MEMORANDUM

To: Atty. Kenneth O. Tamala

From:
Re: United States and Philippines Antitrust Laws
Date: March 14, 2018

QUESTIONS PRESENTED

1. What is US Antitrust Laws about?

2. What is Philippines Antitrust Laws about?

ANSWERS:

1. United States antitrust law is a collection of federal and state government

laws that regulates the conduct and organization of business corporations,
generally to promote fair competition for the benefit of consumers. (The
concept is called competition law in other English-speaking countries.)

The main statutes are the Sherman Act of 1890, the Clayton Act of 1914 and
the Federal Trade Commission Act of 1914. These Acts, first, restrict the
formation of cartels and prohibit other collusive practices regarded as being
in restraint of trade. Second, they restrict the mergers and acquisitions of
organizations that could substantially lessen competition. Third, they prohibit
the creation of a monopoly and the abuse of monopoly power.

The Federal Trade Commission, the U.S. Department of Justice, state

governments and private parties who are sufficiently affected may all bring
actions in the courts to enforce the antitrust laws. The scope of antitrust laws,
and the degree to which they should interfere in an enterprise's freedom to
conduct business, or to protect smaller businesses, communities and
consumers, are strongly debated. One view, mostly closely associated with
the "Chicago School of economics" suggests that antitrust laws should focus
solely on the benefits to consumers and overall efficiency, while a broad range
of legal and economic theory sees the role of antitrust laws as also controlling
economic power in the public interest.

2. Philippine Antitrust laws, also referred to as “competition laws”, are statutes

developed to protect consumers from predatory business practices by ensuring
that fair competition exists in an open-market economy. Competition laws
regulate and prohibit several questionable business activities such as market
allocation/ de facto monopoly whereby companies agree to steer clear of each
other’s identified geographical market or territories; bid rigging whereby
conspiring entities manipulate the market with a view of retaining current
market share and price for each entity; and price fixing whereby two or three
entities agree on the same selling price. Competition laws are designed to
 maximize consumer welfare by regulating or preventing business activities
which stifle competition.

DISCUSSIONS:

1.
A. History of the US Antitrust Laws:

Way back in the 1800s, there were several giant businesses known as “trusts.”
They controlled whole sections of the economy, like railroads, oil, steel, and sugar.
Two of the most famous trusts were U.S. Steel and Standard Oil; they were
monopolies that controlled the supply of their product—as well as the price. With
one company controlling an entire industry, there was no competition, and smaller
businesses and people had no choices about from whom to buy. Prices went through
the roof, and quality didn’t have to be a priority. This caused hardship and threatened
the new American prosperity.
While the rich, trust-owning businessmen got richer and richer, the public got
angry and demanded the government take action. President Theodore Roosevelt
“busted” (or broke up) many trusts by enforcing what came to be known as
“antitrust” laws. The goal of these laws was to protect consumers by promoting
competition in the marketplace.
The U.S. Congress passed several laws to help promote competition by outlawing
unfair methods of competition:

• The Sherman Act is the nation’s oldest antitrust law. Passed in 1890, it makes it
illegal for competitors to make agreements with each other that would they can’t
agree to set a price for a product—that’d be price fixing. The Act also makes it illegal
for a business to be a monopoly if that company is cheating or not competing fairly.
Corporate executives who conduct their business that way could wind up paying
huge fines—and even go to jail!

• The Clayton Act was passed in 1914. With the Sherman Act in place, and trusts
being broken up, business practices in America were changing. But some companies
discovered merging as a way to control prices and production (instead of forming
trusts, competitors united into a single company. The Clayton Act helps protect
American consumers by stopping mergers or acquisitions that are likely to stifle
competition.

• With the Federal Trade Commission (FTC) Act (1914), Congress created a new
federal agency to watch out for unfair business practices—and gave the Federal
Trade Commission the authority to investigate and stop unfair methods of
competition and deceptive practices.

