Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

FIFTEENTH CONGRESS
First Regular Session

House Bill No. 1583

Introduced by Representatives
DIOSDADO MACAPAGAL ARROYO and GLORIA MACAPAGAL ARROYO

AN ACT
PENALIZING UNFAIR TRADE AND ANTI-COMPETITIVE
PRACTICES IN RESTRAINT OF TRADE, UNFAIR
COMPETITION, ABUSE OF DOMINANT POWER,
STRENGTHENING THE POWERS OF REGULATORY
AUTHORITIES AND APPROPRIATING FUNDS THEREFOR,
AND FOR OTHER PURPOSES.

EXPLANATORY NOTE

For far too long, our people have stood at the mercy of huge industries.
Due to lack of regulation and safeguards, unscrupulous businessmen have found
ingenious ways to artificially control prices and manipulate the free market
system. It thus behooves both Houses of Congress to establish a system that
can adequately provide protection to our people against price manipulators.

Article XII, Section 19, of the Constitution provides:

“Section 19. 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.”

As proof of the importance of this Constitutional mandate, Section 22 of
the same article encourages the promulgation of legislation that would impose
civil and criminal sanctions against those who circumvent or negate this principle.
Hence, Section 22 of the Constitution states:


“Section 22. Acts which circumvent or negate any of the
provisions of this Article shall be considered inimical to the national
interest and subject to criminal and civil sanctions, as may be
provided by law.”

Although previous legislations have been passed pursuant to this
Constitutional mandate, the pressing demands of our time require us to introduce
new legislation that can effectively address these pressing concerns.

We are therefore encouraging our colleagues to support the passage of
this bill that aims to provide stricter penalties against combinations or
conspiracies in restraint of trade and all forms of artificial machinations that will
injure, destroy or prevent free market competition.

For these reasons, the passage of this bill is earnestly recommended

DIOSDADO WACARAGAL ARROYO GLORIA MACAPAGAL ARROYO
Second District, Camarines Sur cond District, Pampanga


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

FIFTEENTH CONGRESS
First Regular Session

House Bill No. 1583

Introduced by Representatives
DIOSDADO MACAPAGAL ARROYO and GLORIA MACAPAGAL ARROYO

AN ACT
PENALIZING UNFAIR TRADE AND _ ANTI-COMPETITIVE
PRACTICES IN RESTRAINT OF TRADE, UNFAIR
COMPETITION, ABUSE OF DOMINANT POWER,
STRENGTHENING THE POWERS OF REGULATORY
AUTHORITIES AND APPROPRIATING FUNDS THEREFOR,
AND FOR OTHER PURPOSES

Be it enacted by the Senate and the House of Representatives of the
Philippines in Congress assembled:

ARTICLE I
TITLE AND DECLARATION OF POLICY

SECTION 1. Title. - This Act shall be known and cited as the "Competition
Act of 2010."

SECTION 2. Declaration of Policy. — In line with the constitutional mandate
to regulate or prohibit monopolies when the public interest so requires and
prevent combinations in restraint of trade or unfair competition, the State
endeavors to:

a. Promote and enhance free and full competition in
trade, industry and all commercial economic activities;


b. Prevent the concentration of economic power in a few
persons who threaten to control the production, trade, or industry,
stifle competition, distort, manipulate or constrict the discipline of
free markets, or tamper with the free play of the market forces and
eventually destroy free and open markets; and

¢. Penalize all forms of unfair trade, anti-competitive
conduct and combinations in restraint of trade, with the objective of
protecting and advancing consumer welfare.

ARTICLE II
SCOPE AND APPLICATION, DEFINITION OF TERMS

SECTION 3. Scope and Application. — This Act shall be enforceable within
the territory of the Republic of the Philippines and shall apply to all areas of trade,
industry and commercial economic activity. It shall likewise be applicable to
international trade having substantial effects in the Republic of the Philippines
including those that result from acts done outside the Republic of the Philippines

The Act shall apply to: (a) all firms as defined hereunder and all their
commercial agreements, actions or transactions involving goods, services or
intellectual property; and, (b) all natural persons who, acting in their capacity as
owner, manager or employee of a firm, shall authorize, engage or aid in the
commission of restrictive practices prohibited under this Act.

