Justice department issues guidelines for enforcement of competition law

THE DEPARTMENT of Justice (DoJ) has issued guidelines on enforcing competition law to ensure a “consistent and predictable” regime that will “give meaning and import” to the multiple laws addressing anti-competitive behavior.

Department Circular No. 005, dated March 2 and published in newspapers on April 30, lists as punishable by law agreements intended to “effect the restraint, restriction, prevention, or distortion of competition in the market,” including bid rigging, market share allocation, commercial boycotts intended to exclude competitors, and exploitative abuse of dominant market positions, among others.

The unifying guidelines take effect 15 days after their publication.

The guidelines contain detailed criteria for when an entity can be considered in a dominant economic position with the po- tential for abuse. They include leading market share, technological or patent advantages, high capital investments forming barriers to entry, large production capacity, a specialized sales network.

Monopolization may also occur if dominant entities commit exploitative abuse such as excessive pricing, or exclusionary abuse. The lat- ter form of abuse is defined as aimed at eliminating competition through selective pricing, tying of contracts, predatory pricing, margin squeezing, refusal to deal or entering into exclusivity arrangements.

Among existing competition laws strengthened by the circular are: Act No. 3247 (the 1925 law prohibiting monopolies and combinations restraining trade), Republic Act No. 386 or the Civil Code, and Executive Order No. 45, series of 2011, which designated the DoJ as the Competition Authority.

Assistant Secretary Geronimo L. Sy, head of the Office for Competition, was not immediately available for comment on how these guidelines would affect major cases being pursued by the agency, as well as its effects on the Fair Competition Act that has yet to be approved by the House of Representatives.