Labor Law Implications of the Philippine Competition Act

Introduction

Republic Act No. 10667 or otherwise known as the Philippine Competition Act

was signed by President Benigno Aquino III on July 21, 2015.1 The law was enacted to

penalize the collusion between market participants resulting in a monopolistic behavior.2

Consider a situation wherein garlic prices went up as high as P287 ($6.37) per kilogram

in June 2014 resulting in a 74% increase in a year, and 100% increase over average

prices.3 Due to the steep increase in price, President Benigno S. Aquino III ordered an

investigation as to the cause.4 The results showed that through the loopholes in the

Bureau of Plant Industry (BPI) system of issuing plant quarantine clearances and

collusion, a cartel was able to control 75% of the garlic imports in the country.5 The

persons allegedly behind the garlic cartel were charged, not for engaging in monopolistic

behavior, but with graft and corruption. This is due to the fact that the Philippines have

not yet enacted a competition law.6

According to Senator Paolo Benigno ‘Bam’ Aquino IV, the principal author of the

Philippine Competition Act, the persons responsible for the said act may face charges

under article 186 of the Revised Penal Code, however no one convicted of violation the

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said provision.7 He also stated the Philippine Competition Act is expected to eliminate

cartels, and penalize anti-competitive agreements and abuses of dominant players in the

markets that lead to high prices of goods and services.8

The Philippine Competition Act and the Pertinent Provisions

The Philippine Competition Act prohibits Anti-Competitive Agreements and

Abuse of Dominant Position.9 There is an Anti-Competitive Agreements are divided into

three categories: 1.) those which are prohibited per se; 2.) those agreements which have

the object or effect of substantially preventing, restricting or lessening competition; 3.)

and those agreements other than those previously mentioned which have the object or

effect of substantially preventing, restricting or lessening competition shall also be

prohibited: provided, those which 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 of this Act. 10 The prohibited per se agreements are as follows:

a.) Restricting competition as to price, or components thereof, or other terms of trade;

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http://www.bamaquino.com/after-long-wait-congress-ratifies-act-penalizing-cartels-abuse-of-dominant-
positions/
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R.A. 10667
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R.A. 10667 sec. 15 and 16
 b.) Fixing price at an auction or in any form of bidding including cover bidding, bid

suppression, bid rotation and market allocation and other analogous practices of

bid manipulation;11

On the other hand, the following agreements, between or among competitors which have

the object or effect of substantially preventing, restricting or lessening competition shall

be prohibited:

a.) Setting, Kmiting, or controlling production, markets, technical development,

or investment;

b.) 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; 12

There is an Abuse of Dominant Position when one or more entities engage in conduct

that would substantially prevent, restrict or lessen competition in such a way that:

a.) Goods or services are sold below cost with the object of driving competition out

of the relevant market;

b.) It imposes barriers to entry or committing acts that prevent competitors from

growing within the market in an anti-competitive manner except those that

develop in the market as a result of or arising from a superior product or process,

business acumen, or legal rights or laws;

c.) It makes a transaction subject to acceptance by the other parties of other

obligations which, by their nature or according to commercial usage, have no

connection with the transaction;

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d.) Setting prices or other terms or conditions that discriminate unreasonably between

customers or sellers of the same goods or services, where such customers or

sellers are contemporaneously trading on similar terms and conditions, where the

effect may be to lessen competition substantially;

e.) Imposing restrictions on the lease or contract for sale or trade of goods or services

concerning where, to whom, or in what forms goods or services may be sold or

traded, such as fixing prices, giving preferential discounts or rebate upon such

price, or imposing conditions not to deal with competing entities, where the object

or effect of the restrictions is to prevent, restrict or lessen competition

substantially;

f.) Makes a supply of particular goods or services dependent upon the purchase of

other goods or services from the supplier which have no direct connection with

the main goods or services to be supplied;

g.) Directly or indirectly imposes unfairly low purchase prices for the goods or

services of, among others, marginalized agricultural producers, fisherfolk, micro-,

small-, medium-scale enterprises, and other marginalized service providers and

producers;

h.) Directly or indirectly imposes unfair purchase or selling price on their

competitors, customers, suppliers or consumers, provided that prices that develop

in the market as a result of or due to a superior product or process, business

acumen or legal rights or laws shall not be considered unfair prices; and

i.) Limits production, markets or technical development to the prejudice of

consumers, provided that limitations that develop in the market as a result of or

 due to a superior product or process, business acumen or legal rights or laws shall

not be a violation.13

The law clearly prohibits acts that would, in way prevent or diminish competition.

Indeed, with the promotion of competition, micro, small, and medium enterprises would

proliferate, and start-ups and aspiring entrepreneurs would gain the initiative in

establishing enterprises. This would lead to an increase in employment at the cost of

having stiffer competition between enterprises.

Effects with the Laws and Jurisprudence in Labor

With the rise of competition between enterprises, employees may find themselves

confronted with stricter company policies with respect to non-compete clauses. In the

case of

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