SECTION 4. Definition of Terms. — As used in this Act, the following terms
shall be construed to mean as follows:

a Cartel shall mean a combination of firms, providing
goods in relevant markets, acting or joined together to obtain a
shared monopoly to control production, sale and price, or to obtain
control in any particular industry or commodity, or a group of firms
that agree to restrict trade to their mutual benefit, which may or may
not be of an international scale. It shall also refer to firms or section
of firms having common interest designed to prevent extreme or
unfair competition and allocate markets, and to promote the
exchange of knowledge resulting from scientific and technical
research, exchange of patent rights and standardization of
products;

b. Competition shall mean the process by which
economic agents, acting independently in a market, limit each
other's ability to control the prevailing conditions in the market;


©. Control refers to at least twenty percent (20%)
ownership, directly or indirectly, of a firm or a group of firms by
another firm;

d. Firm shall include any person, partnership,
combination or association in any form, engaged directly or
indirectly in any economic activity: Provided that, two firms, one of
which is controlled by the other, shall be treated as one firm:
Provided, further, That two or more firms that are controlled bya
single firm shall be treated as one firm;

e. Goods shall include all types of goods and services;

f. Market shall refer to a place or venue for commercial
activity, which may extend beyond the borders of the Republic of
the Philippines, where articles are bought or sold. It shall also refer
to the geographical or ecenomic extent of commercial demand:

g. Monopoly shall mean a privilege or undue advantage
of one or more firms, consisting in the exclusive right to carry on a
particular business or trade, and/or manufacture a_ particular
product, article or object of trade, commerce or industry. It is a
form of market structure in which one or only a few firms dominate
the total sales of a product, commodity or service:

h. Monopoly Power shall refer to a situation where a
firm, either by itself or acting in collusion with other firms, is in a
position to control a relevant market for the sale of a particular good
or service by fixing its prices, excluding competitor firm, of
controlling the market in a specific geographical area: and,

i, Relevant Market shall refer to the line of commerce
in which competition has been restrained. It shall also refer to the
geographic area involved, including all reasonably substitutable
goods, and all nearby competitors, to which consumers could turn if
the restraint or abuse results in the significant increase in prices.

ARTICLE Ill
PROHIBITED ACTS

SECTION 5. Cartels - It shall be unlawful for firms providing goods in
relevant markets to join together to monopolize, or to control production in a
particular industry or commodity, the sale and price of such good, and to agree to
restrict trade for their mutual benefit, which may or may not be on an international


scale. This shall also include an association by agreement of firms or sections of
firms having common interests designed to promote the interchange of
knowledge resulting from scientific and technical researches, exchange of patent
rights and standardization of products.

Restrictive agreements resulting from cartel-ike behavior of firms, in any

form, are hereby per se deemed illegal. These shall include, but not limited to,
the following

a. Agreements to fix selling price of goods or other terms
of sale;

b. Agreements to limit supply or output;

c. Agreements to divide the market, whether by volume
of sales or purchase or by territory, by type of goods sold, by
customers or sellers, or by any other means;

d. Agreements to exclude or limit dealings with particular
suppliers or sellers from supplying or selling goods, or customers
from acquiring or buying goods; and

e. Agreements to fix setting price at auctions or in any
other form of bidding.

There shall be a prima facie case for the existence of a cartel if and when
the Department of Trade and Industry (DTI) or concerned regulatory agency finds
that two or more persons or firms competing for the same relevant market
perform uniform or complementary acts among themselves which tend to bring
about artificial and unreasonable increase in the price of any goods or when they
simultaneously and unreasonably increase the prices of their competing goods
thereby lessening competition among themselves.

SECTION 6. Monopolies. — It shall be unlawful for any firm to willfully
monopolize, or knowingly attempt to monopolize, the trade of goods or any part
of the trade or commerce within the Republic of the Philippines or with any
foreign country or territory. As prohibited in this Act, the essential elements of
the crime of monopolization are the possession of monopoly power and its willful
acquisition, maintenance or abuse to exclude competitors from any part of trade,
commerce or industry as distinguished from the natural growth or development of
a firm as a consequence of a superior product, business acumen or historic
accident: Provided that, a firm that has at least fifty percent (50%) of the relevant
market as found and certified by the Department of Trade and Industry or the
concerned regulatory agency shall be deemed prima facie a monopoly or in
dominant position.


