAN (REP. CUA). Sure.
THE CHAIRMAN (SEN. AQUINO). So firstly, may I suggest we
can say, “Any entity or group of entities may request to be exempted.”
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And then second paragraph, “The Commission may forbear from
applying the provisions of this Act, for a limited time, in whole or in
part,” etcetera, etcetera.
Okay. And then I think ours has other elements like, making it
public, and conditions may be attached also to the forbearance so that
it’s not set in stone.
THE CHAIRMAN (REP. CUA). So iyong “entity” will be
changed to “entity and—”?
THE CHAIRMAN (SEN. AQUINO). Or. “Or group of entities.”
THE CHAIRMAN (REP. CUA). Omnibus for the entire section?
THE CHAIRMAN (SEN. AQUINO). Yes. I don’t think they’re
mentioned again, Mr. Chairman.
THE CHAIRMAN (REP. CUA). Second paragraph—
THE CHAIRMAN (SEN. AQUINO). “On an entity or group of
entities,” second paragraph.
THE CHAIRMAN (REP. CUA). Letter (c), it should be (b).
THE CHAIRMAN (SEN. AQUINO). Yeah. “Or group of
entities.” And then letter (c) should be (b), “where the entity or group
of entities.”
Okay. That’s it.
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REP. DEL ROSARIO. Mr. Chairman, just for consistency, the
first paragraph on page 43, sorry.
THE CHAIRMAN (SEN. AQUINO). Uh-huh.
REP. DEL ROSARIO. First paragraph of 43, you shifted “to
party or parties.”
THE CHAIRMAN (SEN. AQUINO). Okay. “Entity or group of
entities,” instead of “party or parties.”
Thank you, Congressman.
The second to the last paragraph. Iyan.
“The Request for Forbearance.” “Relevant entity,” or “group of
entities?”
Okay. That’s it, Mr. Chairman.
REP. ROMUALDO. Mr. Chairman.
REP. ROMUALDO. Mr. Chair, we would like to propose
additional amendment with regard to public hearing.
Considering that the request for forbearance and the
commission’s order shall be made public, we would propose also that
the public hearing itself should be made public. So we propose to
change the word “may,” “A public hearing may be held,” to “A public
hearing shall be held.”
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“A public hearing shall be held…
REP. ROMUALDO. Yes, Mr. Chair.
THE CHAIRMAN (SEN. AQUINO). …to assist the commission.”
REP. ROMUALDO. Yes.
THE CHAIRMAN (SEN. AQUINO). Is that all, Mr.
Congressman?
REP. ROMUALDO. Yes, Mr. Chair.
Thank you.
THE CHAIRMAN (SEN. AQUINO). Mr. Chairman, shall we
accept this provision as amended?
Okay. We now go to our next chapter, Chapter VI, Fines and
Penalties.
This is one of those chapters where there is a huge disagreement
between the modality used for determining fines and penalties. So on
our end, may I ask Senator Villar to start the discussion?
SEN. VILLAR. We want fixed because in the Philippines, it’s
only the public company which are declaring their sales legitimately.
So if the sales, the turnover, will be the basis of our fine, then it will be
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detrimental to the companies which are declaring their right sales.
And it will benefit those which are not declaring their turnover well. So
parang punitive(?) pa doon sa mga nagdi-declare ng tama. So I would
suggest that we do it on a fixed amount para wala tayong—parang we
are punishing those who are declaring the right turnover, and we are
giving benefit to those who are not declaring the right turnover.
THE CHAIRMAN (REP. CUA). Mr. Chair, Senator Villar, the
reason why we proposed percent of turnover, of course we appreciate
your practical advice as it is truly a challenge—
SEN. VILLAR. That’s the real thing in the Philippines.
THE CHAIRMAN (REP. CUA). Yes, ma’am. But the version of
the House is based upon relevant markets. And the advantage of
having percentages is when it comes to, let’s say, sari-sari stores in a
village or maybe mall owners that dominate certain cluster of
provinces, not really nationwide, the penalty will apply based on their
turnover in the relevant market. That’s the more—
SEN. VILLAR. How will you determine the turnover?
THE CHAIRMAN (REP. CUA). Well, that’s—
SEN. VILLAR. I mean, that would be a source of argument
because if they’re not declaring it in their income tax return, how will
you know?
