Competition dos and don’ts in the Year of the Pig
by Atty. Amabelle C. Asuncion
February 8, 2019
Gong Hei Fat Choy! While there are various ways of saying “Happy New Year” in Chinese, this seems to be the most common greeting. It translates to “wishing you great happiness and prosperity,” which is the best anyone could wish for another.
Celebrating its third anniversary a few days ahead of the Chinese New Year, the Philippine Competition Commission makes the same wish for everyone—prosperity for businesses and consumers alike. The essence of competition law and policy is captured in this simple Chinese greeting. As no Chinese New Year celebration is complete without rituals and predictions intended to attract good fortune or counter bad luck, here is a PCC list of dos and don’ts that are worth noting in the Year of the Pig.
First, come forward and come clean. The PCC recently launched its leniency program wherein entities or individuals engaged in anti-competitive agreements can apply for immunity or fine reduction in exchange for providing information to the PCC. Any firm involved in cartel activity—fixing prices, artificially limiting production or supply, or dividing the market—is advised to avail itself of this program. A successful applicant will be granted immunity from criminal and administrative liability and from any civil suit that the PCC would otherwise file. If the applicant is a corporation, the immunity can extend to its responsible directors, officers and employees.
Since the program allows for only one immunity and one fine reduction, applications for leniency are considered on a “first-come, first-served” basis. It is a race to obtain the first marker and there is no consolation for arriving late, like the pig at the party of the Jade Emperor. The benefits available under the leniency program also diminish as the investigation progresses. While immunity is always available before the preliminary inquiry begins, it may not necessarily be so after the inquiry starts. The amount of fine reduction, likewise, dwindles.
The leniency program is an opportunity for infringers to confess and start anew. More important, it is a chance to help arrest practices that have been injurious to consumers.
Second, comply and cooperate. Whether it is a request for information or a subpoena, comply. Compliance is key to dispersing any negative consequence. The PCC takes its mandate seriously and will not hesitate to invoke its full powers to enforce its orders and decisions. A question that has been asked a few times is whether the PCC has teeth. The answer is yes, and a good set of teeth at that. The commission can, and will, if warranted, mete out penalties, issue compulsory processes, and deputize other agencies to assist it.
While confidentiality and privacy of information are valued, withholding information is more detrimental than beneficial. The investigative and analytical processes—whether in the mergers or enforcement context—depend on accurate and complete information. Where information is not provided, the rules of procedure allow the PCC to make assumptions against entities based on worst-case scenarios. Thus, the more information withheld from PCC, the more likely the findings will be adverse. It is like waiting for karma to visit.
Third, take commitments seriously. With pig symbolizing wealth, 2019 is supposed to be an auspicious time for business opportunities. Last year alone, PCC reviewed 41 mergers and acquisitions. More mergers are likely to emerge this year. As mentioned in an earlier column, a merger is like a marriage where, in some cases, commitments are required as conditions to consummate the bond. These commitments are not to be taken lightly but treated as sacrosanct as the unbreakable “word of honor.” Earnest and strict adherence to such commitments is expected no less.
Voluntary commitments are offered by merging parties to address the negative impact of the proposed merger on competition and consumers. The purpose of such commitments is specific and concrete. These commitments are not meant to be motherhood statements or a form of “window dressing” just to muster regulatory approval. Although formally proffered to the PCC, these are actually the merging parties’ commitments to consumers and to competition in general. To renege on these commitments is to turn their backs on the consumers they are supposed to serve. Unless this is the intent, merging parties should have no reason or excuse to violate their own commitments.
To date, the PCC has rendered four commitment decisions based on undertakings submitted by merger parties. The undertakings range from extending fair, reasonable and nondiscriminatory terms to competitors, maintaining pricing behavior pre- and post-merger, data firewalls and avoiding practices that could foreclose entry or expansion of competitors. These are all subject of monitoring to ensure that merger parties abide by their commitments.
The “commitment track” is an option available to merger parties if the merger raises competition concerns. Parties are allowed to offer remedies to address the concerns. If found to be sufficient, the commitment package is approved. This track is a non-adversarial alternative to a straightforward review where the Commission can unilaterally impose remedies or even prohibit the transaction. While this option will continue to be encouraged, merger parties are cautioned that this is not a perfunctory exercise. Commitments offered must remedy the concerns and if violated, the transaction could be unraveled. So, take these commitments seriously both at the time they are offered and during the time they are to be complied with.
With these nuggets of advice and a reminder to always play fair, may the Year of the Pig bring prosperity to all.
Before her appointment to the Philippine Competition Commission, Commissioner Asuncion was engaged in corporate and commercial practice and served as chief legal counsel of a top company and a corporate partner of a law firm. She was also previously involved in legislative, law and policy reform, advocacy, and adjudication work. Commissioner Asuncion has a master of laws degree (with distinction) in International Legal Studies from Georgetown University Law Center in Washington, D.C., and is admitted to the New York bar.
(Originally published on Business Mirror’s Competition Matters column on February 8, 2019 here.)