[ANALYSIS | Point of Law] Competition Commission: Hitting the ground running

In 2014, Republic Act No. 10667, otherwise known as the Philippine Competition Act (“PCA”), created the Philippine Competition Commission (“PCC”)  as the country’s competition authority tasked with ensuring  free competition in the marketplace. The PCA gave PCC broad powers to investigate, hear and decide any violation of the provisions of the PCA, which it may do so at its own instance, or upon a complaint by a third party. 

Should the PCC find that an entity has committed anti-competitive business practices by entering into anti-competitive agreements or abusing its dominant position, the PCC may, after due notice and hearing, impose administrative fines and issue orders of injunction, and even require divestment, and disgorgement of excess profits. This is without prejudice to the PCC’s power to file criminal cases, when applicable. 

Since its establishment in 2015, the PCC has wasted no time sinking its teeth into its role as competition authority. It has promulgated several rules to give more meat to the PCA, the most notable of which are the Merger Review Guidelines and Rules of Procedure governing administrative investigations for violation of the law. 

Crackdown

More importantly, it has cracked down on those it considers to be in violation of the PCA. 

For  example, in 2018, the PCC voided the transaction involving the acquisition of Dennis Uy-led Udenna Corp. of KGL Investment Cooperatief U.A. (KGLI Coop) and penalized both companies for their failure to comply with the compulsory notification of mergers and acquisitions required by the PCA.

Similarly, in the controversial acquisition between the two biggest Transportation Network Companies in the Philippines, Uber and Grab, the PCC exercised its motu proprio power of review. To allow it to conduct its review unhindered, the PCC issued interim measure orders for Uber and Grab to maintain pre-transaction conditions, particularly on pricing policies, rider promotions, driver incentives and service quality during the  course of the review.  

For Grab and Uber’s failure to comply with the interim measures, the PCC imposed a P16-million fine on them. The review remains pending due to various competition concerns over the transaction. 

Earlier this year, the PCC blocked the acquisition by the Universal Robina Corp. (URC) of the assets of Central Azucarera Don Pedro, Inc. (CADPI), its lone sugar milling competitor in Batangas. The PCC resolved that the acquisition by URC of the assets of the only other sugar miller in the province would inevitably result in a monopoly of the sugar milling business in the province to the detriment of sugar cane planters, and ultimately, the consumers. 

Very recently, or earlier this month, the PCC has decided its first case on abuse of dominance declaring that the imposition by a condominium developer of an exclusive internet service provider on its tenants was a clear case of anti-competitive behavior. The Urban Deca Homes Manila Condominium was declared to have abused its dominant position in the market for imposing a sole internet service provider on its tenants. Pursuant to the PCC’s resolution, the developer was thus ordered to “break” the exclusive deal with its in house internet service provider. 

The reach of the PCC’s jurisdiction is not limited to deals or transactions that are reported to it but also extends to any activity which it may perceive as harmful to a free and open market.

In fact,  the recent power outages in Metro Manila have likewise sparked the interest of the PCC as a  possible “collusion” between power generation companies to increase electricity prices.

Far from promised land

It has also publicly announced that it would assist the Department of Agriculture on alleged cold storage cartel in the onion industry. And to deter those who may be in violation of the law, the PCC has recently announced priority sectors for administrative investigations, which include basic commodities and services such as rice, pharmaceuticals, milk products, fertilizers, corn milling and trading, air and land transportation.

With just 4 years since its inauguration, the PCC has definitely hit the ground running, making significant strides towards the fulfillment of its creation, and there is no question that its actions have sent across a strong message to all businesses, both here and abroad, that it is serious in performing its mandate under the PCA.

A free and open market allows for a level playing field, allowing businesses to compete, expanding economic opportunities for both local and foreign players, and ultimately, improving overall consumer welfare.

But that said, we remain far from the Promised Land, where business both big and small are able to freely grow in a market that fosters competition, but the PCC’s significant and aggressive efforts towards achieving its mission are both valiant and promising. – Rappler.com

 

The author, a senior partner of ACCRALAW, is the vice president of the Management Association of the Philippines and a trustee of the Financial Executives Institute of the Philippines. The views in this column are exclusively his. He may be contacted at: francis.ed.lim@gmail.com.