182
So that would be a very big disagreement.
THE CHAIRMAN (REP. CUA). Well, I would assume—
SEN. VILLAR. Because in the Philippines, it’s only the public
companies which are declaring the right sales. The others, the
privately-owned, they really don’t declare. So what will be the basis of
the percentage? So it’s a big argument. What would be the basis of
the percentage? So it will be really something that it is very hard to
determine in the Philippines. And that’s the reality in the Philippines,
and for that matter, all developing countries. Siguro sa States puwede
iyon kasi you have to declare everything, but not here. Ang nagdi-
declare lang dito ng tama, public company. Then you will argue what
will be the basis of the percentage. And that will be a long argument.
Whereas, if you have a fixed amount, then there’s no argument. It’s a
fixed amount.
THE CHAIRMAN (REP. CUA). We cannot dispute, ma’am, that
it is really more practical. Your proposal is really easier and more
practical. But in the proposal of the House…cbg
183
THE CHAIRMAN (REP. CUA). …But in the proposal of the
House, it’s not impossible. Yes, it is, mahirap nga po talagang
malaman iyong totoong amounts.
SEN. VILLAR. What will be the basis?
THE CHAIRMAN (REP. CUA). The wording is the audited
financial statements.
SEN. VILLAR. Audited financial statements. But the audited
financial statements of private companies, you’ll be surprised, they’re
so small. And then parang pine-penalize mo iyong nagsasabi ng totoo
pagkatapos iyong mga hindi nagsasabi ng totoo, better sa inyo, which
is not good practice in our system. Unfair, that’s very unfair, hindi ba?
REP. ROMUALDO. Mr. Chair, just to add to the discussion, I
think the fines would come in after a full-blown investigation has been
conducted by the commission. And, perhaps, during that investigation,
the commission would be able to obtain the pertinent information to
determine the exact turnover of companies, certain companies.
So, perhaps, that factor, the factor that fines would come after
an investigation, after gathering all the necessary documents,
perhaps, that would be enough to really determine the specific
turnover of an entity who has found to have violated the Competition
Law.
184
SEN. VILLAR. Do you mean that the commission will be the
one to determine the sales of a company and not the company? There
will be no legal basis on the sales of the company if we will say that
it’s not according to the financial statement but it will be according to
the personal determination of the commission. That would be the role.
REP. ROMUALDO. Although the House version states that the
total turnover would be based on the audited statements of the
preceding year, perhaps, that could be something that we could
change or modify.
SEN. VILLAR. Kapag audited iyan in a private company, I’m
telling you, that’s not true. In practice, that’s not true. That would be
very unfair for those declaring and those not declaring kasi audited
financial statement. You’ll be surprised about the audited financial
statements of non-public companies, they will be so small.
REP. GUTIERREZ. Mr. Chair, one possible adjustment to the
language in the House version would be to peg the percentage not on
the total turnover based on the entities audited statements, but on the
entities total turnover as may be determined by the commission, as
the suggestion of Congressman Romualdo would indicate.
185
So in other words, the commission will also conduct the
determination of the total turnover based on the evidence that it can
actually obtain through subpoenaes.
SEN. VILLAR. Bakit ayaw niyo ng fixed para pare-pareho, fair
para wala ng ano? Kasi subject to determination of the commission,
everybody might disagree, hindi ba, and it will be a source of
controversy. Whereas if it is fixed, then—
REP. ROMUALDO. Well, Mr. Chair, during our deliberations,
there was a debate also in the House on whether it should be fixed or
based on a percentage. And I recall that the reason why the
committee decided to make it based on a percentage was because—
SEN. VILLAR. There are companies which have big turnover
pero ang profitability, small like iyong mga retailing. Mayroon namang
