Republic of the Philippines

House of Representatives
Quezon City, Metro Manila

FIFTEENTH CONGRESS
First Regular Session

HOUSE BILLNO. 3534

Introduced by Rep. Lorenzo R. Tafiada Ill

EXPLANATORY NOIE

Article Xil, Section 19 of the 1987 Constitution of the Republic of the
Philippines mandates that “The State shall regulate or prohibit monopolies when
the public interest so requires. No combinations in restraint of trade or unfair
competition shall be allowed”. Section 22 thereof states that “Acts which
circumvent or negate any of the provisions of [Article Xil] shall be considered
inimical to the national interest and subject to criminal and civil sanctions as
may be provided by law". To this end, the Constitution directs the State to
protect Filipino enterprises against unfair competition and trade practices.

With the government's push to deregulate and privatize state-owned
public utilities and to promote micro, small and medium enterprises and
considering that laws governing anticompetitive behavior, monopolies,
combinations in restraint of trade and other frauds in commerce and industry,
provide inadequate penalties to deter violations thereof, coupled with lack of
effective enforcement mechanism and that there is a need to regulate a
market scheme wherein competition forces the players fo produce products of
high quality and in lower prices, the passage of this bill is, therefore, imperative.

The purpose of the bill is to provide a comprehensive and general law
which shall regulate anticompetitive behavior and business practices unfettered
by limitations based on self-interest, by strengthening prohibitions against
monopolies, cartels, combinations in restraint. of trade and other anti-
competitive practices and conduct, as a means of attaining a more equitable


distribution of opportunities, income and wealth, while recognizing permissible
concerted actions that need not be curtailed by an antitrust law.

The bill is distinctive as it promotes competition in the market, with utmost
consideration for the development of micro, small and medium enterprises, by
classifying price discrimination as a form of illegal trade practice and by
enumerating contracts, concerted actions or combinations in restraint of trade,
while distinguishing mere growth or development as a consequence of a
superior product, business acumen or historic accident. Finally, the bill
completes and harmonizes current laws of the country with respect to
intellectual property, corporations, right to form organizations and the right to
collective bargaining.

Itis, therefore, earnestly requested that this bill be urgently approved.

5 pS

R Torker
LORENZO R. TANADATII
Representative
4" District, Quezon


Republic of the Philippines

House of Representatives
Quezon City, Metro Manila

FOURTEENTH CONGRESS
First Regular Session

HOUSE BILL NO. 3534

Introduced by Representative Lorenzo R. Tafiada III

AN ACT PRESCRIBING AN ANTITRUST LAW TO STRENGHTEN THE PROHIBITION AGAINST
MONOPOLIES, CARTELS, COMBINATIONS IN RESTRAINT OF TRADE AND OTHER
ANTICOMPETITIVE PRACTICES AND CONDUCT, AND FOR OTHER PURPOSES.

SECTION 1. Tile — This Act shall be known as the “Philippine Antitrust Act".

SECTION 2. Declaration of Policy ~Itis the declared policy of the State to achieve a
more equitable distribution of opportunities, income, and wealth: a sustained
increase in the amount of goods and services produced by the nation for the benefit
of the people; and an expanding productivity as the key fo raising the quality of life
for all by espousing competition and protecting Filipino enterprises from unfair trade
practices. :

SECTION 3, Definition of Terms — As used in this act, the following terms shall be taken
to mean as follows:

a. Antitrust Laws — this Act, statutes and all other statutes hereinafter enacted by
Congress relating to or governing monopolies, oligopolies, cartels,
combinations, contracts and/or agreements or arrangements in restraint of
trade, production, commerce or industry or which make available to national
or local governments, or any private person whose rights have been or in
danger of being impaired, any civil and/or criminal remedies or administrative
proceedings before the Regional Trial Court or administrative agency with
respect to any act, contract, agreement, rule, control, course of conduct, or
other activity by, between or among persons constituting a restraint upon or
monopolization of domestic or foreign trade, commerce or industry or
methods of competition in or affecting such trade, commerce or industry.


b. Person - any natural person, firm, company, corporation, society, association,
parinership, joint-stock company, or any other legal entity including any
person acting under color or authority of law.

c. Commerce — intercourse by way of trade and traffic between different
regions, provinces, towns of cities in the Philippines and the citizens or
inhabitants thereof, including not only the purchase, sale and exchange of
commodities, goods, articles, services, productions or property of any kind,
but also the instrumentalities and agencies by which it is promoted and the
means and modes by which it is carried on.

d. Export trade — trade or commerce in goods, wares, merchandise or object of
trade, commerce or industry exported, or in the course of being exported
from the Philippines to any foreign country.

e. Implementing Agencies — shall refer to administrative agencies vested by law
with jurisdiction to regulate competition and grant administrative relief in
specific industries and/or sectors.

f, Industry - any department or branch of art, occupation or business
conducted as a means of livelihood or for profit, especially one which
employs much labor and capital and is a distinct branch of trade.

g. Trade ~ mercantile or commercial business in general, or the buying and

selling, exchanging, of commodities and services, either by wholesale or retail.