Today, the Federal Trade Commission’s (FTC’s) Bureau of Competition and the
Department of Justice’s Antitrust Division enforce these three-core federal antitrust
laws. The agencies talk to each other before opening any investigation to decide who
will investigate the facts and work on any case that might be brought. But each
agency has developed expertise in certain industries. Every state has antitrust laws,
too; they are enforced by each state’s attorney general. There’s an office in your state
capitol that helps consumers or businesses who might be hurt when businesses don’t
compete fairly. Antitrust laws were not put in place to protect competing businesses
from aggressive competition. Competition is tough, and sometimes businesses fail.
That’s the way it is in competitive markets, and consumers benefit from the rough
and tumble competition among sellers.

B. The Enforcers

 The Federal Government

Both the FTC and the U.S. Department of Justice (DOJ) Antitrust Division enforce
the federal antitrust laws. In some respects, their authorities overlap, but in practice
the two agencies complement each other. Over the years, the agencies have
developed expertise in particular industries or markets. For example, the FTC
devotes most of its resources to certain segments of the economy, including those
where consumer spending is high: health care, pharmaceuticals, professional
services, food, energy, and certain high-tech industries like computer technology and
Internet services. Before opening an investigation, the agencies consult with one
another to avoid duplicating efforts. In this guide, "the agency" means either the FTC
or DOJ, whichever is conducting the antitrust investigation.

Premerger notification filings, correspondence from consumers or businesses,

Congressional inquiries, or articles on consumer or economic subjects may trigger
an FTC investigation. Generally, FTC investigations are non-public to protect both
the investigation and the individuals and companies involved. If the FTC believes
that a person or company has violated the law or that a proposed merger may violate
the law, the agency may attempt to obtain voluntary compliance by entering into a
consent order with the company. A company that signs a consent order need not
admit that it violated the law, but it must agree to stop the disputed practices outlined
in an accompanying complaint or take certain steps to resolve the anticompetitive
aspects of its proposed merger.

If a consent agreement cannot be reached, the FTC may issue an administrative

complaint and/or seek injunctive relief in the federal courts. The FTC's
administrative complaints initiate a formal proceeding that is much like a federal
court trial but before an administrative law judge: evidence is submitted, testimony
is heard, and witnesses are examined and cross-examined. If a law violation is found,
a cease and desist order may be issued. An initial decision by an administrative law
judge may be appealed to the Commission.

Final decisions issued by the Commission may be appealed to a U.S. Court of

Appeals and, ultimately, to the U.S. Supreme Court. If the Commission's position is
upheld, the FTC, in certain circumstances, may then seek consumer redress in court.
If the company violates an FTC order, the Commission also may seek civil penalties
or an injunction.

In some circumstances, the FTC can go directly to federal court to obtain an

injunction, civil penalties, or consumer redress. For effective merger enforcement,
the FTC may seek a preliminary injunction to block a proposed merger pending a
full examination of the proposed transaction in an administrative proceeding. The
injunction preserves the market's competitive status quo.

The FTC also may refer evidence of criminal antitrust violations to the DOJ. Only
the DOJ can obtain criminal sanctions. The DOJ also has sole antitrust jurisdiction
in certain industries, such as telecommunications, banks, railroads, and airlines.
Some mergers also require approval of other regulatory agencies using a "public
interest" standard. The FTC or DOJ often work with these regulatory agencies to
provide support for their competitive analysis.

 States

State attorneys general can play an important role in antitrust enforcement on matters
of particular concern to local businesses or consumers. They may bring federal
antitrust suits on behalf of individuals residing within their states ("parens patriae"
suits), or on behalf of the state as a purchaser. The state attorney general also may
bring an action to enforce the state's own antitrust laws. In merger investigations, a
state attorney general may cooperate with federal authorities. For more information
on joint federal-state investigations, consult the Protocol for Coordination in Merger
Investigations.

