Proposed amendments to the Philippine Competition Act

Published October 8, 2021, 2:20 PM

by Atty. Vic Dimagiba

The Competition Law and Policy Program (CLPP) of the University of the Philippines College of Law held a 5–day webinar on the Philippine Competition Act, and on the proposed amendments. I was one of the 3 panelists on Day 5 (September 22) of the webinar as a representative of the consumer group thru Laban Konsyumer Inc.

LKI President Victorio Mario Dimagiba

The webinar enumerated the proposed amendments as follows:

  1. Cartels injure consumers by raising prices and restricting supply, thus making goods and services completely unavailable to some purchasers or unnecessarily expensive for others. The proposed bill empowers the Philippine Competition Commission (PCC) to conduct unannounced inspections of business entities.
  2. The PCC will be authorized to undertake by itself or through deputized law enforcement agencies the power to search and inspect various premises and objects. It will dispense with the requirement of court intervention in issuing an order authorizing inspection, search and reproduction.

  1. The amendments mandate government agencies and instrumentalities to observe the key elements of the National Competition Policy and to review their respective policies, issuances and interventions to determine whether they restrict competition.

  1. The modification to the definition of the term Dominant Position under Section 4 of the PCA adds that Dominant Position shall also mean significant market power. This proposed amendment should be read in conjunction with the changes proposed to Section 15 of the PCA, which now includes significant market power obligations among the remedies that the PCC and relevant regulators may impose to promote competition.

  1. The amendments shift the current notification regime from compulsory to hybrid compulsory-voluntary and raise the notification threshold to P50 billion. At present, the only option of businesses with transactions falling below the notification threshold is to avail themselves of a pre-notification consultation. However, there is no commitment on the part of PCC to give a definitive assessment that the transaction does not present any competition concern. With the proposed amendments, PCC is required to make an assessment once a voluntary notification is made.

  1. At present, there is no government agency with a clear mandate to review government fiscal incentives from a competition perspective. To allow the Commission to stay true to its mandate, the substitute bill expands the power of the Commission by giving it the power to issue advisory opinions on fiscal and other industry-specific incentives of the government that may adversely affect competition and recommend remedies in each case.

In my message, I shared with the participants, the following additional amendments which I hope the CLPP can include in its final report on the output of the webinar. I believe our proposals further strengthen the PCC. These are:

1. PCC should be reorganized as a quasi-judicial body.

  1. PCC to observe notice and hearing.

  1. DOJ-OFC to be authorized to act on criminal complaints independently of any PCC intervention.

  1. PCC to maintain its independence Vis a Visregulators and government agencies.

Among the points LKI shared, emphasis was placed on ensuring that the Philippine Competition Commission discharges its role as a quasi-judicial body, similar to sector regulators such as the Energy Regulatory Commission. As a quasi-judicial body, the Commission will have to follow the procedure with which regulated entities and consumers are familiar, including the conduct of public hearings upon proper notice. I further stressed that this is in keeping with the requirements of administrative due process.

Related to the effective enforcement of the Philippine Competition Act, I took the view that the prosecution of criminal offenses under the law should be undertaken solely by the Department of Justice Office for Competition, given the experience and readiness of that office to undertake the necessary investigation and initiation of criminal cases before regular courts. This means that a complainant should be able to approach the DOJ-OFC with a criminal complaint and that office ought to be able to proceed with the investigation and filing of a criminal information without any intervention or participation by the Commission.

In addition, I also shared the view that it is important for the Commission to remain independent and to maintain that independence even as against government agencies and sector regulators, whose conduct may come under scrutiny for competition-related concerns. The amended law should not allow the practice of signing of memorandum of agreement between the PCC and sectoral regulators.

On the adjustment to the merger review threshold, I suggested to review the current merger regime to ensure that the adjustment will not impede the Commission’s review of transactions that may raise competition issues, even though these fall below the proposed threshold.

Atty. Vic Dimagiba

President of Laban Konsyumer Inc.

Email at [email protected]