companies na maliit ang turnover pero bigger ang margin. So hindi mo
rin naka-catch iyong ganoong ano kung turnover lang ang basis mo,
hindi ba? Kasi iba-iba ang companies.
Like retailing, malaki ang turnover niyan, lalo na ang
supermarket, pero maliit ang profitability niyan. Mayroon namang
maliit ang turnover pero malaki ang profit margin. So unfair din, hindi
pa rin fair iyon. And then mayroong mga public company that they
declare all their sales and mayroong mga private company, you’ll be
186
ano—Kaya nga ang sinasabi nila iyong mga nasa Forbes Park na
private company, naka-Forbes Park pero dini-declare na income,
300,000 a year, hindi ba?
So that’s so unfair, hindi ba? So that will be very relative. Ako, I
would go for fixed na lang. Para fair to everybody, I mean, you should
consider that considering the practice in the Philippines kasi we’re
different. [Off the record]
THE CHAIRMAN (SEN. AQUINO). [Laughter] Strike from the
record.
REP. DEL ROSARIO. Mr. Chairman, may we hear somebody—I
think ComSec might have the data.
May we get a comparison with regard to this penalty scheme as
stated in the House version as compared to other countries in the
region?
THE CHAIRMAN (SEN. AQUINO). Indonesia, iyong mga ka-
level natin.
THE COMMITTEE SECRETARY (MS. ALLADAS). Yes. Mr.
Chairman, in Singapore—
THE CHAIRMAN (SEN. AQUINO). Vietnam and Indonesia.
THE COMMITTEE SECRETARY (MS. ALLADAS). Yes.
VOICE. Vietnam and Singapore na lang.
187
SEN. VILLAR. Vietnam. Hindi tayo Malaysia.
THE COMMITTEE SECRETARY (MS. ALLADAS). Okay. So
Singapore, it’s 10 percent of the—
SEN. VILLAR. No. Singapore.
VOICE. No, Malaysia and Indonesia.
THE COMMITTEE SECRETARY (MS. ALLADAS). Malaysia,
financial penalty not exceeding 10 percent of the worldwide turn—
THE CHAIRMAN (REP. CUA). Vietnam.
THE CHAIRMAN (SEN. AQUINO). Indonesia, Vietnam
THE CHAIRMAN (REP. CUA). Indonesia, Vietnam.
THE COMMITTEE SECRETARY (MS. ALLADAS). Vietnam,
financial penalty of 10 percent of the total turnover of the organization
for the preceding financial year. And Indonesia, financial penalty in
the amount of a minimum of rupiah one billion to a maximum of
rupiah 25 billion.
THE CHAIRMAN (SEN. AQUINO). May I know kung ano
iyong conversion nuon to pesos, rupiah? Just for our benefit lang.
VOICE. Almost one is to one.
THE CHAIRMAN (SEN. AQUINO). No. [Laughter] One is to
one, hindi naman.
So how much was the minimum, one billion?
188
I’m sure my Google naman tayo dito, hindi ba? Paki-Google
iyong exact kasi nagbobolahan tayo sa ano.
One billion rupiah is how many pesos? One billion Indonesian
rupiah is how many pesos?
Mababa, three million pesos lang iyon.
SEN. VILLAR. See, pareho lang tayo ng Indonesia.
[Informal Discussion] /jbc
189
[INFORMAL DISCUSSION]
THE CHAIRMAN (SEN. AQUINO). Mr. Chairman, we are trying
to have suspension, maybe we can just wrap up for today.
Mr. Chairman, can we resume?
THE CHAIRMAN (REP. CUA). Yes, Mr. Chairman.
THE CHAIRMAN (SEN. AQUINO). Mr. Chairman, just to put
on the record, we are currently under the chapter on fines and
penalties. There seems to be a disagreement which we are working
out so we hope to be able to finalize this by tomorrow. And in the
interest of endurance, we are going to call for a third day of this bicam,
also because we know how important this bill is so we don’t want the
members of the panel so tired that things miss out or that we just tend
to agree on all things.
So we are proposing, Mr. Chairman, to suspend the proceedings
and reconvene again tomorrow at noontime.
REP. TINIO. Mr. Chair, before the Committee act, can I raise a
point, Mr. Chair?
THE CHAIRMAN (SEN. AQUINO). Of course.
THE CHAIRMAN (REP. CUA). If you don’t mind, Mr. Chair,
we’ll just iron out a few details that need to be sorted out.
190
REP. TINIO. Mr. Chair, with the indulgence of both committees
just to go back to Section 26 on forbearance.
THE CHAIRMAN (SEN. AQUINO). Section 27?
REP. TINIO. Yes, Section 27. Personally, I don’t think it’s good
for this competition law to be giving the Commission such a broad
power to exempt even whole industries, it was mentioned, from this
law.
REP. TINIO. And my understanding of forbearance based on