SECTION 7. Monopoly Power or Abuse of Market Power by One in
Dominant Position. — It shall be unlawful for one or more firms with market power
within relevant markets to abuse their monopoly power or dominant position by
engaging in unfair methods of competition or engaging in unfair or deceptive
trade practices, or entering into agreements, combinations in the form of trust or
otherwise, or conspiracy, with the purpose and effect to prevent, restrict, or
distort competition. Abusive agreements such as, but not limited to, any of the
following, shall be deemed to fall under the crime of abuse of monopoly power or
market power by one in dominant position:

a. Price Fixing — Any agreement to fix the selling price
of goods or other terms of sale, with the purpose and effect of
creating a monopoly or cartel, or lessening competition;

b. __Bid Rigging - Any agreement to fix price at auctions
or in any other form of bidding, with the purpose and effect of
creating a monopoly or cartel, or lessening competition, Provided
that, nothing herein shall bar another prosecution against the erring
party for violation of applicable laws on procurement and public
biddings;

In determining whether there is price fixing or bid rigging, the
following circumstances may be considered:

i. generally, any considered evidence that two sellers of
similar goods have agreed to set the price of their goods, to sell
only a certain amount of their goods, or to sell only to a limited
number of buyers or consumers;

ji. a drastic change in prices of goods and services
involving more than one seller of similar goods of different brands,
particularly if the changes in prices take place in equal amount and
about the same time;

iii. a seller refusing to sell based on an agreement with a
competitor;

* iv. the same firm has repeatedly been the low bidder
who has been awarded contracts for a certain service or a
particular bidder seems to win bids on a fixed-rotation;

v. there is an unusual and unexplainable difference
between the winning bid and all other bids; and


vi, the same bidder bids substantially higher on some
bids than on others, and there is no logical cost reason to explain
the difference.

c. Limitation and Control of Markets — Any agreement
to limit or control production, markets, technical development, or
investment with the purpose and effect of creating a monopoly or
cartel, or lessening competition;

d Market Allocation — Any agreement to divide the
market, whether by volume of sales or purchase or by territory, by
type of goods sold, by customers or sellers or by any other means,
with the purpose and effect of creating a monopoly or cartel, or
lessening competition;

e. Arrangements to Share Markets or Sources of
Supply — Any agreement to share markets or sources of supply of
raw materials, with the purpose and effect of creating a monopoly
or cartel, or lessening competition;

f. Price Discrimination — Any agreement prescribing or
charging, directly or indirectly, discriminatory pricing terms or
conditions in the supply or purchase of goods of like grade and
quality with the purpose and effect of creating a monopoly or cartel,
or substantially lessening competition: Provided that, nothing
contained herein shall be construed to prohibit permissible price
differentials unless the same shall have the effect of preventing,
restricting or distorting competition: Provided, further, That for the
purpose of this section, the following shall be considered
permissible price differentials:

i. Socialized Pricing — Socialized pricing for the less
fortunate sector of the economy;

ii, Volume Discounts — Price differentials which reflect
an allowance for differences in the cost of manufacture, sale, or
delivery resulting from differing methods or quantities in which the
goods are sold or delivered to the purchasers;

iii, Competitive Pricing — A price differential or other
terms of sale in response to the competitive price of payments,
services or facilities furnished by a competitor;

iv. Bona fide Selection of Customers — The selection
of customers on bona fide transaction; and,

6


v. Price Differentials Due to Changing Market
Conditions or Marketability of Goods — Price changes from time
to time in response to changing conditions affecting the market or
the marketability of the goods concerned such as, but not limited to,
actual or imminent deterioration of perishable goods, obsolescence
of seasonal goods, distress sides under court process, or sale on
good faith in discontinuance of business.

