Understanding the Philippine Competition Act: Protecting Fair Market Practices

Businesses in the Philippines, especially startups, might have some concerns about fair market competition. After all, there has, in the past, been cases of monopolisation that seriously affect smaller businesses—in some cases, shutting them down for good.

But today, things are different. In 2015, the Philippine government brought in the Philippine Competition Act (Republic Act No. 10667). This law protects the market (and the consumer) by preventing unfair business practices—think anti-competitive agreements, abuse of dominant positions, anti-competitive mergers and acquisitions, monopolistic behaviours. . . you get the idea.

That’s all great news for small businesses. The PCA keeps the playing field level, meaning you can innovate and compete in a fair, open market.

But how does the Philippine Competition Act work exactly? And how does it protect your business? Let’s answer your questions!

In this article, you will learn:

• What is the Philippine Competition Commission (PCC)?
• What is the Philippine Competition Act (RA 10667)?
• What is a monopoly and how does it affect the market?
• Monopolistic competition in the Philippines: What you need to know
• Anti-competition laws in the Philippines: Understanding the legal framework
• How the Philippine Competition Commission protects small businesses
• Examples of anti-competitive behaviour and legal action in the Philippines
• The future of competition law in the Philippines

What is the Philippine Competition Commission (PCC)?

So you know what the Philippine Competition Act is. But do you know how it’s enforced? That would be down to the Philippine Competition Commission (PCC).

The PCC is an independent government agency. It’s their job to maintain fair market competition in the Philippines. That may sound simple, but the commission is actually tasked with many major responsibilities—but we’ll get to those later.

They don’t just play a role in preventing unfair market practices, but also in promoting positive ones, too. They promote competition through policy advocacy, public education, and collaboration with other regulatory bodies. 

As you can imagine, that’s a lot of work! And we should all be grateful for it. The PCC is a fundamental part of business and consumer welfare here in the Philippines.

Key functions of the Philippine Competition Commission

We mentioned that the Philippine Competition Commission has several serious responsibilities in the Philippine market. But what exactly are those responsibilities?

Let’s see how the PCC exercises its authority:

• Investigating mergers and acquisitions: They’ll look into business mergers to prevent transactions that may substantially lessen competition.
• Penalising anti-competitive agreements: If the PCC finds evidence of cartels or collusion, they can take action.
• Overseeing the PCA: The PCC conducts market studies, runs inquiries, imposes sanctions, and more in order to uphold the PCA.
• Promoting competition: The PCC also works hard to promote competition though education, ensuring positive market practices for the future!

What is the Philippine Competition Act (RA 10667)?

We’ve mentioned both the PCC and the PCA. Now, it’s time to take a closer look at the Philippine Competition Act. It’s the foremost competition law in the Philippines, so it’s important you’re familiar with it!

The law’s main role is simple: to make the economy stronger. The hope is that by prohibiting unfair market practices, the government can help encourage innovation and increase consumer choice.

With that aim, the PCA:

• Prohibits monopolies
• Prohibits unfair business practices like:
• Price-fixing
• Bid-rigging
• Market allocation
• Abuse of dominant positions
• Regulates mergers and acquisitions

This isn’t all just theory, either; the PCC (remember them?) has the power to enforce these laws!

Key provisions of the Philippine Competition Act

So what does all this look like in practice? Well, the PCA covers a broad range of areas, but its main provisions are as follows:

• Prohibiting anti-competitive agreements: This is a broad category. But it generally means anything that artificially restricts market choice and inflates prices.
• Prohibiting abuse of dominant position: Where a company uses its market power to unfairly limit competition.
• Regulating mergers and acquisitions: The PCC wants to make sure that big mergers or acquisitions don’t significantly lessen market competition (say a big company buys its only other competitor).

These provisions aren’t just about quotas. They have real-world impact, too. Don’t believe us? Let’s explore a couple of real examples where the PCC played a role:

1. In 2018, the PCC was called in to scrutinise the famous Grab-Uber merger. With Grab being the dominant ride-hailing service in Southeast Asia, there were understandable concerns about reduced competition. The PCC imposed commitments on Grab to address pricing and service concerns. 
2. In 2020, several shipping companies were found to have been involved in bid-rigging for government projects. The result? Sanctions, and even legal proceedings, all headed by the PCC.