some of my readings is that, for instance, in the case of the net
neutrality decision in the United States when the Federal
Communications Commission ruled in favor of net neutrality by
declaring the broadband services to be utilities, public utilities. The
FCC said that, “Yes, they’re utilities but we will exercise forbearance.”
Meaning, the host of regulations that come with being a utility will not
be applied wholly to the broadband providers.
So that my understanding of forbearance is that the Commission
taking it upon itself not to apply certain laws and regulations in the
interest of promoting competition.
In our case, it’s granting of exemptions which is different and
which could be dangerous, Mr. Chair.
191
THE CHAIRMAN (SEN. AQUINO). Mr. Chairman.
REP. TINIO. In other words, I kind of agree basically with the
position of the DOJ on forbearance.
THE CHAIRMAN (SEN. AQUINO). What is the position of the
DOJ on forbearance? Can we have that stated into the record? They
are not against it, hindi ba?
REP. TINIO. Based on the letter addressed to you…
THE CHAIRMAN (SEN. AQUINO). They don’t want to delete,
hindi ba? They have a version.
REP. TINIO. No. They want to delete it yata.
THE CHAIRMAN (SEN. AQUINO). Delete ba? No. They
submitted, sir, a new wording, actually, later on.
REP. TINIO. Okay. But anyway, Mr. Chair, I hope that the
bicam can reconsider forbearance. If not, I am just putting my
position on the record.
THE CHAIRMAN (SEN. AQUINO). Are you proposing to delete
the whole section or to amend the section to be more clear about what
can be forbore?
REP. TINIO. Perhaps an amendment which would state that
forbearance applies to the Commission that it can choose not to apply
certain aspects of the law in the interest of promoting competition.
192
REP. TINIO. It’s not about granting exemptions to entities.
THE CHAIRMAN (SEN. AQUINO). All right. I am quite happy
with that suggestion, Mr. Chairman.
Congressman, if you wish to tackle it right now—it’s one
section—we can tackle it right now. And I know you won’t be here
tomorrow. So we should tackle it already.
REP. TINIO. All right, Mr. Chairman.
THE CHAIRMAN (SEN. AQUINO). Can we take a look at the
approved text for forbearance so we can add to it or delete it to make
it more strict?
Well, we do have consumer interest as a condition.
Policy objectives. Can we look at the policy objectives?
“The Commission may forbear from applying the provisions of
this Act for a limited time, in whole or in part, in all or specific cases on
an entity or group of entity, if it needs dissemination”—Sorry—
“Enforcement is not necessary to the attainment of the policy
objectives of this Act.”
So this is for new industries.
REP. TINIO. Yes.
193
THE CHAIRMAN (SEN. AQUINO). Forbearance will not impede
competition in markets.
Are these conditions? These are conditions, ‘no?
REP. TINIO. So, Mr. Chair, I suggest that we delete the
request—that any entity may request to be exempted. So the
Commission may forbear.
REP. TINIO. It’s within their power. In other words, the
purpose of this is to make it clear that they are not obligated to
enforce the letter of the law in all situations.
THE CHAIRMAN (SEN. AQUINO). Yes. So are you proposing
we delete the first paragraph?
REP. TINIO. Yes. Because this is not a matter of, you know,
application and lobbying that certain groups be exempted.
MR. GUTIERREZ. Mr. Chair.
MR. GUTIERREZ. Mr. Chair, well, I am not really disagreeing
with the proposal of Congressman Tinio but I just like to point out that
even if we delete it, nothing will prevent a firm from writing to the
194
Commission and asking or pointing out that they belong to an industry
which should actually avail of forbearance.
In other words, even if we take away the former notation(?) that
a firm can write, they can always do so. I mean, there is no law
against it.
THE CHAIRMAN (SEN. AQUINO). I am also not against taking
it out but that is also quite true and sometimes there is a new industry
that the Commission does not know anything about. For example, if
we suddenly had a burgeoning animation industry in the Philippines, so
they need to make themselves known to the Commission. But we can