g. Exclusivity Arrangement — Any agreement imposing
restrictions on the lease or contract for sale or trade of goods
concerning where, to whom, or in what forms goods may be sold or
traded, such as, but not limited to fixing prices, or giving preferential
discounts, or rebate upon such price, or imposing conditions not to
deal with competing firms, where the purpose of such agreement is
to lessen competition: Provided that, nothing contained herein shall
prohibit or render unlawful permissible franchising, licensing or
exclusive distributorship agreements.

h. Tie-In Arrangements — Any agreement making the
supply of particular goods dependent upon the purchase or lease of
other goods from the supplier or his consignee, where the purpose
and effect of such sale or lease or such condition is to substantially
lessen competition or to create a monopoly or cartel.

i. Boycott — Any concerted refusal to sell or conspiracy
not to sell or to stop doing business on the part of the suppliers of
any goods, unless for a legitimate purpose, such as but not limited
to:

i Defaulting Borrowers - refusal by one or more
credit institutions to extend loans to defaulting debtors;

ii, Defaulting Buyers - refusal by one or more
manufacturers or sellers to sell on credit to defaulting customers;
and,

ili, Violators of Intellectual Property Rights — refusal
by manufacturers or sellers to have any commercial dealings with
one or more firms who violate the intellectual property rights of the
owners of patents, copyrights, trademarks and other intellectual
property.


ARTICLE IV.
PENALTIES,

SECTION 8. Penalties. - Without prejudice to the violation of other laws,
any firm that shall be found to have violated Sections 5, 6 and 7 of this Act, or
any combination thereof, shall, for each and every violation, be punished by a
fine of not less One Million Pesos (Php1,000,000.00) and not exceeding Ten
Million Pesos (Php10,000,000.00) if a natural person; by a fine of not less than
Ten Million Pesos (Php10,000,000.00) but not exceeding One Hundred Million
Pesos (Php100,000,000.00) if a firm, and by imprisonment not exceeding ten
(10) years, or both, at the discretion of the court.

ARTICLE V
ENFORCEMENT

SECTION 9. Preliminary Inquiry. — The Department of Justice (DOJ), in
coordination with the Department of Trade and Industry (DTI), other regulatory
and/or appropriate government agency, shall motu propio, upon the filing of a
verified complaint by an interested party or upon referral by the concerned
regulatory agency, initiate a preliminary inquiry for the enforcement of this Act
based on reasonable grounds. ‘

SecTION 10. Powers of Concemed Regulatory Agencies. —
Notwithstanding the provisions of the preceding section, the exercise of
regulatory powers by different government agencies over an industry or a sub-
sector of an industry shall be cumulative and shall not be construed in any way
as derogating from the power and authority of the concerned agency. The
government agencies shall cooperate and coordinate with one another in the
exercise- of their powers in order to prevent overlap, to share confidential
information, or for other effective measures.

SECTION 11. Power to Investigate. - The DOJ may, through its duly
authorized inquiring officer, by written notice, require a firm or natural person to
produce a specified document, or to provide specified information which the DOJ
considers as relevant its investigation. The inquiring officer, upon the authority
granted by the Secretary of Justice, may engage the services of consultants or
experts to aid in the inquiry. He may also make use of any available or
analogous means under existing laws and procedures to determine if any
provision of this Act has been violated. For this purpose, he shall have the power
to punish for contempt any firm which does not comply with the notice or order
for document, information or such other relevant matters and to impose a fine not
exceeding One Hundred Thousand Pesos (Php100,000.00) for non-compliance
with each notice or order.


SECTION 12. Seff-incrimination and Privileged Communication Exclusion
— Pursuant to the preceding section, a person subject of any investigation by the
DOJ shall produce the specified document or information when so required by
written notice: Provided that, no person shall be excused from disclosing any
document or information to the inquiring officer on the ground that the disclosure
of the information or document may be incrimination: Provided, however, That
such document or information produced by the person subject of investigation
shall not be admissible as evidence against him in criminal proceedings:
Provided, finally, That such document or information shall he admissible in
evidence in civil proceedings including those arising from or in connection to the
implementation of this Act

Nothing in this section shall compel the disclosure of privileged
communication or trade secrets: Provided, That the person who refuses to
disclose the information or produce the document or other material required by
the inquiring officer in relation to the preliminary inquiry being conducted shall
nevertheless be obliged to give the name and address of the firm to whom, or by
whom, or on whose behalf, such privileged communication was made.