 Private Parties

Private parties can also bring suits to enforce the antitrust laws. In fact, most antitrust
suits are brought by businesses and individuals seeking damages for violations of
the Sherman or Clayton Act. Private parties can also seek court orders preventing
anticompetitive conduct (injunctive relief) or bring suits under state antitrust laws.
Individuals and businesses cannot sue under the FTC Act.

 Issues of International Jurisdiction

U.S. and foreign competition authorities may cooperate in investigating cross-border

conduct that has an impact on U.S. consumers. For more information on the
application of U.S. antitrust laws to businesses with international operations, consult
the Antitrust Guidelines for International Enforcement and Cooperation. In addition,
as more U.S. companies and consumers do business overseas, federal antitrust work
often involves cooperating with international authorities around the world to
promote sound competition policy approaches. There are now more than 130 foreign
competition agencies.

2.
A. History of Philippine Competition Act

A comprehensive competition law was first proposed in the late 1980s during the
administration of President Cory Aquino.
The Philippines was the only country in ASEAN without a competition law and the
integration of ASEAN into a single market was an impetus to pass the act.

Signed into law on 21 July 2015, Republic Act No. 10667, otherwise known as the
Philippine Competition Act (“PCA”) is the first consolidated framework regulating
competition in the Philippines.

With the key objective of regulating and prohibiting monopolies and combinations
in restraint of trade or unfair competition to improve the overall welfare of
consumers by giving them more choices at possibly lower prices, the key features of
the PCA include:

Prohibition on:
 anti-competitive agreements, (2) abuse of dominant position, and (3) anti-
competitive mergers and acquisitions
 The creation of the Philippine Competition Commission, the regulatory body
tasked with the enforcement of the PCA
 Establishment of a framework for compulsory notification of mergers and
acquisitions wherein the value of the transaction exceeds PHP 1 billion
 Development of a system of fines and penalties for violations of the provisions
of the PCA.

B. Who or what is covered by the PCA?

The provisions of the PCA are applicable to any individual or entity engaged in trade,
industry and commerce in the Philippines. It is likewise applicable to international
trade, industry or commerce or acts done outside the Philippines if the same can
reasonably have a direct impact on trade, industry and commerce in the Philippines.
Hence, the acts punishable under the PCA may be committed by both domestic and
foreign entities.

C. What is the role of the Philippine Competition Commission?

The PCA provides for the creation of The Philippine Competition Commission
(“PCC”), the government entity tasked to implement and enforce the provisions of
the PCA and its implementing rules and regulations. The PCC has the power to
conduct inquiries, investigate and hear and decide cases involving violations of the
PCA and other competition laws, including the power to issue subpoenas for
documents or testimonies of persons. Inquiries, investigations and cases may be
undertaken by the PCA on its own, upon the complaint of an interested party or
referral of a concerned government agency. Additionally, The PCC may also issue
advisory opinions and guidelines on matters involving competition.

Distinguished among the powers of the PCC is its authority to review and prohibit
proposed mergers and acquisitions. If it finds a merger and/or acquisition to be anti-
competitive, the PCC may do any of the following: (a) prohibit the implementation
of the agreement contemplating such merger and/or acquisition, (b) require
modifications in the terms of the agreement contemplating such merger and/or
acquisition by specifying such changes; or (c) require parties thereto enter into
otherwise legally enforceable agreements.

D. Philippine Competition Commission

The Philippine Competition Commission is an independent, quasi-judicial body

created to enforce the act. It is attached to the Office of the President of the
Philippines. Five commissioners were appointed to the Philippine Competition
Commission and sworn in on January 27, 2015.

Arsenio Balisacan (Chairperson)

Stella Alabastro-Quimbo
Johannes Bernabe
Elcid Butuyan
Menardo Guevarra

Arsenio Balisacan resigned from his post as Philippine Socioeconomic Planning

Secretary and Director General of the National Economic and Development
Authority to lead the Philippine Competition Commission. Guevarra left the
Commission after he was appointed Senior Deputy Executive Secretary. He was
replaced by lawyer Amabelle Asuncion.