Trusts - an association or combination of persons or corporations having the

intention and power, or the tendency to create a monopoly, control

production, interfere with the free course of trade, or to fix and regulate the
supply and the price of commodities and services.

. Unfair trade practices - refers to any act that impedes fair competition such
as unjustly discriminating between persons, dealing at unjust prices, unjustly
inducing or coercing customers of a competition fo deal with oneself, dealing
with another party on such terms as will unjustly restrict the business activities
of the said party, and dealing with another party by unjust use of one's
bargaining position.

Ex

SECTION 4. Contracts, Concerted Actions or Combinations in Restraint of Trade = It
shall be unlawful for any person to enter into any contract or agreement or shall take
part in any conspiracy or combinations in the form of trusts or otherwise or any other
form of mutual understanding with a competing person.

a. To limit unduly the facilities for transporting, producing, manufacturing,
supplying, storing or dealing in any product;

b. To prevent, limit or lessen, by artificial means, the manufacture or production
of a product or to enhance unreasonably the price thereof;

c. To prevent or lessen, unduly, competition in the production, manufacture,
purchase, barter, sale, storage, rental, transportation or supply of a product,
or in the price of insurance on persons or property: or

d. To otherwise restrain or injure competition through unfair trade practices.


SECTION 5. Monopoly or Attempt to Monopolize - It shall be unlawful for any person
to monopolize, or attempt fo monopolize, or to combine or conspire, expressly OF
impliedly, with any other person or persons, to monopolize any part of the trade or
commerce within the country, or with any foreign country or territory. Provided, that
nothing contained in this Act shall render unlawful the right of a patent holder or a
copyright holder to enjoy the benefit of his or its patent or copyright duly registered in
the Philippines or in any foreign country with which the Philippines is a co-signatory to:
any treaty or convention that protects the rights to an invention, patent, or to a
copyright as the case may be.

As prohibited in this Act, it has two elements: (1) possession of monopoly power in
relevant markets, and (2) willful acquisition or maintenance of that power to exclude
competitors from any part of trade, commerce or industry, as distinguished from

growth or development as a consequence of a superior product, business acumen
or historic accident.

SECTION 6. Price discrimination - It shall be considered an illegal trade practice fora
person engaged in business to be party or privy to:

a. Any sale that discriminates fo his knowledge, directly or indirectly, against
competitors of a purchaser of articles from him in that any discount, rebate,
allowance, price concession or other advantage is granted to the purchaser
over and above any discount, rebate, allowance, price concession or other
advantage that, at the time the articles are sold to the purchaser, is available
to the competitors in respect of a sale of articles of like quantity and quality;
Engage in the policy of selling products in areas of the Philippines at prices
lower than those exacted by him elsewhere in the country, having the effect
or tendency of substantially lessening competition or eliminating a competitor
in that part of the Philippines, or designed to have that effect:
c. Engage in a policy of selling products at prices unreasonably low, having the
effect or tendency of substantially lessening competition or eliminating a
competitor, or designed to have that effect.

a

SECTION 7. Bid-Rigging - No person shall enter into an agreement or arrangement
whereby one or more of those persons agree or undertake not to submit a bid in
response fo a call or request for bids or tenders: or shall agree to make a submission
of bids or tenders arrived at by agreement or arrangement between or among two
or more bidders or tenderers in response to a call or request for bids or tenders.

SECTION 8. Permissible Concerted Action - Contracts, agreement resulting to
concerted action between competing persons is permissible only upon approval
and determination by the proper implementing agencies that the planned
concerted action shall be beneficial to the economy as a whole and in the public
interest. Applications for permissible concerted action may be made for the
following purposes:


a. Unifying the specifications or models of goods for the purpose of reducing
costs, improving quality, or increasing efficiency:

b, Joint research and development on goods or markets for the purpose of
upgrading technology, improving quality, reducing costs, or increasing

efficiency; .

