Issue 16 | october - december 2019 PHILIPPINE COMPETITION BULLETIN

What’s Inside 2 PCC IN 2019: STRONGER COMPETITION ENFORCEMENT FOR A GROWING ECONOMY 3 Supreme Court ADDS DAWN RAIDS TO PCC ARSENAL 6 adb funds PCC project on Capacity Building to Foster Competition

1 PCC IN 2019 STRONGER COMPETITION ENFORCEMENT FOR A GROWING ECONOMY

In 2019, the Philippine Competition Commission (PCC) sustained its momentum in enforcing the competition law in pursuit of its mandate to prohibit anti-competitive agreements, abuse of market dominance, and anti- competitive mergers and acquisitions.

First merger prohibition

PCC blocked Universal Robina Corporation’s proposed acquisition of Central Azucarera Don Pedro as it would substantially lessen competition in the market for sugarcane milling services in Southern Luzon. The prohibition of the transaction prevented the creation of a monopoly that could significantly harm the welfare of sugarcane farmers in Batangas, Laguna, Cavite, and Quezon. jan Leniency Program In a bid to strengthen its enforcement mechanisms, PCC launched its leniency program, offering either immunity from suit or reduction of administrative fines to an entity that was or is a participant in price-fixing, bid-rigging, market-allocation, or output-restriction agreements, in exchange for the entity’s voluntary disclosure of information regarding such agreements.

Expedited Merger Review Rules

In line with government efforts to improve ease of doing business in the country, PCC launched an expedited review process for mergers and acquisitions (M&As) that are less likely to substantially prevent, restrict, or lessen competition in the relevant jun market. Under the expedited process, review of qualified M&A transactions will take only 15 working days, instead of the 30 calendar-day turnaround time for regular Phase 1 review prescribed by the Philippine Competition Act.

Exemption from compulsory notification of solicited PPP projects

PCC issued the Rules for Solicited Public-Private Partnership (PPP) Projects, under which joint ventures of private entities formed for a solicited PPP project may be jul exempted from compulsory notification.

First abuse of dominance case

In a landmark development on competition law enforcement in the , PCC closed its first abuse of dominance case, ordering the termination of the exclusive oct deal between Urban Deca Homes and its in-house internet service provider (ISP) Fiber to Deca Homes in nine projects across the country.

Issuance of the Rule on Administrative Search and Inspection

The Supreme Court of the Philippines released a resolution approving the Rule on Administrative Search and Inspection under the PCA, effectively adding the conduct nov of dawn raids to the arsenal of tools PCC can use in investigating violations of the country’s antitrust law.

For more details on PCC’s accomplishments, the 2019 Year-End Report can be accessed at https://phcc.gov.ph/press-releases/pcc-year-end-report-2019/ 

2 Supreme Court ADDS DAWN RAIDS TO PCC ARSENAL by Ryan Israel T. Advincula

PCC, in partnership with the World Bank Group and the Fr. Joaquin G. Bernas SJ Institute for Continuing Legal Education, conducted a half-day seminar on the Rule on Administrative Search and Inspection on December 4 at the Ateneo Professional Schools in Makati. Participants were compliance officers, lawyers, and antitrust law practitioners.

The Supreme Court (SC) of for strengthening our armory special commercial courts shall the Philippines released a of investigative tools to detect, have concurrent jurisdiction resolution approving the Rule investigate, and prosecute within their respective territorial on Administrative Search and anti-competitive agreements jurisdictions. Inspection under the Philippine and conduct. The rules strike a Competition Act (PCA). The balance between due process Information subject to SC action effectively adds the and public interest in enforcing inspection includes books, tax conduct of dawn raids to the the competition law,” said PCC records, documents, papers, arsenal of tools the Philippine Chair Arsenio Balisacan. accounts, letters, photographs, Competition Commission databases (including means (PCC) can use in investigating “Cartels operate on clandestine of accessing information violations of the country’s arrangements or so-called contained in such databases), antitrust law. gentleman’s agreements that and other electronically stored ultimately affect prices and information. PCC dawn raids will be hurt consumer welfare. With unannounced visits to business the rules on dawn raids now The rules were drafted by an SC operations, aimed at finding in place, PCC can intensify its special committee composed information on possible anti- case building, uncover anti- of Justice (now Chief Justice) competitive conduct and competitive behavior, and pin Diosdado Peralta (chair), practices. These may involve down such white-collar crimes Justice Alexander Gesmundo searching documents stored covered by the Philippine (vice chair), Justice Ramon online and offline, as well Competition Act,” Balisacan Paul Hernando, and Court as questioning officials and added. Administrator Midas Marquez, employees of a business. all of the Supreme Court; and According to the rules, Commissioners Amabelle While the PCA has a built- dawn raids are enforceable Asuncion, Johannes Bernabe, in clause on dawn raids, it nationwide, but may be and Macario de Claro, Jr., and required an enabling order from commenced only after the Attys. Rigor Pascual, Genevieve the court. The SC resolution issuance of an inspection order, Jusi, and Gifany Tongohan, all of activated that clause beginning which is requested at special PCC. November 16, 2019. commercial courts in Quezon City, , Makati, , Cebu continued on page 7 “The PCC extends its profound City, Iloilo City, Davao City, and thanks to the Supreme Court Cagayan de Oro City. Other 3 Advocacy roundup PHilippines, CHINA COMPETITION AUTHORITIES INK MOU ON COOPERATION