take it out because it won’t seem like a formal request. But maybe as
a counterproposal, we can just make the (a) (b)—we can add a (c) and
a (d) which will be even more strict like it will not harm consumers,
something like that. So that it won’t be given loosely or it’s only for
industries which are—I don’t know—which have a public interest, this
leads to a public interest, will not harm consumers. Maybe that might
be another alternative, Congressman.
REP. TINIO. Well, I think the value of deleting the first
sentence, “Any entity may request,” is that it kind of gives the
impression that, you know, well, anyone can apply.
195
THE CHAIRMAN (SEN. AQUINO). I am okay to delete it, Mr.
Chairman, if that is the proposal.
THE CHAIRMAN (REP. CUA). [Off-mike] How will it appear?
THE CHAIRMAN (SEN. AQUINO). No, they will just delete the
first one, then I will add a letter (c) maybe to—
REP. TINIO. It will start with “The Commission may forbear
from applying”—
THE CHAIRMAN (SEN. AQUINO). Is “may forbear” the right
English language—“may forbear from applying”?
VOICE. Yes.
THE CHAIRMAN (SEN. AQUINO). Maybe letter (c)—we can
add letter (c), forbearance will not harm the consumers or—
Forbearance is consistent with the public interest.
Can we put that in letter (c)? Would you want stronger
language, benefit of the consumer?
Forbearance is consistent with the public interest and the benefit
of consumers—the welfare and will benefit…/mpm
196
THE CHAIRMAN (SEN. AQUINO). “…and will benefit—is
consistent with the public interest and the benefit and welfare of the
consumers.”
That is also the DOJ suggestion, if I am not mistaken.
Yes. I am very happy with this actually. It’s an improvement.
THE CHAIRMAN (SEN. AQUINO). Okay. So proposed and so
accepted.
Thank you.
All right. Just going back, we are actually almost finished. We
just have the chapter on fines and penalties, the section on anti-
competitive agreement. The explanation of distortion which we have—
REP. RODRIGUEZ. Yeah. Because we—
THE CHAIRMAN (SEN. AQUINO). Are we ready to explain
distortion?
REP. RODRIGUEZ. Yeah. So that we can finish with abuse of
the dominant position.
THE CHAIRMAN (SEN. AQUINO). Yeah. Mr. Chairman, can
we—Yes, distort.
Can we have the explanation of distort so we can agree to either
accept it or delete it?
197
Yes, Professor Abrenica.
MS. ABRENICA. Thank you, Mr. Chair.
Sa EU jurisprudence—EU law, not jurisprudence, specifically
Article 3(g) of the European Commission Treaty, it defines “distortion
of competition” as “changing the conditions of competition artificially to
favor the infringer and to the detriment of a third party.” So, ang
example po dito is state subsidy for a particular firm that may not
necessarily prevent competition or lessen competition but will favor or
distort competition in favor of one entity.
In the case of violation of competition law, some examples that I
found—one of them is, supposed you have one manufacturer and
several retailers. One retailer is owned by the manufacturer. The
manufacturer requires all retailers to submit to him the names of the
customers to whom they sell their product. As a result, the retailer
owned by the manufacturer is favored because he is able to learn as
well the information about the customers of the other retailers to
whom it competes. So the competition in the retailing business is not
necessarily prevented nor lessened but it favored—but it becomes
distorted because it favored the retailer which is owned by the
manufacturer.
198
REP. RODRIGUEZ. Mr. Chairman, these are all covered
already with the restricting competition. Your language in the Senate
has “to prevent, restrict and lessening.” So unless it was removed
because precisely, restricting is already lessening. This kind of
examples are very difficult—you know, I don’t think even the entities
to be regulated would be able to know really what is distorting, what is
the effect of that. I think let us stick to what we have, which is really
just on—it already covers everything.
Because the dictionary says that distortion is just really twisting
it out from the true meaning. It’s not really more about fair
competition. So it is not very well-known in the field of competition
law.
