Leveling the playing field

Can a real estate developer impose a sole Internet service provider (ISP) on its unit owners? The country’s anti-trust watchdog, the Philippine Competition Commission (PCC) in its recent decision, thinks not. In fact, apart from directing the real estate developer to desist from imposing such sole ISP on the unit owners, it also slapped a hefty fine on the developer, marking the first abuse of dominance case in the country since the establishment of the PCC in 2016.

The landmark ruling of the PCC aims to stop an anti-competitive practice, to restore competition and to set as an example to deter other companies from pursuing similar exclusive dealings effectively resulting in a monopoly. To this end, the PCC highlighted that competition is important for consumers, for residents may have chosen a certain developer as their dwelling or address, but the latter cannot limit the choice of the residents for other business.

The PCC primarily enforces the Philippine Competition Act which penalizes all forms of anti-competitive agreements, abuse of dominant position and anti-competitive mergers and acquisitions, with the objective of protecting consumer welfare and advancing domestic and international trade and economic development.

Section 15 of the Philippine Competition Act prohibits exploitative and exclusionary conduct that substantially lessens competition, or abuse of dominance. Dominant position refers to a position of economic strength that an entity or entities hold, which makes it capable of controlling the relevant market independently from any or a combination of the following: competitors, customers, suppliers, or consumers.

Abuse of dominant position can be exhibited in various conduct that would substantially prevent, restrict or lessen competition, such as, but not limited to:

• Selling goods or services below cost with the object of driving competition out of the relevant market, subject to evaluation of the

PCC;

• Imposing barriers to entry or preventing competitors from growing within the market in an anti-competitive;

• Price differentials where such customers or sellers are contemporaneously trading on similar terms and conditions, subject to well-defined exceptions such as social price adjustment for the marginalized sectors; and,

• 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. There is a view that although the long list found in Section 15 is comprehensive — it covers a wide range of practices including predatory pricing, tying the sale of a product to the purchase of a totally unrelated product or some other condition, unfair selling price, undefined barriers, among others — the same is far from being exhaustive for the legislature cannot possibly list all possible conduct constituting abuse of dominance. Further, there may be other acts of abuse of dominance that may appear later on out of sheer human creativity.

This recent ruling springing from the Philippine Competition Act has the potential to affect a wide array of consumer transactions that have traditionally been associated with exclusivity. This level of policing poses a reminder to businesses: gone are the days of market dominance by monopoly, as a new era of competition as a way of doing business and a way of life is ushered in for the betterment of the economy as a whole.

“This recent ruling springing from the Philippine Competition Act has the potential to affect a wide array of consumer transactions that have traditionally been associated with exclusivity.

“Landmark ruling of the Philippine Competition Commission aims to stop an anti-competitive practice, to restore competition and to set as an example to deter other companies.