What is a monopoly and how does it affect the market?

You’ve heard us mention ‘monopolies’. But what is a monopoly?

It’s quite simple: when a single massive company corners a market, they may end up with the power to control prices and limit supply. It could even prevent competitors from competing. 

An example of monopoly in the Philippines would be Meralco. In some regions, they completely dominate electricity distribution.

To be clear: we’re not suggesting any wrongdoing. Monopolies can occur naturally. But they can still harm competition if unregulated.

The argument is that competition encourages innovation and lower prices. Without that, monopolists can under-deliver and over-charge, which is bad for both the economy and consumers’ wallets!

And for small businesses, of which you might be one, monopolies can make it extremely tough to break into a certain market.

Examples of monopoly in the Philippines

We’ve mentioned the electricity giant Meralco. But what about other examples of monopoly in the Philippines?

Well, we might also look at the PLDT-Globe Telecom duopoly in the telecommunications sector. The two companies dominate the field, but that’s historically limited consumer choice and kept prices high. The PCC approved the merger between the two companies' tower-sharing ventures in 2020 to promote better infrastructure access and competition.

Likewise, when the San Miguel Corporation (SMC), which has a big presence in infrastructure, tried to acquire more market share in the fuel industry through mergers, the PCC stepped in. They reviewed the deals to make sure they wouldn’t lead to inflated prices.

Monopolistic competition in the Philippines: what you need to know

Is ‘monopolistic competition’ an oxymoron? Well, not exactly. It’s a market structure where firms offer similar, but—and here’s the important part—not identical, products or services. The market gets diversity, but not monopoly.

Key characteristics, then, include:

• Many sellers
• Product differentiation
• Free entry and exit
• Some degree of pricing power

In the Philippines, we see this all around us every day. When you walk through a city centre, you’ll see Jollibee, McDonald's, and KFC everywhere. They offer similar products. But you wouldn’t say they’re the same, would you?

Example of monopolistic competition in the Philippines

We already mentioned the fast food industry as an example. Let’s take another. What about local coffee shops?

Just like fast food, you probably notice several coffee shop businesses popping up everywhere you go (think Bo's Coffee, Figaro, Starbucks, etc.) No doubt, these chains offer similar products, right? Sure, but they differentiate themselves through brand identity, store ambiance, customer experience, and unique offerings such as local coffee blends or international flavors. 

They each have some pricing power. But not enough to dominate exclusively. This is precisely the kind of competition the PCC aims to monitor!

Anti-competition laws in the Philippines: understanding the legal framework

The PCA is part of a broader anti-competition law landscape in the Philippines. Every part of that landscape exists to keep competition high and the market healthy.

Oh, what do we mean by ‘anti-competition’? Such behaviour is anything that harms competition. That could be:

• Price-fixing
• Market allocation
• Bid-rigging
• Abuse of dominant position

And the PCC’s not alone. They work alongside other regulatory bodies to maintain fair market conditions. They’re there to ensure a competitive environment that fosters innovation and ultimately benefits you, the consumer. 

Important note: violators can face fines or even legal charges.

Key anti-competition laws in the Philippines

The Philippines Competition Act is the main competition law in the Philippines. But it encompasses and works alongside other important regulations, too. Those include:

• Implementing Rules and Regulations (IRR) of the Philippine Competition Act: This tells the PCC how exactly the PCA should be interpreted. Essentially, it tells them the process for reviewing things like mergers and acquisitions to maintain consistency.
• The National Competition Policy (NCP): This supports the PCA to create an environment that fosters competition across various sectors. It’s all about market openness and anti-monopoly regulation.
• Anti-competitive regulations in specific sectors: There are industry-specific regulations, too. Take the Energy Regulatory Commission (ERC), for example. This takes aim at utility companies engaging in price-fixing or unfair practices.
• Consumer protection laws: Of course, there are consumer protection laws, too. The Consumer Act of the Philippines (RA 7394) plays a critical role in regulating deceptive practices—including those that could lead to anti-competitive outcomes!