THE CHAIRMAN (SEN. AQUINO). Mr. Chairman, on the
contrary, I think this is from a glossary of the OECD.
MS. ABRENICA. Sir, it is not in the glossary. It is mismo in
the European Commission Treaty, Article 3(g).
MS. ABRENICA. So it is in the treaty itself. And the standard
that is being used by the European Union is “prevention, restriction or
distortion of competition.”
199
MS. ABRENICA. So it covers all three—
REP. RODRIGUEZ. These are very advanced already. The EU
has already advanced competition, we are just starting, Mr. Chair. We
don’t want to give that kind of, you know, an interpretation by the
commission that will unduly also restrict our businesses and being able
to operate.
MS. ABRENICA. Sir.
THE CHAIRMAN (SEN. AQUINO). Mr. Chairman, if I may
just add. I think, the cases of distortion, much like lessening and
restricting competition are largely accepted in jurisprudence, firstly.
And secondly, the cases that Professor Abrenica had mentioned seem
to be truly detrimental to your consumers so I am just afraid that we
will miss out on an aspect of competition law that may actually help
our consumers in the long run.
So, for example, may I ask, Professor?
Is there a distortion that is good for the consumer or a distortion
that eventually leads to the benefit of consumers?
MS. ABRENICA. If we are talking about distortion of
competition, then there is none. Because “distorting” means you are
causing the balance or the stock of odds in favor of one group which is
the opposite of making it fair.
200
THE CHAIRMAN (SEN. AQUINO). Okay. I have a question.
Isn’t this closer to an unfair trade practice? Because we said unfair
trade practices is not part of the scope of the—isn’t that more like an
unfair trade practice?
MS. ABRENICA. It is not just that. It could be borne out of
the behavior of a company. So like my example, a manufacturer
imposes conditions on its retailers. So it’s a buyer-supplier
relationship. So it is not unfair trade practice in the list enumerated.
But it is really a behavior and it would be an abuse of the dominant
position in that case.
Because we accepted the other distortions but we are talking
about this particular distortion, obviously, if we were to take it out or
allow it, we mean the whole bill, not just on this particular provision.
REP. RODRIGUEZ. Yes. Because this is not yet in our
situation. This will breed more uncertainty and give more discretion to
the Philippine Competition Commission. It is already here, the
preventing, restricting. It lessens—if you want, you can put back
lessening competition. This is the word—the words of the Senate do
not have any distortion.
201
That is why we come here on the basis that we are going to
agree on the conflicting provisions. Your words here in anti-competitive
agreements is “preventing, restricting and lessening competition.”
Then we put up a new, “distortion” which has not been even been
studied in our Committee. So we are at a loss on…
SEN. VILLAR. Explain na lang in a layman’s language.
REP. RODRIGUEZ. And then, your abuse of competition, your
own—it only states “prevent or restrict.”
THE CHAIRMAN (REP. CUA). Mr. Chair.
I personally would tend to agree with our colleague that the less
terms which are synonymous or may be synonymous used, the clearer
the writing of the bill will be. Unless, of course, it is definitely a carve
out of the terms that we have already—it is a concept not yet covered
by the terms that we already used. But if it falls as a subset of one or
all of those terms, Mr. Chair, maybe we can consider.
THE CHAIRMAN (SEN. AQUINO). Well, on my right, that is
what the UP School of Economics says.
Maybe we can ask DOJ, who is here, if distortion is really another
legal term or is it the same as “lessen” and “restrict” and “prevent”?
Do you use distortion in your distortion of the market?
MS. BARROZA. In our submission, sir—
202
THE CHAIRMAN (SEN. AQUINO). Can you come to the—
Director Heiddi.
Do you use distortion?
MS. BARROZA. In our submission, sirs, we use that because
that is the exact standard used by the European Union, particularly
Articles 101, 102 of the Treaty of the Functioning of the European
Union.
THE CHAIRMAN (SEN. AQUINO). So what are used—
