Article 35Supplement v1, p. 35

COMMERCIAL LAWS SUPPLEMENT

dispensing

of

the

requirement

for

a

favorable

recommendation by the appropriate government agency

under

Section

79

of

the

Corporation

Code

of

the

Philippines.

A favorable recommendation by a governmental agency

with

a

competition

mandate

shall

give

rise

to

a

disputable presumption that the proposed merger or

acquisition is not violative of this Act.

Section 18. Effect of Notification. — If within the relevant

periods

stipulated

in

the

preceding

section,

the

Commission

determines

that

such

agreement

is

prohibited under Section 20 and does not qualify for

exemption

under

Section

21

of

this

Chapter,

the

Commission may:

(a) Prohibit the implementation of the agreement;

(b) Prohibit the implementation of the agreement unless

and until it is modified by changes specified by the

Commission.

(c) Prohibit the implementation of the agreement unless

and until the pertinent party or parties enter into legally

enforceable agreements specified by the Commission.

Section 19. Notification Threshold. – The Commission

shall, from time to time, adopt and publish regulations

stipulating:

(a) The transaction value threshold and such other criteria

subject to the notification requirement of Section 17 of

this Act;

(b) The information that must be supplied for notified

merger or acquisition;

(c)

Exceptions

or

exemptions

from

the

notification

requirement; and

(d) Other rules relating to the notification procedures.

Section

20.

Prohibited.

Mergers

and

Acquisitions. –

Merger

or

acquisition

agreements

that

substantially

prevent, restrict or lessen competition in the relevant

market or in the market for goods or services as may be

determined by the Commission shall be prohibited.

Section 21. Exemptions from Prohibited. Mergers and

Acquisitions.

–

Merger

or

acquisition

agreement

prohibited

under

Section

20

of

this

Chapter

may,

nonetheless,

be

exempt

from

prohibition

by

the

Commission when the parties establish either of the

following:

(a) The concentration has brought about or is likely to

bring about gains in efficiencies that are greater than the

effects of any limitation on competition that result or

likely to result from the merger or acquisition agreement;

or

(b) A party to the merger or acquisition agreement is

faced with actual or imminent financial failure, and the

agreement

represents

the

least

anti-competitive

arrangement among the known alternative uses for the

failing entity’s assets:

Provided, That an entity shall not be prohibited from

continuing to own and hold the stock or other share

capital or assets of another corporation which it acquired

prior

to

the

approval

of

this

Act

or

acquiring

or

maintaining

its

market

share

in

a

relevant

market

through such means without violating the provisions of

this Act:

Provided, further, That the acquisition of the stock or

other share capital of one or more corporations solely for

investment and not used for voting or exercising control

and not to otherwise bring about, or attempt to bring

about

the

prevention,

restriction,

or

lessening

of

competition

in

the

relevant

market

shall

not

be

prohibited.

Section 22. Burden of Proof. – The burden of proof under

Section 21 lies with the parties seeking the exemption. A

party seeking to rely on the exemption specified in

Section 21(a) must demonstrate that if the agreement

were not implemented, significant efficiency gains would

not be realized.

Section

23.

Finality

of

Ridings

on

Mergers

and

Acquisitions. – Merger or acquisition agreements that

have received a favorable ruling from the Commission,

except when such ruling was obtained on the basis of

fraud

or

false

material

information,

may

not

be

challenged under this Act.

CHAPTER V DISPOSITION OF CASES

Section

24.

Relevant

Market.

–

For

purposes

of

determining the relevant market, the following factors,

among

others,

affecting

the

substitutability

among

goods or services constituting such market and the

geographic

area

delineating

the

boundaries

of

the

market shall be considered:

(a) The possibilities of substituting the goods or services

in question, with others of domestic or foreign origin,

considering

the

technological

possibilities,

extent

to

which substitutes are available to consumers and time

required for such substitution;

(b) The cost of distribution of the good or service, its raw

materials, its supplements and substitutes from other

areas and abroad, considering freight, insurance, import

duties and non-tariff restrictions; the restrictions imposed

by economic agents or by their associations; and the time

required to supply the market from those areas;

(c) The cost and probability of users or consumers seeking

other markets; and

(d) National, local or international restrictions which limit

access by users or consumers to alternate sources of

supply or the access of suppliers to alternate consumers.

Section 25. Control of an Entity. – In determining the

control of an entity, the Commission may consider the

following:

Control is presumed to exist when the parent owns

directly or indirectly, through subsidiaries, more than one

half (1/2) of the voting power of an entity, unless in

exceptional

circumstances,

it

can

clearly

be

demonstrated that such ownership does not constitute

control. Control also exists even when an entity owns one

half (1/2) or less of the voting power of another entity

when:

(a) There is power over more than one half (1/2) of the

voting rights by virtue of an agreement with investors;

(b) There is power to direct or govern the financial and

operating

policies

of

the

entity

under a statute or

agreement;

(c) There is power to appoint or remove the majority of

the members of the board of directors or equivalent

governing body;

(d) There is power to cast the majority votes at meetings

of the board of directors or equivalent governing body;

(e) There exists ownership over or the right to use all or a

significant part of the assets of the entity;

(f) There exist rights or contracts which confer decisive

influence on the decisions of the entity.

Section

26.

Determination

of

Anti-Competitive

Agreement

or

Conduct.

–

In

determining

whether

anti-competitive

agreement

or

conduct

has

been

committed, the Commission shall:

(a) Define the relevant market allegedly affected by the

anti-competitive agreement or conduct, following the

principles laid out in Section 24 of this Chapter;

(b) Determine if there is actual or potential adverse

impact on competition in the relevant market caused by

the alleged agreement or conduct, and if such impact is

substantial

and

outweighs

the

actual

or

potential

efficiency

gains

that

result

from the agreement or

conduct;

© Compiled by RGL

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