SECTION 13. Immunity from Suit. - Any person or firm which cooperates or
furnishes any information, document or data to the DOJ before or during the
conduct of the preliminary inquiry that constitutes material evidence as
determined by the DOJ under this Act shall be immune from any suit or charge
including from affected parties and third parties: Provided, further, That any
person or firm which cooperates or furnishes information, document or data to
the DOJ in connection to an investigation being conducted shall not be subjected
to any form of reprisal or discrimination: Provided, furthermore, That such reprisal
or discrimination shall be considered a violation of this Act and subjected to the
penalties provided for under Section 8: Provided, finally, That, notwithstanding
the provisions of Section 17 hereof, the firm which cooperates with the DOJ in its
investigation shall be entitled to a reward equivalent to twenty percent (20%) of
any monies paid by the firm subject of the inquiry, or the monetary relief
recovered from court action.

SECTION 14. Termination of Preliminary Inquiry. - The DOJ, after
considering the statements made, or documents or articles produced, in the
course of an inquiry conducted by it, shall terminate the preliminary inquiry by
issuing a resolution ordering its closure if no violation or infringement of this Act
is found; or by issuing a nolo contendere resolution; or to, singly or cumulatively:
(a) endorse the findings to the regulatory agency for the imposition of
administrative fines; (b) institute a civil case for damages; or (c) file a criminal
case for violation of this Act or other relevant laws: Provided that, for purposes of
this Act, the preliminary inquiry referred to in Section 9 of this Act shall fulfill the
requirements of a preliminary investigation: Provided, further, That no appeal can
be taken from the said resolution unless issued with grave abuse of discretion.


SECTION 15. Nolo Contendere Resolution. — Any firm under inquiry under
the provisions of this Act may submit to a nolo contendere resolution at any time
before the termination of the preliminary inquiry by: a) the payment of an amount
within the range of penalties provided for under Section 8; b) by entering into an
undertaking to effectively stop and rectify the acts complained against, make
restitution to the affected parties, whether or not the parties are complainants or
witnesses; and, c) by submitting regular compliance reports as may be directed
Provided that, five percent (5%) of the amounts paid under this section shall
equitably accrue to the government agencies involved in the inquiry: Provided,
further, That a nolo contendere resolution shall not bar any inquiry for the same
or similar acts if continued or repeated.

SECTION 16. Court Action. — In addition to any criminal action, the DOJ,
when instituting the civil action, shall bring it in the name of the Republic of the
Philippines, as parens patriae, on behalf of persons residing in the Philippines, to
secure treble damages for any monetary injury sustained by such natural
persons by reason of any violation of this Act plus the cost of suit and a
reasonable attorney's fee.

SECTION 17. Effect of Final Judgment. —The final judgment in an action
brought under the preceding section shall be res judicata as to any claim by any
person on whose behalf such action was brought: Provided that, such person
notifies the court having jurisdiction of the case within the period given. by the
court: Provided, further, That such period shall not be less than ninety (90) days.

SECTION 18. Distribution of Monetary Relief Recovered. — The monetary
relief recovered in a civil action under Section 15 of this Act shall be distributed in
the following manner: (1) as determined and to be authorized by the Regional
Trial Court having jurisdiction of the case; (2) ten percent (10%) of the total
amount of monetary relief shall accrue to the DOJ to be used in the enforcement
of this Act; and, (3) the remainder of which total amount of monetary relief shall
be deemed a civil penalty by the Regional Trial Court and shall be deposited to
the National Treasury as part of the general fund of the government: Provided
that, any distribution procedure adapted by the Regional Trial Court shall afford
each person having an interest in the monetary relief a reasonable opportunity to
secure his appropriate portion of the net monetary relief obtained

SEcTION 19. Evidential Effect of a Final Judgment. — Any final judgment
rendered in any civil or criminal action brought by the DOJ on behalf of the
People of the Philippines under this Act to the effect that a defendant has
violated any or all of the provisions of this Act shall be prima facie evidence
against such defendant in any civil action brought by any other party against
such defendant under this Act as to all matters respecting which said judgment
would he an estoppel as between the parties concerned.