PCC officials, led by Chair Arsenio M. Balisacan (fifth from left), are joined by top state executives of China’s State Administration for Market Regulation headed by Minister Xiao Yaqing (sixth from left) during the signing of the MOU for cooperation between both agencies.

The Philippine Competition cooperation is essential to Commission (ACCC), and hosted Commission (PCC) and the safeguarding competition in a study visit for the Myanmar State Administration for today’s increasingly borderless Competition Commission Market Regulation (SAMR) and dynamic markets,” said (MmCC). of the People’s Republic of Balisacan. China signed this November a “The PCC considers foreign memorandum of understanding The move is part of PCC’s competition authorities as (MoU) on technical cooperation. efforts to work closely with its partners and allies toward our The agreement is expected international counterparts and shared commitment to promote to strengthen bilateral ties on of its active engagement with and protect competitive markets competition law enforcement. the ASEAN Experts Group on and combat cross-border Competition, the International cartels,” Balisacan said. PCC Chair Arsenio Balisacan Competition Network and SAMR Minister Xiao Yaqing (ICN), the United Nations The MoU also enables PCC led the signing ceremony, Conference on Trade and and SAMR to provide a agreeing to lay down a general Development (UNCTAD), and mechanism to conduct joint framework for cooperation the Organisation for Economic dialogues on economic issues in competition enforcement, Co-operation and Development and developments in their including exchange of (OECD) Competition Division. respective competition policies, information, coordination as well as on other matters of of enforcement activities, Earlier this year, PCC mutual interest. notification of cases of mutual coordinated with the interest, as well as technical Competition and Consumer SAMR is China’s consolidated cooperation and capacity Commission of Singapore state agency exercising market building. (CCCS) on the Grab and Uber supervision responsibilities merger case, carried out spanning competition, “Our MoU marks the start exchange programs with the intellectual property, business of a productive partnership Korea Fair Trade Commission registration, and product safety between PCC and SAMR, (KFTC) and the Australian and standards, among others. recognizing that international Competition and Consumer – L. Gorosin 

BALISACAN HIGHLIGHTS INTEGRATION of COMPETITION POLICY and CONSUMER PROTECTION at NEW YORK ANTITRUST CONFERENCE Philippine Competition consensus that competition for the Competition Committee, Commission Chairman Arsenio policy and consumer protection Organisation for Economic Co- M. Balisacan represented the have much in common. He operation and Development. country at the Antitrust and advised caution, however, Developing and Emerging noting the need to determine Founded in 2004, Concurrences Economies conference held what is driving this integration. is an independent legal at the New York University He said that while competition publisher dedicated to antitrust School of Law on November policy and consumer protection law and competition economics. 1. This annual high-level event help to prevent deceptive It has offices in Paris, London, is organized by Concurrences, marketing and advertising, and New York. an independent antitrust law putting the two under one – R. Advincula  publisher. agency roof may not be ideal for some developing nations. In his presentation, Balisacan The panel was moderated by acknowledged a growing Mr. Frédéric Jenny, Chairman