How the Philippine Competition Commission protects small businesses

You might not realise it, but if you’re a small business in the Philippines, the PCC is working to protect you as we speak. That’s because monopolies harm you as much as they harm the consumer.

Why? Well, in a few ways. Firstly, pricing. When there’s a strong monopoly, the dominant company may be able to provide much lower prices (while also limiting your supply). This prevents small businesses from competing.

What’s more, monopolists can also make it super difficult to enter a market. That’s what we call ‘high barrier to entry’; it means they control supplies and small businesses can’t get their hands on the necessary supplies to produce.

The PCC helps to prevent all this and make sure that a small business with the right product or service can succeed in the Philippines!

The role of the PCC in safeguarding small business interests

This isn’t all just theory. The PCC plays an active role in regulating the market for fairness—and that’s especially great if you run a small business.

We already mentioned the Grab-Uber merger earlier on, when the PCC went through the deal to make sure it wouldn’t reduce competition in the ride-hailing market and harm smaller players.

But there are other examples, too. For example, there was another case involving the retail gasoline sector. There had been reports of coordinated price hikes and market manipulation by dominant oil companies. The PCC came to the rescue. They intervened to ensure smaller retailers weren’t unfairly affected by anti-competitive pricing.

Those are just two of numerous examples of the PCC doing its part to protect small business in the Philippines!

Examples of anti-competitive behaviour and legal action in the Philippines

Ever heard of an anti-competitive behaviour case? There have actually been several notable cases of anti-competition law in the Philippines, which shows the PCC has had a real impact.

Here are just a couple:

• Shipping companies (2018): The PCC uncovered that several shipping firms had coordinated bids for government transport contracts—what’s known as ‘bid-rigging’. Meaning? The companies had manipulated prices and restricted fair competition. The PCC fined the companies.
• Cement industry (2019): The PCC investigated major cement manufacturers for alleged anti-competitive agreements and price-fixing. They actually found evidence to support this. Again, the PCC issued heavy fines on the companies involved. 

Notable antitrust cases in the Philippines

You might be interested to learn of some more high-profile antitrust cases involving the PCC. Details can be thin on the ground here, but there are some notable cases:

• Philippine Airlines (PAL)-Cebu Pacific (2019): The PCC stepped in when there were allegations of price-fixing on domestic routes. They found no conclusive proof of collusion. However, they closely monitored fare practices and introduced regulations for greater pricing transparency.
• Retail banking sector (2018): The PCC probed potential anti-competitive practices related to ATM fee collusion among banks. The case is one of the reasons there are stricter fee regulations today!

These industries—airlines, banks, construction, retail, oil—affect everyday life in the Philippines, not just small business. The PCC plays a vital role in consumer protection.

The future of competition law in the Philippines

So where does competition law go from here? Well, as industries adapt, the Philippines Competition Act will have to, too.

We don’t have a crystal ball, but if we had to make a prediction, we’d say the PCA will adapt to digital markets and emerging industries. As digitalisation grows, legal frameworks will have to evolve to address issues like:

• Algorithmic pricing
• Data monopolies
• Platform dominance

The PCC may even expand definitions of market abuse to prevent loopholes made possible by digitalisation.

They have a tough task ahead, but it’s essential they succeed. Not only for small businesses, but for us all as consumers, too.

How businesses can prepare for changes in competition law

Hopefully, your business is already on top of competition law. But it’s important not to get complacent. Businesses of all sizes should adopt proactive practices to stay compliant!

Try these tips:

• Conduct regular internal audits to review operations.
• Establish a compliance program that includes employee training.
• Consult legal advisors when entering into mergers or acquisitions.
• Stay updated with the PCC

We know there’s a lot of paperwork involved in compliance. Luckily, you’re not alone: top-rated accounting software like QuickBooks is there to make documentation and compliance a breeze. Find out more on our homepage—you can even try QuickBooks for free any time you like!