Section 14. Anti-Competitive Agreements
Section 14. Anti-Competitive Agreements
Section 14. Anti-Competitive Agreements
We now come to grips with the contention that some provisions of R.A. No. 8180 violate
section 19 of Article XII of the 1987 Constitution. These provisions are:
(1) Section 5 (b) which states — "Any law to the contrary notwithstanding and
starting with the effectivity of this Act, tariff duty shall be imposed and collected on
imported crude oil at the rate of three percent (3%) and imported refined petroleum
products at the rate of seven percent (7%) except fuel oil and LPG, the rate for which
shall be the same as that for imported crude oil. Provided, that beginning on January
1, 2004 the tariff rate on imported crude oil and refined petroleum products shall be
the same. Provided, further, that this provision may be amended only by an Act of
Congress."
(2) Section 6 which states — "To ensure the security and continuity of petroleum
crude and products supply, the DOE shall require the refiners and importers to
maintain a minimum inventory equivalent to ten percent (10%) of their respective
annual sales volume or forty (40) days of supply, whichever is lower," and
(3) Section 9 (b) which states — "To ensure fair competition and prevent cartels and
monopolies in the downstream oil industry, the following acts shall be prohibited:
On the other hand, section 19 of Article XII of the Constitution allegedly violated by the
aforestated provisions of R.A. No. 8180 mandates: "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 2
b) Agreement refers to any type or form of contract, arrangement, understanding, collective
recommendation, or concerted action, whether formal or informal, explicit or tacit, written or
oral;
(a) The following agreements, between or among competitors, are per se prohibited:
(1) Restricting competition as to price, or components thereof, or other terms
of trade;
(b) The following agreements, between or among competitors which have the object
or effect of substantially preventing, restricting or lessening competition shall be
prohibited:
(c) Agreements other than those specified in (a) and (b) of this section 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.
An entity that controls, is controlled by, or is under common control with another entity or
entities, have common economic interests, and are not otherwise able to decide or act
independently of each other, shall not be considered competitors for purposes of this section.
(h) Entity refers to any person, natural or juridical, sole proprietorship, partnership,
combination or association in any form, whether incorporated or not, domestic or foreign,
including those owned or controlled by the government, engaged directly or indirectly in any
economic activity;
An entity that controls, is controlled by, or is under common control with another entity or
entities, have common economic interests, and are not otherwise able to decide or act
independently of each other, shall not be considered competitors for purposes of this section.
Agan vs PIATCO
Sec. 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.
(a) The following agreements, between or among competitors, are per se prohibited:
Gokongwei vs SEC
The terms "monopoly", "combination in restraint of trade" and "unfair competition" appear to
have a well defined meaning in other jurisdictions. A "monopoly" embraces any combination
the tendency of which is to prevent competition in the broad and general sense, or to control
prices to the detriment of the public. 37 In short, it is the concentration of business in the
hands of a few. The material consideration in determining its existence is not that prices are
raised and competition actually excluded, but that power exists to raise prices or exclude
competition when desired. 38 Further, it must be considered that the Idea of monopoly is now
understood to include a condition produced by the mere act of individuals. Its dominant
thought is the notion of exclusiveness or unity, or the suppression of competition by the
qualification of interest or management, or it may be thru agreement and concert of action. It
is, in brief, unified tactics with regard to prices. 39
From the foregoing definitions, it is apparent that the contentions of petitioner are not in
accord with reality. The election of petitioner to the Board of respondent Corporation can
bring about an illegal situation. This is because an express agreement is not necessary for
the existence of a combination or conspiracy in restraint of trade. 40 It is enough that a
concert of action is contemplated and that the defendants conformed to the
arrangements, 41 and what is to be considered is what the parties actually did and not the
words they used. For instance, the Clayton Act prohibits a person from serving at the same
time as a director in any two or more corporations, if such corporations are, by virtue of their
business and location of operation, competitors so that the elimination of competition
between them would constitute violation of any provision of the anti-trust laws. 42 There is
here a statutory recognition of the anti-competitive dangers which may arise when an
individual simultaneously acts as a director of two or more competing corporations. A
common director of two or more competing corporations would have access to confidential
sales, pricing and marketing information and would be in a position to coordinate policies or
to aid one corporation at the expense of another, thereby stifling competition.
1. Dominant position; Abuse of Dominance
Section 15. Abuse of Dominant Position. – It shall be prohibited for one or more entities to
abuse their dominant position by engaging in conduct that would substantially prevent,
restrict or lessen competition:
(a) Selling goods or services below cost with the object of driving competition out of
the relevant market: Provided, That in the Commission’s evaluation of this fact, it
shall consider whether the entity or entities have no such object and the price
established was in good faith to meet or compete with the lower price of a competitor
in the same market selling the same or comparable product or service of like quality;
(b) Imposing 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;
(1) Socialized pricing for the less fortunate sector of the economy;
(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: Provided, That nothing contained in this Act shall prohibit or render
unlawful:
(1) Permissible franchising, licensing, exclusive merchandising or exclusive
distributorship agreements such as those which give each party the right to
unilaterally terminate the agreement; or
(f) Making 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 imposing 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;
Provided, That nothing in this Act shall be construed or interpreted as a prohibition on having
a dominant position in a relevant market or on acquiring, maintaining and increasing market
share through legitimate means that do not substantially prevent, restrict or lessen
competition:
Provided, further, That any conduct which contributes to improving production or distribution
of goods or services within the relevant market, or promoting technical and economic
progress while allowing consumers a fair share of the resulting benefit may not necessarily
be considered an abuse of dominant position:
Provided, finally, That the foregoing shall not constrain the Commission or the relevant
regulator from pursuing measures that would promote fair competition or more competition
as provided in this Act.
