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Competition watchdog to start imposing sanctions

Posted on July 15, 2017

THE PHILIPPINE Competition Commission will impose starting Aug. 9 penalties on entities found violating Republic Act No. 10667, or the Philippine Competition Act, after the two-year transitory period under that law will have lapsed by then.

Violators face administrative fines of up to P100 million for the first offense and P100 million-250 million for the second offense. BW FILE PHOTO
RA 10667, which took effect on August 8, 2015, was designed to promote and protect fair market competition in the country. That law aims, among others, to prevent economic concentration that will control production, distribution, trade and other commercial activities, thus stifling free market competition.

The law’s enactment led to formation of the Philippine Competition Commission (PCC), the quasi-judicial body entrusted with enforcement.

RA 10667’s Section 53 gave “affected parties time to renegotiate agreements or restructure their business to comply with the provisions of this Act”, saying that “an existing business structure, conduct, practice or any act that may be in violation of this Act shall be subject to the administrative, civil and criminal penalties prescribed... only if it is not cured or is continuing upon the expiration of two years after the effectivity of this Act.”

Speaking at a forum on Friday at the Kamuning Bakery Café in Quezon City, PCC Commissioner Stella Luz A. Quimbo reminded private firms, government-owned and -controlled corporations, and other entities that the reprieve for any violation ends on Aug. 8.

“So, kung meron silang mga (if these companies have) anti-competitive agreements at the time na naipasa ang batas, meron po silang (the law was enacted, they have) two years para i-rectify ang kanilang (to rectify their) conduct, hanggang (until) Aug. 8,” Ms. Quimbo said.

Pagdating po ng Aug. 9 ay pwede na silang patawan po ng penalties (We can impose penalties on violators starting Aug. 9).”

RA 10667 classified prohibited acts as either “anti-competitive agreements” or “abuse of dominant position”.

Section 14 enumerated “anti-competitive agreements” as:

• restricting competition on price or other terms of trade;

• fixing price at an auction and other forms of bid manipulation;

• controlling production, markets, technical development or investment;

• dividing or sharing the market, whether by volume of sales or purchases, territory, type of goods or services, buyers or sellers or any other means;

• as well as other agreements that have the object or effect of substantially preventing, restricting or lessening competition.

Section 15 said “abuse of dominant position” included:

• selling goods or services below cost with the object of driving competition out of the market;

• imposing barriers to entry or committing acts that prevent competitors from growing within the market in an anti-competitive manner;

• making a transaction subject to acceptance by parties that have no connection with the transaction;

• setting prices or other terms or conditions that discriminate unreasonably between customers or sellers of the same goods or services, where the effect may be to lessen competition substantially;

• making supply of goods or services dependent on the purchase of other goods or services from the supplier that have no direct connection with the goods or services to be supplied;

• imposing unfair purchase or selling price on competitors, customers, suppliers or consumers;

• limiting production, markets or technical development to the prejudice of consumers;

• as well as directly or indirectly imposing unfairly low purchase prices for the goods or services of marginalized agricultural producers; fisherfolk; micro-, small-, medium-scale enterprises and other marginalized service providers and producers.

The law also bans merger or acquisition agreements that substantially prevent, restrict or lessen competition.

Violators face administrative fines of up to P100 million for the first offense and P100 million-250 million for the second offense.

Those failing to comply with the commission’s orders face penalties of P50,000-P2 million for each violation and a similar amount for each succeeding day until the violator complies fully. These fines accrue daily only starting the 45th day from the time the order or ruling was received.

Parties that -- intentionally or due to negligence -- give incorrect or misleading information in any document submitted to the commission faces fines of up to P1 million.

Violations not specifically penalized by RA 10667 may result in fines amounting to P50,000 to P2 million.

The law also provides criminal sanctions for those that enter into anti-competitive arrangements, consisting of two to seven years of imprisonment as well as P50 million-250 million “for each and every violation”.

“The penalty of imprisonment shall be imposed upon the responsible officers and directors of the entity,” the law reads.

Since its formation in 2015, a total of 109 cases have already been lodged with the commission, at least 80 of which have already been resolved. -- A. B. Francia