4 PCC, Vietnam competition authority PARTICIPATE IN MARKET STUDIES WORKSHOP The Australian Competition and experiences and practices in ASEAN member-states. Consumer Commission (ACCC) administering market studies. CLIP is supported by the led a three-day workshop titled It delved on specific stages ASEAN-Australia-New Zealand Market Studies by Competition of planning and execution Free Trade Area Economic Agencies on October 28-30. of market studies, such as Cooperation Support Program Participants were economists evidence-gathering, stakeholder (AECSP). The AECSP was and officials of the Philippine engagement, and adopting established by the governments Competition Commission (PCC) analytical techniques. of the ASEAN member-states, and the Vietnam Competition Australia, and New Zealand Authority (VCA). The workshop was carried out as the vehicle to implement under the Competition Law the economic cooperation The workshop allowed PCC, Implementation Program (CLIP), chapter of the ASEAN-Australia VCA, and panelists from a multi-phase capacity-building and New Zealand Free Trade ACCC and the Organisation and technical assistance project Agreement. for Economic Co-operation on competition law enforcement – L. Gorosin  and Development to exchange and regulation, catering to friedrich naumann foundation PHILIPPINES HONORS PCC with FREEDOM FLAME AWARD The Friedrich Naumann Flame Award annually to Tañada, for his contributions Foundation (FNF) Philippines personalities and institutions in in upholding liberal democracy bestowed a Freedom Flame the Philippines who have played in positions on national issues Award on the Philippine significant roles in achieving while he was a member of the Competition Commission remarkable milestones, allowing Philippine Senate and Congress; (PCC) for its role in promoting Filipinos to better experience the Philippine Educational free markets and competitive freedom in the country. Theater Association (PETA), enterprise in the Philippines. for providing a platform for This year, FNF Philippines civic education through theater FNF Philippines is a German recognized PCC for its efforts in and the arts; and Mr. John non-government organization crafting policies that promote a Nery, for his published works that promotes liberal competitive market for business and current initiatives on democracy, economic freedom, owners and consumers. Aside countering disinformation in the respect for human rights, and from PCC, the other recipients Philippines. – L. Gorosin  rule of law. It gives the Freedom included Senator Wigberto

PCC bags OUTSTANDING ACCOUNTING OFFICE award The Association of Government Accountants of the Philippines, Inc. (AGAP) conferred on the Philippine Competition Commission (PCC) the Outstanding Accounting Office Award during the 2019 AGAP Annual Convention-Seminar held in Atrium Limketkai Center, Cagayan de Oro City on October 23.

The award was given to PCC “for having exemplarily met the criteria of accuracy, timeliness, reliability and compliance with accounting rules and regulations set by the Committee on Awards” in 2018. Dr. Kenneth Tanate, PCC Executive Director (third from left), and Atty. Joseph Melvin Basas, PCC - P. Ballentos  Finance, Planning, and Management Office Director (fourth from left), receive the Outstanding Accounting Office Award during the 2019 AGAP Annual Convention-Seminar.

5 PCC RECOGNIZED FOR QUALITY MANAGEMENT Recognition Ceremony and Public Sector Quality and Productivity Improvement Forum held on October 24 at the Philippine International Convention Center in Pasay City.

The GQMC is composed of Acting Secretary Wendel E. Avisado of the Department of Budget and Management, Secretary Ramon M. Lopez of the Department of Trade and PCC Executive Director Kenneth V. Tanate (center) received GQMC’s plaque of recognition on behalf Industry, Secretary Eduardo of the Philippine Competition Commission during the 7th Recognition Ceremony and Public Sector M. Año Department of Interior Quality and Productivity Improvement Forum at the Philippine International Convention Center, and Local Government, Deputy Pasay City on October 24. Executive Secretary Alberto A. Bernardo of the Office of The Government Quality continual improvement by the President-Internal Audit Management Committee obtaining an International Service, and President and Chief (GQMC) has recognized Organization for Standardization Executive Officer Engelbert C. the Philippine Competition (ISO) 9001:2015 certification. Caronan, Jr. of the Development Commission’s efforts to improve Academy of the Philippines. frontline service and customer The recognition was given - P. Ballentos  satisfaction and to promote during the Seventh GQMC

adb funds PCC project on Capacity Building to Foster Competition

PCC Chair Arsenio M. Balisacan (left) and ADB Vice President Ahmed M. Saeed exchange pleasantries at the ceremonial signing of loan agreements with the Asian Development Bank held in Manila on December 13.

