Local anti-trust law…part 2

Last week, we started this two-part series on House Bill No. 4320 or the Philippine Fair Competition Act of 2014 introduced by House Deputy Speaker Sergio F. Apostol which seeks to penalize anti-competitive agreements, abuse of dominant positions by companies and anti-competitive mergers.

With this bill, the author also seeks to create the Philippine Fair Competition Commission in order to implement the policies of the Act within 180 days after the approval of the bill.

The commission would fall under the Office of the President. Its composition: a chairperson and four Association Commissioners, two of whom should be members of the Philippine Bar, and two eminent Filipino economists, with all of them having chalked up at least 10 years of experience in their fields.

Candidates in the most recent elective national or local elections cannot qualify for the posts. While the chairperson can serve for six years without reappointment, two of the chairpersons can only serve for four, and the other two for only two years. All may not hold other offices or employment, nor practice their profession during their terms and may not run for public office in elections immediately following their end of term, nor practice before the commission for two years after their term expires.

Those are pretty constricting prohibitions, but since the Chairperson holds a rank equivalent to Department Secretary or a Presiding Justice of the Court of Appeals (for purposes of the Act) while the Associate Commissioners share the rank of a Department Undersecretary or Associate Justice of the Court of Appeals, I guess it is only fair that this be the case. In addition, a Career Executive Service Officer (CESO) shall be named as Executive Director of the Commission.

The Commission is tasked to gather and compile information on businesses or industries, require business firms to file annual or special reports by way of disclosure which could be made public, except in cases where trade secrets are involved. The body may also conduct preliminary inquiries and impose fines, penalties and sanctions for verified violations.

This particular provision on fines and penalties is most interesting as it gives teeth to the Commission.  Any firm that violates certain specific provisions of the Act “shall, for each and every violation, be punished by a fine of not less than Ten Million Pesos (P10,000,000) and not exceeding Fifty Million Pesos (P50,000,000) if a natural person; by a fine of not less than Two Hundred Fifty Million Pesos (P250,000,000) but not exceeding Seven Hundred Million Pesos (P750,000,000) if a firm, AT THE DISCRETION OF THE COMMISSION. In addition, a fine shall be imposed in an amount double the gross proceeds gained by the violator/s or double the gross loss suffered by the plaintiffs.” (Note: capitals supplied by this writer.)

Whew, the House Deputy Speaker is certainly not joking when he crafted this bill. Whether for a self-made millionaire or a multinational company operating here, those fines and penalties are hefty. When the Commission issues a ruling or a cease and desist order and a person or a company refuses or fails to comply, there will be a fine of not less than P50,000 for each separate violation which may even be counted on a daily basis in case of continuing failure. Even misrepresentation of information filed can subject one to fines ranging from P5,000 to P100,000. On top of all these, violations of the sections covering Anti-competitive Agreements, Abuse of Dominant Position, and Anti-Competitive Mergers can merit criminal penalties, with fines ranging from P10,000,000 to P50,000,000 for natural persons, and for companies from P250,000,000 to P750,000,000 and IMPRISONMENT NOT EXCEEDING TEN YEARS OR BOTH, at the discretion of the court. (Again, the capitals are mine.) Who may be imprisoned? In case of the above-mentioned violations, the terms of the Revised Penal Code will apply for the criminal liability of principals, accomplices and accessories.

These provisions may appear too harsh that our lawmakers themselves may approach the proposed Act with temerity and a lot of caution. The penalties are stiff, yes, but monopolies and cartels have been lording it over the Philippine business scene far too long that it is time that someone takes up the cudgels for the ordinary consumer and the smaller businessmen. Give the Commission a lot of teeth, but are we scaring away the big boys?

The Commission, if it finds just cause, can file a class suit against the erring person or company in the name of the Republic of the Philippines. If the erring party files the prescribed penalties or rectifies the violations, or makes restitution to the affected parties, then the Commission may stop the inquiry altogether.  However, 10 percent of the amounts paid under these terms shall accrue to the Commission.

Because of the fines and penalties faced by erring parties, it is always best to encourage voluntary compliance.  Adjudicatory administrative remedies are always costly and can stretch to even decades, thus enriching our corporate lawyers even more. If in doubt, a corporation may always request the Commission to issue a binding ruling on certain conducts of business or agreements, and the Commission shall be tasked to monitor the compliance thereon by the companies (or persons) involved.  It would be in the party’s best interest to request for a certification as to its compliance with the Commission’s final and executory ruling. A binding ruling, however, may be re-opened by the Commission upon petition of an interested party when it deems that certain materials facts or law have changed or were issued based on falsified information or when the parties involved fail to comply with any condition related to the Commission’s ruling.

What remedies do these “erring” parties have? They may elevate the matter to the Court of Appeals, and failing to find this court’s decision favorable, may then take the matter to the Supreme Court who will have the last and final say on the case in question. Foreigners found guilty of these violations shall also be deported after serving the sentence. The Commission, though, is rendered immune from suits for acts done in the performance of their duties, unless such acts were done in bad faith or gross negligence.

The Act seeks to cover areas previously covered by the Price Act, the Public Telecommunications Policy Act, the Downstream Oil Industry Deregulation Act, the Electric Power Industry Reform Act, the Domestic Shipping Development Act and the Universally-Accessible Cheaper and Quality Medicines Act, so these may, according to this Act, be repealed or amended.

In essence, these are the salient provisions of the Philippine Fair Competition Act of 2014.

Mabuhay!!! Be proud to be a Filipino.

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