“prevent”?
MS. BARROZA. “Prevent, restrict or distort competition.”
THE CHAIRMAN (SEN. AQUINO). So it is not lessening.
MS. BARROZA. Actually, substantial lessening of the
competition is another standard that is used in the merger control.
So the European standard is “prevent, restrict or distort.”
MS. BARROZA. Restrict or distort competition.
THE CHAIRMAN (SEN. AQUINO). Okay. And have you been
using this in your DOJ-UFC?
MS. BARROZA. Actually, sir, we used that when we issued
our guidelines on enforcement of Competition Law, our Department
Circular No. 005, sir, which is published last May.
203
THE CHAIRMAN (SEN. AQUINO). And this is part of the rule
of reason, right?—the rule of reason, what the effect of the market is.
MS. BARROZA. Yes, sir. It is part of the rule of reason.
THE CHAIRMAN (SEN. AQUINO). The other thing we can
do—well, first of all, I don’t know if are you going to delete distort?
REP. RODRIGUEZ. These were never discussed in our
Committee.
In fact, that is why, in your version, there is no “distortion.” In
our version, there is also no “distortion.” What are we now trying to
reconcile? And that is why, we have to go into that and internalize
that. And I am afraid that if that word continues to be there, that can
create really much discretion because how can you describe it is
“distortion”?
“Distortion is twisting the true meaning of something.” Now, we
are not trying to distort any—distortion is more on wage(?) distortion
when you have the wages there. But in fair competition, it is not
because it is really more on prevention…/mjp
204
CFDriz IX-3 June 4, 2015 6:30 p.m. 1
REP. RODRIGUEZ. …more on prevention and restricting and
lessening competition. So that’s my fear. This kind of a word might
be giving a wide latitude and again will be a chilling effect to the
investors in this country.
THE CHAIRMAN (SEN. AQUINO). Well, maybe for the record,
let me just state that this is the first time we’re having a competition
policy so I accept that there are issues to be raised. But then again,
we don’t want to miss out on the advancements of other countries as
well and if distortion, as the DOJ had said and the UP School of
Economics had said, is a valid and accepted standard in terms of harm
to the competition in the market, then I think it’s incumbent upon us
to be able to include that considering that it’s a whole other realm of
actions or effects that we don’t want to happen.
So actually, Mr. Chairman, if you want, we can tackle this
tomorrow. To be frank, Congressman Rufus has very good points and
maybe we need to talk about it further or also sleep on it.
But for the record, let me just say I don’t want to miss out on
the opportunity that there is a valid realm of Competition Law that we
might be missing out in our creation of our landmark competition
policy.
THE CHAIRMAN (REP. CUA). Okay. Is it okay that we park
this issue? Okay. But before that, may I bring you to Section 4, page
205
CFDriz IX-3 June 4, 2015 6:30 p.m. 2
4 of the matrix. In the definition of “conduct,” may we propose the
insertion of one word so it will read, “Conduct refers to any type or
form of” and then insert the word “independent undertaking, collective
recommendation, concerted action or practice whether formal or
informal.”
THE CHAIRMAN (SEN. AQUINO). All right, we accept.
THE CHAIRMAN (SEN. AQUINO). All right. So can we
suspend--Yes.
THE CHAIRMAN (REP. CUA). May we suspend for a minute?
THE CHAIRMAN (REP. CUA). Mr. Chairman, before anything,
may I again correct the insertion of the word “independent” not before
“undertaking” but to be placed after “recommendation, independent or
concerted action.”
THE CHAIRMAN (SEN. AQUINO). Or “or independent
concerted action.” Okay.
THE CHAIRMAN (REP. CUA). To be consistent with the other
definitions.
206
CFDriz IX-3 June 4, 2015 6:30 p.m. 3
THE CHAIRMAN (SEN. AQUINO). All right. So this would be
the final amendment we will be accepting for tonight.
We thank everyone. On the part of the Senate panel, we
suspend and we shall meet again tomorrow at noon time.
THE CHAIRMAN (REP. CUA). On the part of the House panel,
we thank everybody and we suspend until tomorrow noon.
Thank you.
…/cfd
207

