Anti-Competitive Agreements in the Philippines: Competition Law Explained

Under the Philippine Competition Act (Republic Act No. 10667), anti-competitive agreements are contracts, arrangements, understandings, or concerted actions — formal or informal, written or oral, explicit or tacit — between or among competitors that restrict competition. Section 14 of the law prohibits them in three tiers: certain agreements are per se prohibited (illegal regardless of effect), others are prohibited when they substantially prevent, restrict, or lessen competition, and a catch-all covers any other agreement with that object or effect. The Philippine Competition Commission (PCC) enforces these rules and may impose fines, injunctions, and divestment.

What counts as an anti-competitive agreement?

Section 4(b) of the Philippine Competition Act defines an "agreement" broadly. It covers any type or form of contract, arrangement, understanding, collective recommendation, or concerted action — whether formal or informal, explicit or tacit, written or oral. This means a handshake, a series of text messages, or an unspoken understanding among competitors can qualify.

The law targets agreements between or among competitors. Entities that control, are controlled by, or are under common control with one another — with common economic interests and no ability to decide or act independently — are not considered competitors for this purpose.

Per se prohibited agreements

Section 14(a) treats two categories as per se prohibited, meaning no showing of actual harm to competition is required:

• Price fixing — restricting competition as to price, or components of price, or other terms of trade.
• Bid manipulation — fixing price at an auction or in any form of bidding, including cover bidding, bid suppression, bid rotation, market allocation, and other analogous practices.

Because these are per se violations, the PCC does not need to prove that the agreement actually lessened competition in the market.

Agreements prohibited when they harm competition

Under Section 14(b), the following agreements between or among competitors are prohibited when they have the object or effect of substantially preventing, restricting, or lessening competition:

• Setting, limiting, or controlling production, markets, technical development, or investment; and
• 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.

Section 14(c) adds a catch-all: other agreements not falling under (a) or (b) that have the object or effect of substantially preventing, restricting, or lessening competition are likewise prohibited. However, agreements that contribute to improving the production or distribution of goods and services, or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefits, may not necessarily be deemed a violation.

Who enforces competition law in the Philippines?

The PCC is an independent quasi-judicial body created under Section 5 of the Act, attached to the Office of the President. It has original and primary jurisdiction over the enforcement of the law and its implementing rules.

Among its powers under Section 12, the PCC may:

• Conduct inquiries, investigate, and hear and decide cases motu proprio, upon a verified complaint from an interested party, or upon referral by a concerned regulatory agency;
• Upon a finding based on substantial evidence of an anti-competitive agreement, stop or redress it through remedies such as injunctions, divestment, and disgorgement of excess profits;
• Conduct administrative proceedings and impose sanctions, fines, or penalties for noncompliance; and
• Issue subpoenas, show cause orders, and cease and desist orders after due notice and hearing.

Criminal prosecution follows a separate track. Under Section 13, the Office for Competition of the Department of Justice conducts preliminary investigation and undertakes prosecution of all criminal offenses arising under the Act.

Penalties and remedies

The law authorizes the PCC to impose administrative sanctions and fines for breaches of the Act and its implementing rules. It may also order structural remedies such as adjustment or divestiture, but only in specific circumstances: where there is no equally effective behavioral remedy, or where a behavioral remedy would be more burdensome for the enterprise than the structural remedy.

The Act also governs mergers and acquisitions. Under Section 17, parties to a merger or acquisition where the value of the transaction exceeds one billion pesos (P1,000,000,000.00) are prohibited from consummating the agreement until thirty (30) days after notifying the PCC. An agreement consummated in violation of this requirement is considered void and subjects the parties to an administrative fine of one percent (1%) to five percent (5%) of the transaction value.

Frequently asked questions

What is an anti-competitive agreement under Philippine law? It is any contract, arrangement, understanding, collective recommendation, or concerted action between or among competitors — formal or informal, written or oral, explicit or tacit — that restricts competition, as defined in Section 4(b) and prohibited under Section 14 of the Philippine Competition Act.

Is price fixing always illegal in the Philippines? Yes. Under Section 14(a), agreements between or among competitors that restrict competition as to price, or components of price, or other terms of trade are per se prohibited — no proof of actual market harm is needed.

Who can file a complaint for anti-competitive agreements? The PCC may act on its own initiative, on a verified complaint from an interested party, or on referral by a concerned regulatory agency. Criminal offenses are handled by the Department of Justice Office for Competition.

Practical takeaways

• The Philippine Competition Act, Republic Act No. 10667, prohibits anti-competitive agreements, abuse of dominant position, and anti-competitive mergers and acquisitions.
• Price fixing and bid manipulation between competitors are per se prohibited under Section 14(a) — intent and market effect need not be proven.
• Market-sharing, output-limitation, and similar agreements are prohibited when they substantially prevent, restrict, or lessen competition.
• The PCC can investigate on its own, impose fines, issue injunctions and cease and desist orders, and require divestment.
• Merger and acquisition transactions exceeding one billion pesos require notification to the PCC before consummation.

Primary sources

The rules discussed above are drawn from the following primary sources, as published in the Official Gazette and the national statute book.

• REPUBLIC ACT NO. 10667 - AN ACT PROVIDING FOR A NATIONAL COMPETITION POLICY PROHIBITING ANTI-COMPETITIVE AGREEMENTS, ABUSE OF DOMINANT POSITION AND ANTI-COMPETITIVE MERGERS AND ACQUISITIONS, ESTABLISHING THE PHILIPPINE COMPETITION COMMISSION AND APPROPRIATING FUNDS THEREFOR

• REPUBLIC ACT NO. 8752 - AN ACT PROVIDING THE RULES FOR THE IMPOSITION OF AN ANTI-DUMPING DUTY, AMENDING FOR THE PURPOSE SECTION 301, PART 2, TITLE II, BOOK I OF THE TARIFF AND CUSTOMS CODE OF THE PHILIPPINES, AS AMENDED BY REPUBLIC ACT NO. 7843, AND FOR OTHER PURPOSES

• REPUBLIC ACT NO. 8751 - AN ACT STRENGTHENING THE MECHANISMS FOR THE IMPOSITION OF COUNTERVAILING DUTIES ON IMPORTED SUBSIDIZED PRODUCTS, COMMODITIES OR ARTICLES OF COMMERCE IN ORDER TO PROTECT DOMESTIC INDUSTRIES FROM UNFAIR TRADE COMPETITION, AMENDING FOR THE PURPOSE SECTION 302, PART 2, TITLE II, BOOK I OF PRESIDENTIAL DECREE NO. 1464, OTHERWISE KNOWN AS THE TARIFF AND CUSTOMS CODE OF THE PHILIPPINES, AS AMENDED

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.