Article 42Supplement v1, p. 42

COMMERCIAL LAWS SUPPLEMENT

iii. imposing conditions not to deal with competing

entities,

where the object or effect of the restrictions is to prevent,

restrict or lessen competition substantially: Provided, that

nothing contained in the Act shall prohibit or render

unlawful:

1)

Permissible

franchising,

licensing,

exclusive

merchandising, or exclusive distributorship agreements,

such

as

those

which

give

each

party the right to

unilaterally terminate the agreement, unless found by the

Commission to have substantial anti-competitive effect;

2) Agreements protecting intellectual property rights,

confidential information, or trade secrets;

(6)

Making

supply

of

particular

goods

or

services

dependent upon the purchase of other goods or services

from the supplier which have no direct connection with

the main goods or services to be supplied;

(7) Directly or indirectly imposing unfairly low purchase

prices

for

the

goods

or

services

of, among others,

marginalized agricultural producers, fisherfolk, micro-,

small-,

medium-scaled

enterprises,

and

other

marginalized service providers and producers;

(8) Directly or indirectly imposing unfair purchase or

selling price on their competitors, customers, suppliers, or

consumers, Provided that prices that develop in the

market as a result of or due to a superior product or

process, business acumen or legal rights or laws shall not

be considered unfair prices; and

(9)

Limiting

production,

markets,

or

technical

development to the prejudice of consumers, Provided,

that limitations that develop in the market as a result of

or due to a superior product or process, business acumen,

or legal rights or laws shall not be a violation of this Act.

(b) Nothing in the Act or these Rules shall be construed or

interpreted

as

a

prohibition

on

having a dominant

position

in

a

relevant

market,

or

on

acquiring,

maintaining,

and

increasing

market

share

through

legitimate

means

that

do

not substantially prevent,

restrict, or lessen competition.

(c)

Any

conduct

which

contributes

to

improving

production or distribution of goods or services within the

relevant market, or promoting technical and economic

progress, while allowing consumers a fair share of the

resulting benefit may not necessarily be considered an

abuse of dominant position.

(d) The foregoing shall not constrain the Commission or

the relevant regulator from pursuing measures that

would promote fair competition or more competition as

provided in the Act.

SECTION 3. Determination of Exceptions. —

In Section 2, par. (a) (2), (8) and (9), the concerned entity or

entities invoking the exception shall clearly establish to

the Commission's satisfaction, that the barrier to entry or

anti-competitive act is an indispensable and natural

result

of

the

superior

product

or

process,

business

acumen, or legal rights or laws.

RULE 4 Mergers and Acquisitions

SECTION 1. Review of Mergers and Acquisitions. —

The Commission, motu proprio or upon notification as

provided under these Rules, shall have the power to

review

mergers

and

acquisitions

having

a

direct,

substantial and reasonably foreseeable effect on trade,

industry, or commerce in the Philippines, based on

factors deemed relevant by the Commission.

(a) In conducting this review, the Commission shall:

(1) Assess whether a proposed merger or acquisition is

likely

to

substantially

prevent,

restrict,

or

lessen

competition in the relevant market or in the market for

goods

and

services

as

may

be determined by the

Commission; and

(2) Take into account any substantiated efficiencies put

forward

by

the

parties

to

the proposed merger or

acquisition, which are likely to arise from the transaction.

(b) In evaluating the competitive effects of a merger or

acquisition, the Commission shall endeavor to compare

the competitive conditions that would likely result from

the merger or acquisition with the conditions that would

likely have prevailed without the merger or acquisition.

(c) In its evaluation, the Commission may consider, on a

case-to-case basis, the broad range of possible factual

contexts and the specific competitive effects that may

arise in different transactions, such as:

(1) the structure of the relevant markets concerned;

(2) the market position of the entities concerned;

(3) the actual or potential competition from entities

within or outside of the relevant market;

(4) the alternatives available to suppliers and users, and

their access to supplies or markets;

(5) any legal or other barriers to entry.

SECTION 2. Notifying Entities. —

(a) Parties to a merger or acquisition that satisfy the

thresholds in Section 3 of this Rule are required to notify

the Commission before the execution of the definitive

agreements relating to the transaction.

(b) If notice to the Commission is required for a merger or

acquisition,

then

all

acquiring

and

acquired

pre-acquisition ultimate parent entities or any entity

authorized

by

the

ultimate

parent

entity

to

file

notification on its behalf must each submit a Notification

Form (the "Form") and comply with the procedure set

forth in Section 5 of this Rule. The parties shall not

consummate the transaction before the expiration of the

relevant periods provided in this Rule.

(c) In the formation of a joint venture (other than in

connection

with

a

merger

or

consolidation),

the

contributing entities shall be deemed acquiring entities,

and the joint venture shall be deemed the acquired

entity.

SECTION 3. Thresholds for Compulsory Notification. —

Parties to a merger or acquisition are required to provide

notification when:

(a) The aggregate annual gross revenues in, into or from

the Philippines, or value of the assets in the Philippines of

the ultimate parent entity of at least one of the acquiring

or acquired entities, including that of all entities that the

ultimate

parent entity controls, directly or indirectly,

exceeds One Billion Pesos (PhP1,000,000,000.00); and

(b) The value of the transaction exceeds One Billion Pesos

(PhP1,000,000,000.00), as determined in subsections (1),

(2), (3) or (4), as the case may be.

(1) With respect to a proposed merger or acquisition of

assets in the Philippines if either:

i. the aggregate value of the assets in the Philippines

being acquired in the proposed transaction exceeds One

Billion Pesos (PhP1,000,000,000.00); or

ii. the gross revenues generated in the Philippines by

assets acquired in the Philippines exceed One Billion

Pesos (PhP1,000,000,000.00).

(2) With respect to a proposed merger or acquisition of

assets outside the Philippines, if

i. the aggregate value of the assets in the Philippines of

the

acquiring

entity

exceeds

One

Billion

Pesos

(PhP1,000,000,000.00); and

© Compiled by RGL

42 of 203