Arrangements to develop a separate and specialized area for the purpose of

rationalizing operations:

Entering into agreements concerning solely the competition in foreign

markets for the purpose of securing or promoting exports;

. Joint acts for the purpose of improving operational efficiency or

slrengthening the competitiveness of small and medium enterprises.

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SECTION 9. Acquisitions of Corporate Stocks and Assets — No person engaged in
commerce or in any activity affecting commerce shall acquire, directly or indirectly,
the whole or part of the stock or share capital, or acquire the whole or any part of
the assets of another person engaged also in commerce or in any activity affecting
commerce, where in any line of commerce or in any activity affecting commerce in
any section of the country, the effect of such acquisition may be substantially to
lessen competilion or tend to create a monopoly. Provided, this section shall not
apply to persons purchasing such stock solely for investment and not using the same
by voting or otherwise to bring about, or in altempting fo bring about, the substantial
lessening of competition. Nor shall anything contained in this section prevent a
corporation engaged in commerce or in any activity affecting commerce from
causing the formation of subsidiary corporations for the actual carrying on of their
immediate lawful business, or the natural and legitimate branches of extensions
thereof, or from owning and holding all or part of the stock of such subsidiary
corporations, when the effect of such formation is not to substantially lessen .
competition.

SECTION 10. Interlocking Directors - No person shall, at the same time, serve as a
director or officer in any two corporations that are engaged in whole or in part in
commerce and by virtue of their business and location of operation, competitors, to
the effect that an agreement to eliminate competition between them would
constitute a violation of any antitrust law except:

a. Between parent and subsidiary companies;

b. Between or among affiliates defined to mean ownership by one of not less
than twenty percent (20%) but not more than fifly percent (50%) if the shares
of stock of the other;

c. The co-venturers in joint venture companies; and

d. Family corporations.

SECTION 11. Labor, Agricultural or Horticultural Organizations — The labor of a human
being is not a commodity or Article of commerce. Nothing contained in this Act,


therefore shall be construed to forbid the existence and operation of any labor,
agricultural or horticultural organizations, instituted for purposes of mutual help, and
not having capital stock or conducted for profit, or to forbid, restrain, individual
members of such organizations from lawfully carrying out the legitimate objects
thereof; nor shall such organizations, or the members thereof, be held or construed as
to be illegal combinations of conspiracies in restraint of trade.

SECTION 12. Collective Bargaining - Nothing in this act shall apply to combinations or
activities of workmen or employees for their own reasonable protection as such
workmen or employees and contracts, agreements or arrangements between or
among two or more employers in a trade, industry, or profession, whether effected
directly between or among the employers or through the instrumentality of a
corporation or association of which the employers are members, pertaining to
collective bargaining with their employees in respect of salary or wages and terms or
conditions of employment.

SECTION 13. Liability of Directors, Officers and Agents - Whenever a corporation shall
violate any of the provisions of this Act, such violation shall be deemed to be also
that of the individual directors, officers or agents of such corporation who shall have
authorized, ordered, or done any of the acts constituting in whole or in part such
violation.

SECTION 14. Penalties for Violations — Any person found guilty of committing any acts
in violation of sections 4, 5, 6 and/or 7 or any combination of such sections of this Act:
shall, for each violation be punished by a fine not exceeding twenty million pesos
(Php 20,000,000.00) if a corporation or association, or, four million pesos (Php
4,000,000.00) if a natural person, or imprisonment not exceeding five (5) years or both
fine and imprisonment in the discretion of the court.

Any person found guilty fo have violated Sections 9 and/or 10 of this Act or any
combination of such sections, shall for each and every violation, be punished by a
fine not exceeding five million pesos (Php 5,000,000.00), or by imprisonment not

exceeding two (2) years, or both fine and imprisonment upon the discretion of the
court.

SECTION 15. Jurisdiction - The Regional Trial Court shall have original jurisdiction to try
and decide alll criminal and civil cases involving violations of this Act. Any
administrative agency that is vested by law with jurisdiction to grant administrative
telief in specific cases shall continue to exercise such jurisdiction, however availment
of a remedy under this Act shall not be precluded if it be found more convenient,
adequate and expeditious for his immediate protection and relief.

SECTION 16. Jurisdiction of Specialized Agencies — The exclusive and original
jurisdiction conferred upon by law to specialized agencies to regulate, enforce


competition laws, and handle administrative cases on specific industries shall be
discharged by the specialized agency concermed.

