Member Article

It has been almost two years since Republic Act No. 10667, otherwise known as the Philippine Competition Act (the PCA), took effect on August 8, 2015. Under the transitional clause of the PCA, to enable parties to renegotiate agreements or restructure their businesses to comply with the law, an existing business structure, conduct, practice or any act that may be in violation of the PCA shall be subject to the administrative, civil and criminal penalties only if it is not cured or is continuing upon the expiration of two years after the effectivity of the PCA. This grace period expires on August 7, 2017.

In this regard, the Philippine Competition Commission (PCC) recently published its draft 2017 Rules of Procedure (the Rules), which apply to investigations, hearings, and proceedings before the PCC, except matters involving mergers and acquisitions which are governed by separate PCC issuances. The Rules provide for the procedure for both adversarial proceedings, e.g., fact-fi nding preliminary inquiries to determine if there are reasonable grounds to conduct a full administrative investigation and full administrative investigations to determine if there is suffi cient basis to charge an entity for violation of the PCA, and non-adversarial proceedings, e.g., request for a binding ruling or issuance of a show cause order or submission of a consent order. The PCC is expected to issue the fi nal Rules by August 2017 and the Rules will take effect 15 days after its publication.

Under the PCA, administrative penalties for anticompetitive agreements and abuse of dominant position involve a fi ne ranging from US$2million to US$5million. The PCA also allows for the institution of a separate and independent civil action by any person who suffers direct injury by reason of any violation of the PCA after the PCC has completed the preliminary inquiry. Administrative and civil actions are barred unless instituted within fi ve years from the time the cause of action accrues.

Finally, the PCA also imposes criminal penalties for anti-competitive agreements between competitors that are per se illegal or have the object or effect of substantially preventing, restricting, or lessening competition. Such penalties involve imprisonment from two to seven years, and a fi ne ranging from about US$1 million to US$5 million. For juridical entities, the penalty of imprisonment shall be imposed on its offi cers, directors, or employees holding managerial positions, who are knowingly and willfully responsible for such violation.

Download the full ALB August 2017 Issue from the ALB website. The “Enforcement Update: Philippine Competition Act” is on page 8.