Avon vs Luna
Now to the basics. From the wordings of the Constitution, truly then,
what is brought about to lay the test on whether a given agreement
constitutes an unlawful machination or combination in restraint of trade is
whether under the particular circumstances of the case and the nature of the
particular contract involved, such contract is, or is not, against public
interest.[17]
And what is public policy? In the words of the eminent Spanish jurist,
Don Jose Maria Manresa, in his commentaries of the Codigo Civil, public
policy (orden pblico):
[R]epresents in the law of persons the public, social and legal interest, that
which is permanent and essential of the institutions, that which, even if
favoring an individual in whom the right lies, cannot be left to his own
will. It is an idea which, in cases of the waiver of any right, is manifested
with clearness and force. [20]
Plainly put, public policy is that principle of the law which holds that
no subject or citizen can lawfully do that which has a tendency to be
injurious to the public or against the public good.[22] As applied to contracts,
in the absence of express legislation or constitutional prohibition, a court, in
order to declare a contract void as against public policy, must find that the
contract as to the consideration or thing to be done, has a tendency to injure
the public, is against the public good, or contravenes some established
interests of society, or is inconsistent with sound policy and good morals, or
tends clearly to undermine the security of individual rights, whether of
personal liability or of private property.[23]
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.
Unfair Competition
Wilaware vs Jesichris
Article 28 of the Civil Code provides that "unfair competition in agricultural, commercial or
industrial enterprises or in labor through the use of force, intimidation, deceit, machination or
any other unjust, oppressive or high-handed method shall give rise to a right of action by the
person who thereby suffers damage."
From the foregoing, it is clear thatwhat is being sought to be prevented is not competitionper
sebut the use of unjust, oppressive or high- handed methods which may deprive others of a
fair chance to engage in business or to earn a living. Plainly,what the law prohibits is unfair
competition and not competition where the means usedare fair and legitimate.
In order to qualify the competition as "unfair," it must have two characteristics: (1) it must
involve an injury to a competitor or trade rival, and (2) it must involve acts which are
characterized as "contrary to good conscience," or "shocking to judicial sensibilities," or
otherwise unlawful; in the language of our law, these include force, intimidation, deceit,
machination or any other unjust, oppressive or high-handed method. The public injury or
interest is a minor factor; the essence of the matter appears to be a private wrong
perpetrated by unconscionable means.9
168.1. A person who has identified in the mind of the public the goods he manufactures
or deals in, his business or services from those of others, whether or not a registered
mark is employed, has a property right in the goodwill of the said goods, business or
services so identified, which will be protected in the same manner as other property
rights.
168.2. Any person who shall employ deception or any other means contrary to good faith
by which he shall pass off the goods manufactured by him or in which he deals, or his
business, or services for those of the one having established such goodwill, or who shall
commit any acts calculated to produce said result, shall be guilty of unfair competition,
and shall be subject to an action therefor.
168.3. In particular, and without in any way limiting the scope of protection against unfair
competition, the following shall be deemed guilty of unfair competition:
(a) Any person, who is selling his goods and gives them the general appearance
of goods of another manufacturer or dealer, either as to the goods themselves or
in the wrapping of the packages in which they are contained, or the devices or
words thereon, or in any other feature of their appearance, which would be likely
to influence purchasers to believe that the goods offered are those of a
manufacturer or dealer, other than the actual manufacturer or dealer, or who
otherwise clothes the goods with such appearance as shall deceive the public
and defraud another of his legitimate trade, or any subsequent vendor of such
goods or any agent of any vendor engaged in selling such goods with a like
purpose;
(b) Any person who by any artifice, or device, or who employs any other means
calculated to induce the false belief that such person is offering the services of
another who has identified such services in the mind of the public; or
(c) Any person who shall make any false statement in the course of trade or who
shall commit any other act contrary to good faith of a nature calculated to
discredit the goods, business or services of another.
168.4. The remedies provided by Sections 156, 157 and 161 shall apply mutatis
mutandis. (Sec. 29,R.A. No. 166a)
The petitioner theorizes that the above section does not limit the scope of protection on the
particular acts enumerated as it expands the meaning of unfair competition to include "other acts
contrary to good faith of a nature calculated to discredit the goods, business or services of
another." Allegedly, the respondents' hoarding of Coca Cola empty bottles is one such act.
We do not agree with the petitioner's expansive interpretation of Section 168.3 (c).