The Philippine Competition government agencies involved Department of Finance (DOF) Commission (PCC) has secured in competition-related work to and ADB signed this December. from the Asian Development build staff capacity, strengthen The two other loan agreements Bank (ADB) a USD 23.3-million the institutional capability will provide USD 400 million for loan assistance for a six-year of PCC, and help develop an a youth employment facilitation Capacity Building to Foster academic center of excellence program and USD 200 million Competition project. Aimed in competition law and policy at in additional funding for at supporting the effective the University of the Philippines. infrastructure preparation and enforcement of the Philippine innovation facility - C. Daquis  Competition Act, the project The assistance was one of the will enable PCC and other three loan agreements that the

6 SC adds... continued from page 3 the Supreme Court in so short Valid enforcement tool a time. IP (indigenous people) In the News and cybercrime rules took Dawn raids are effective years to approve. The reason is because this law, the Philippine Leveling the playing field investigative tools because they Competition Act, is vital to The PCC’s landmark decision provide direct and clear access the Philippine economy,” he on the country’s first abuse of to information that would explained. dominance case is aimed at otherwise be safe-locked in stopping an anticompetitive companies’ premises1. Launder, on the other hand, practice, restoring competition, shared practical tips on how and setting an example to It is regularly used in Europe, firms and their representatives discourage other firms from with each competition authority should behave when faced with seeking similar exclusive averaging about 10 dawn raids on-site inspections by PCC. He deals that effectively lead to a per year. This number excludes underscored the importance monopoly. (Dean Nilo Divina, inspections delegated by the of PCC’s IT head liaising with Daily Tribune, October 11, 2019) European Union to national authorities. Similarly, the the IT leader of the firm being inspected when searching for Competition Commission: South African Competition data and documents at the Hitting the ground running Commission had conducted 12 firm’s information infrastructure. With only four years since its dawn raids from 2015 to 2018. He reminded the PCC staff that inception, the PCC has certainly firm employees are entitled to struck the ground, making From 2016 to 2019, the Hong have private discussions within significant progress towards its Kong Competition Commission the business while the search is formation, and there is no doubt tallied 200 open cases initiated underway. that its activities have sent a through compulsory powers, strong message to all firms, such as extensive document During the seminar, PCC both locally and globally, that requests and dawn raids. In Commissioner Amabelle it is serious in carrying out its September 2019, the Japan Fair Asuncion assured firms that the mandate. (Francis Lim, Rappler, Trade Commission initiated a activation of PCC’s authority to October 21, 2019) dawn raid of carmaker BMW Japan Corporation for allegedly conduct dawn raids does not automatically equate to a hostile Watchdog gears for dawn raids imposing unreasonable sales relationship between PCC and in fight vs cartels quotas on its distributors. businesses. “I know that this After the Supreme Court upheld may be daunting—like how will the Philippine Competition No surprises you protect your client and Commission’s (PCC) inspection your company? The objective powers through a court order, After the issuance of the Rule of this forum is to reassure you deputy agents in the Philippines on Administrative Search and that PCC will exercise its power can now inspect business Inspection, PCC organized of inspection judiciously and premises uninvited. (Jenina on December 4 a seminar to we will abide by the rules and Ibañez, Business World, familiarize compliance officers, observe due process.” October 29, 2019) lawyers, and antitrust law practitioners with dawn raids. MSMEs told: Gain knowledge The seminar’s resource persons of competition law, policy included Supreme Court The Philippine Competition Associate Justice Ramon Paul L. Commission (PCC) advises Hernando, who was a member micro, small and medium-sized of the SC Special Committee M&A enterprises (MSMEs) to be that drafted the set of rules, and aware of competition law and Mr. Guy Launder, Enforcement policy, as it ensures fair market Director at the Australian DASHBOARD competition. PCC Chairman Competition and Consumer Arsenio Balisacan expects Commission. Notifications received from that such information would October to December 2019: promote MSMEs’ voluntary Justice Hernando reiterated compliance with the Philippine the importance of the PCA. Competition Act (PCA) and “The Rule on Administrative 9 would be able to detect and Search and Inspection under the Notifications received since report potential violations of the Philippine Competition Act is February 2016: law to the PCC. (Business Mirror, the only rule that was passed by November 20, 2019) 1 Annabel, Cedric and Jorge. (2019). Safe- raids? Meaningful judicial review of dawn 230 raids on business premises. Retrieved from https://eulawenforcement.com/?p=1495 7 other publications

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