SC Approves Rule on Competition Law

October 18, 2019

The Supreme Court has approved the Rule on Administrative Search and Inspection under the Philippine Competition Act (PCA) or Republic Act No. 10667 to help in the investigation and prosecution of competition law offenses. The Rule shall take effect on November 16, 2019.

          In an En Banc resolution in A.M. No. 19-08-06-SC promulgated on September 10, 2019, the Rule shall govern the application, issuance and enforcement of an inspection order for administrative investigations of alleged violations of the PCA, its implementing rules and regulations, and other competition laws.

The PCA “is the primary competition policy of the Philippines for promoting and protecting competitive market.” It defines and penalizes anti-competitive agreements, abuse of dominant position, and anti-competitive mergers and acquisitions. It also gives the Philippine Competition Commission (PCC) the power, upon order of the court, to undertake inspections of business premises and other offices, land and vehicles, as used by the entity, where it reasonably suspects that relevant books, tax records, or other documents which relate to any matter relevant to the investigation are kept, in order to prevent the removal, concealment, tampering with, or destruction of the books, records or other documents.

          However, the detection, investigation and prosecution of violations of the PCA and related laws require a rule of procedure for the application, issuance and implementation of inspection orders in competition cases.

An inspection order is an order in writing issued in the name of the Republic, signed by a judge, upon application by the PCC. The inspection order can be applied with the designated Special Commercial courts in Quezon City, Manila, Makati, Pasig, Cebu City, Iloilo City, Davao City, and Cagayan de Oro City.

All applications for an inspection order shall be acted upon within 24 hours from its filing. The inspection order shall be issued if the court finds that there is a reasonable ground to suspect: (1) that the information is kept, found, stored, or accessible at the premises indicated in the application; (2) the information relates to any matter relevant to the investigation; and (3) the issuance of the order is necessary to prevent the removal, concealment, tampering with, or destruction of the books, records, or other documents to be inspected.

          The Rule was drafted by the Special Committee for the Rules on Inspection chaired by Justice Diosdado M. Peralta. The Special Committee was created to draft the Rule to ensure that the exercise of the power granted under the PCA is effective, objective, efficient, and provides a balance between the right to due process and the strong public interest in the enforcement of the law.

          The Special Committee is vice-chaired by Justice Alexander G. Gesmundo (Vice Chairperson), with members: Justice Ramon Paul L. Hernando, Court Administrator Jose Midas P. Marquez, PCC Commissioners Amabelle C. Asuncion, Johannes R. Bernabe, and Macario R. de Claro, Jr., Atty. Rigor R. Pascual, Atty. Genevieve E. Jusi, Atty. Gifany L. Tongohan. The secretariat consists of Atty. Ralph Jerome D. Salvador, Atty. Camille Sue Mae L. Ting, and Atty. Noreen B. Bragas.

Inspections and “dawn raids” conducted by competition law agencies abroad are effective tools in investigating and prosecuting competition law offenses, in order to gather information which are not usually provided by entities through voluntary or compulsory means. They have empowered competition agencies in tracking down such offenses, especially hardcore cartels, that is, anti-competitive agreements whereby competitors to fix prices, submit collusive tenders or bids, restrict output or divide or share markets.   

The Philippine Judicial Academy, the SC’s education arm, will soon conduct training seminars for special commercial court judges to familiarize them with the Philippine Competition Act and related implementing rules and regulations, as well as the rule on “dawn raids.”   

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