Article 46Supplement v1, p. 46

COMMERCIAL LAWS SUPPLEMENT

In determining the control of an entity, the Commission

may consider the following:

(a) 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.

(b) Control also exists even when an entity owns one half

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

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

voting rights by virtue of an agreement with investors;

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

operating

policies

of

the

entity

under a statute or

agreement;

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

the members of the board of directors or equivalent

governing body;

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

of the board of directors or equivalent governing body;

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

significant part of the assets of the entity; or

(6) There exist rights or contracts which confer decisive

influence on the decisions of the entity.

RULE 7 Determination of Anti-Competitive

Agreement or Conduct

SECTION

1.

Determination

of

an

Anti-Competitive

Agreement or Conduct. —

In determining whether an anti-competitive agreement

or conduct substantially prevents, restricts, or lessens

competition, the Commission, in appropriate cases, shall,

inter alia :

(a) Define the relevant market allegedly affected by the

anti-competitive agreement or conduct, following the

principles laid out in Section 24 of the Act and Rule 5 of

these Rules;

(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;

(c)

Adopt

a

broad

and

forward-looking

perspective,

recognizing future market developments, any overriding

need

to

make

the

goods

or

services

available

to

consumers, the requirements of large investments in

infrastructure, the requirements of law, and the need of

our economy to respond to international competition, but

also taking account of past behavior of the parties

involved and prevailing market conditions;

(d) Balance the need to ensure that competition is not

prevented or substantially restricted and the risk that

competition

efficiency,

productivity,

innovation,

or

development of priority areas or industries in the general

interest of the country may be deterred by overzealous or

undue intervention; and

(e) Assess the totality of evidence on whether it is more

likely

than

not

that

the

entity

has

engaged

in

anti-competitive

agreement

or

conduct,

including

whether the entity's conduct was done with a reasonable

commercial purpose, such as but not limited to, phasing

out of a product or closure of a business, or as a

reasonable commercial response to the market entry or

conduct of a competitor.

RULE 8 Determination of Dominance

SECTION 1. Existence of Dominance. —

Dominance can exist on the part of one entity (single

dominance)

or

of

two

or

more

entities

(collective

dominance).

SECTION 2. Assessment of Dominance. —

In determining whether an entity has a market dominant

position for purposes of this Act and these Rules, the

Commission shall consider the following illustrative and

non-exhaustive criteria, as may be appropriate:

(a) The share of the entity in the relevant market and the

ability of the entity to fix prices unilaterally or to restrict

supply in the relevant market;

(b) The share of other market participants in the relevant

market;

(c) The existence of barriers to entry and the elements

which could foreseeably alter both the said barriers and

the supply from competitors;

(d) The existence and power of its competitors;

(e) The credible threat of future expansion by its actual

competitors or entry by potential competitors (expansion

and entry);

(f) Market exit of actual competitors;

(g)

The

bargaining

strength

of

its

customers

(countervailing power);

(h) The possibility of access by its competitors or other

entities to its sources of inputs;

(i) The power of its customers to switch to other goods or

services;

(j) Its recent conduct;

(k) Its ownership, possession or control of infrastructure

which are not easily duplicated;

(l) Its technological advantages or superiority, compared

to other competitors;

(m) Its easy or privileged access to capital markets or

financial resources;

(n) Its economies of scale and of scope;

(o) Its vertical integration; and

(p) The existence of a highly developed distribution and

sales network.

SECTION 3. Presumption of Dominance. —

There

shall

be a rebuttable presumption of market

dominant position if the market share of an entity in the

relevant market is at least fifty percent (50%), unless a

new

market

share

threshold

is

determined

by

the

Commission for that particular sector.

SECTION 4. Setting the Thresholds for Dominance. —

The Commission shall, from time to time, determine and

publish

the

threshold

for dominant position or the

minimum level of share in the relevant market that could

give rise to a presumption of dominant position. In such a

determination, the Commission would consider:

(a) The structure of the relevant market;

(b) The degree of integration;

(c) Access to end-users;

(d) Technology and financial resources; and

(e) Other factors affecting the control of a market, as

provided in Section 2 of this Rule.

SECTION 5. Exceptions. —

The

Commission

shall

not

consider

the

acquisition,

maintenance

and increase of market share through

legitimate means that does not substantially prevent,

restrict, or lessen competition in the market, such as but

not limited to, having superior skills, rendering superior

© Compiled by RGL

46 of 203