ARTICLE VI
OTHER PROVISIONS

SECTION 20. Statute of limitations. - Any civil or criminal action to enforce
any cause of action arising from a violation of any provision of this Act shall he
forever barred unless commenced within ten years (10) years after the cause of
action accrues. The running of the statute of limitation shall be suspended during
the pendency of any proceeding.

SECTION 21. Imposition of Fines by Regulatory Agency. — Notwithstanding
any provisions of law, regulatory agencies shall, in the conduct of their functions
or duties, have the power to impose fines in the amount not less than One
Hundred Thousand Pesos (Php100,000.00) and not exceeding Five Million
Pesos (Php5,000,000.00), if a natural person; and not less than Five Million
Pesos (Php5,000,000.00) and not exceeding Fifty Million Pesos
(Php50,000,000.00) if a firm for each violation of or non-compliance with an order
oF notice of the regulatory agency. Ten percent (10%) of such fines shall accrue

to the budget of the regulatory agency for the exclusive use in the enforcement of
this Act

SECTION 22. Prohibition on the Issuance of Temporary Restraining Orders,
Preliminary Injunctions and Preliminary Mandatory Injunctions. - Except for the
Supreme Court, no other court shall issue any temporary restraining order,
preliminary injunction or preliminary mandatory injunction against the regulatory
agency in the exercise of its duties or functions: Provided that, this prohibition
shall apply in all cases, disputes or controversies instituted by a private party,
including, but not limited to, cases filed by regulated firms or those claiming to
have rights through such firms: Provided, however, That, this prohibition shall not
apply when the matter is of extreme urgency involving a constitutional issue,
such that the non-issuance of a temporary restraining order will result in grave
injustice and irreparable injury to the public: Provided, further, That, the applicant
shall file a bond, in an amount to be fixed by the court, but in no case shall it be
less than half of the imposable fines provided for under Section 21 of this Act:
Provided, finally, That in the event that the court finally decides that the applicant
was not entitled to the relief applied for, the bond shall accrue in favor of the
regulatory agency.

Any temporary restraining order, preliminary injunction or preliminary
mandatory injunction issued in violation of this section is void and of no force and
effect. Any judge who violates this section shall be penalized by suspension of at
least one (I) year without pay in addition to other criminal, civil or administrative
penalties.

The Supreme Court may designate regional trial courts to act as
commissioners with the sole function of receiving facts of the case involving the


acts of the regulatory agency. The designated Regional Trial Court shall, within
thirty (30) days from the date of receipt of the referral, forward its findings of facts
to the Supreme Court for appropriate action.

SECTION 23. Intellectual Property Rights. - The implementation of the
provisions of this Act shall be without prejudice to the rights, liabilities and
remedies under Republic Act No. 8293, otherwise known as the Intellectual
Property Code of the Philippines: Provided that, the exercise of intellectual
property rights shall not in any way be used to justify violations of this Act

SECTION 24. Guidelines. - The DOJ, in consultation with the DTI, shall
prepare the necessary guidelines for the implementation of this Act: Provided
that, where the guidelines would apply to an industry or a sub-sector of industry
that is subject to the jurisdiction of a regulatory agency, the DOJ shall, in
preparing the guidelines, consult with the concerned regulatory agency
Provided, further, That the DOJ may revise such guidelines it deems necessary:
Provided, however, That such revised guidelines shall only take effect following
its publication in two newspapers of general circulation.

SECTION 25. Separability Clause.- If any clause, sentence, section or part
of this Act shall be adjudged by a court of competent jurisdiction to be invalid,
such judgment shall not affect, impair or invalidate the remainder of this Act, but
shall be confined in its operation to the clause, sentence paragraph, section, or
part thereof directly involved in the controversy.

SECTION 26. 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 27. Effectivity Clause. — This Act shall take effect fifteen (15) days
following its publication in the Official Gazette or in at least two (2) national
newspapers of general circulation

Approved,