SECTION 17. Exclusion of Civil Action from the Criminal Action ~The institution of a
criminal action under this Act against a defendant shall not be deemed fo include
any claim for damages in favor of any person that may have suffered any monetary
injury because of any violation of this Act.

SECTION 18. Private Suits for Monetary Injury - Any person who may be injured in his
business or properly by reason of the violation of any provision of this Act or its
implementing rules and regulations may sue in the Regional Trial Court in the
principal place of business of the defendant/s, regardless of the amount in
controversy. He shall be entitled to recover not more than threefold the damages
sustained by him, plus the costs of suit, including reasonable attorney's fees at the
discretion of the Court.

SECTION 19. Parens Patriae Suit - In addition to the criminal action instituted by the
Secretary of Justice, a civil action may be instituted in the name of the Philippines, as
parens patriae, on behalf of natural persons residing in the Philippines to secure

treble damages for any monetary injury sustained by such natural person by reason
‘of any violation of this Act.

Any person on whose behalf a civil action has been brought by the Secretary of
Justice under this Act in the name of the Republic of the Philippines may elect to
exclude from adjudication the portion of the claim of the Republic of the Philippines
for monetary relief attributable to him by filing such notice of election with the
Regional Trial Court having jurisdiction over the civil action within such time specified
the rules.

SECTION 20. Effect of a Final Judgment in a Parens Patriae Suit - The final judgment

rendered in a parens patriae suit shall be res judicata as to any claim by any person
on behalf of whom such action was brought by the Republic of the Philippines and

who {ails to give a notice of election to exclude from adjudication his portion of the
monetary relief.

SECTION 21. Suit of the Republic of the Philippines to Recover its Own Damages -
Whenever the Republic of the Philippines is hereafter injured in its business or properly
by reason of anything forbidden or rendered unlawful in this Act, it may sue
correspondingly sue the defendants in the proper Regional Trial Court for the
recovery of actual damages sustained by it and the costs of suit, :

SECTION 21. Evidential Effect of a Final Judgment Rendered in a Criminal Case — Any
final judgment or decree rendered in any criminal action brought by the People of
the Philippines, or any civil action instituted on behalf of the Republic of the
Philippines to the effect that the defendant was found to have violated any provision


of this Act shall be prima facie evidence against such defendant in any civil action
brought by any party against such defendant under this Act. This Section shall not
apply to any consent judgment or degree entered into by the parties concerned.

SECTION 22. Consent Judgment — At any time in the course of a civil action brought
by or on behalf of the Republic of the Philippines under this Act, the Republic of the
Philippine through the Secretary of Justice, may propose in a proper pleading to the
defendant or defendants a consent judgment. Any such proposal for consent
judgment must be filed with the Regional Trial Court having jurisdiction over the case.
The Regional Trial Court shall correspondingly evaluate and examine the proposal for

consent judgment and determine if entry of such judgment shall be in the public
interest.

In making its determination, the Regional Trial Court may: (1) take the testimony of
the government officials or such expert witnesses, as the Regional Trial Court may
require; (2) appoint such outside consultants; (3) request and obtain the views,
evaluations, or advice of any individual group, or agency of the government with
respect to any aspects of the proposed consent judgment or the effect of such
consent judgment; (4) authorize full or limited participation in the civil proceedings
before the Regional Trial Court having jurisdiction of the case by interested persons or
agencies of the government, including the appearance of amicus curiae,
intervention as a parly pursuant to provisions of the Rules of Court, examination of
witnesses or documentary materials, or participation any other manner and extent
which serves the public interest as the Regional Irial Court may deem appropriate.

SECTION 23. Prescription — Any criminal, civil action or any private suit, shall be barred
unless commenced within five (5) years from the discovery of the crime or of the act
or agreement giving rise to the cause of action, or which would be a valid basis for
the commencement of any legal action.

SECTION 24. Separability Clause -- Any portion or provision of this Act that may be
declared unconstitutional shall not have the effect of nullifying other portions or
provisions hereof, as long as such remaining portions or provisions can still subsist and
be given effect in their entirety.

SECTION 25. Repealing Clause — All provisions of law, orders, decrees, executive
orders, including rules and regulations or parts thereof which are contrary to or
inconsistent with the provisions of this Act are hereby repealed or modified
accordingly.

SECTION 26. Effectivity — This Act shall take effect after fifteen (15) days from the
completion of its publication in at least two (2) newspapers of general circulation.