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Repu blic of t h e Ph ilippin es

CONGRESS OF THE PHILIPPINES

BICAMERAL CONFERENCE COMMITTEE

DATE : Thursday, June 4, 2015

TIME : 12:00 noon

VENUE : Committee Room No. 1, 2nd Floor

AGENDA : Disagreeing Provisions of Senate

HON. PAOLO BENIGNO “BAM” AQUINO IV - Chairman

HON. DAKILA CARLO E. CUA - Chairman

Dir. Heiddi Veneccia Barrozo - Department of Justice (DOJ)

Ms. Vina Vargas - O/S Aquino

Mr. Joey M.Tunac, MNSA - Committee Secretary

Ms. Norma G. Dizon - Committee Stenographer

Ms. Rasiele Rellosa - Office of Rep. Romualdo

HOUSE OF REPRESENTATIVES SECRETARIAT:

Ms. Jannalinna Alladas - Committee Secretary

(For complete list, please see attached Attendance Sheet.)

AT 12:40 P.M., HON. PAOLO BENIGNO “BAM”

THE CHAIRMAN (SEN. AQUINO). So we resume the

Bicameral Conference on both the Senate and House’s version on the

Congress for attending and making the trip here.

salient points and important points. And we wish everyone a healthy

THE CHAIRMAN (REP. CUA). Yes. Thank you, Senator Bam,

We likewise thank you for the sumptuous lunch that we had

which has energized us to be ready for the discussions on the parked

provisions and we hope as well that we finish it by today.

THE CHAIRMAN (SEN. AQUINO). We would like to reiterate

respective committee secretariats, the staff of the senators and

congressmen and officially designated experts on the matter.

So we request everyone else to please vacate the room.

All right. So, shall we begin?

I think the House has proposal for Section 3, “Scope and

THE CHAIRMAN (REP. CUA). Yes, Mr. Chairman, we propose

to combine the Senate and House versions and if possible to remove

the proviso on MSMEs.

THE CHAIRMAN (SEN. AQUINO). May we request that the

portion be read into the record?

THE CHAIRMAN (REP. CUA). “Scope and Application. – This

Act shall be enforceable against any person or entity engaged in any

trade, industry and commerce in the Republic of the Philippines. It

shall likewise 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.

“This Act shall not apply to the combinations or activities of

workers or employees nor 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.”

THE CHAIRMAN (SEN. AQUINO). So the proposal is to

small and medium-sized enterprises or MSMEs.”

May I know the reason for this deletion—for this proposal?

THE CHAIRMAN (REP. CUA). Mr. Chairman, members of the

to promote competition in all levels of the economy, so which is why

this is the proposal.

THE CHAIRMAN (SEN. AQUINO). For the benefit of my co-

So we are inclined to accept unless there are objections from my

Okay. We move on.

THE CHAIRMAN (REP. CUA). Thank you.