Philippines – Leniency For Participants In Anti-Competitive Agreements.

Section 35 of Republic Act No. 10667, otherwise known as the Philippine Competition Act (“PCA”), provides that the Philippine Competition Commission (“PCC”) shall develop a Leniency Program (‘Program”) for a participant in an anti-competitive agreement as provided in Section 14(a) and 14(b) of the PCA. On 27 December 2018, the PCC issued the “Rules of the Leniency Program of the Philippine Competition Commission” (“Rules”). The PCC has created the Leniency Committee which is empowered to perform all necessary acts in order to implement its Rules.

Benefits of the Program

The PCA and its Rules allow any entity that participates or participated in a violation of Section 14(a) or 14(b) thereof i.e., price-fixing, bid-rigging, output restriction, and market allocation, to avail of “leniency” in the form of either: (a) immunity from suit; or (b) exemption, waiver, or gradation of fines (“reduction of fines”) in exchange for the voluntary disclosure of information regarding such violation, subject to certain requirements. The PCC will allow only one beneficiary of immunity from suit and one beneficiary of reduction of fines for each reported violation. The limitation is meant to ensure that members of a cartel will race to the PCC and disclose the existence of the anti-competitive agreement to obtain the benefits of the Leniency Program.

Immunity from suit includes immunity from (a) administrative, (b) criminal liability arising from violations of Sections 14(a) and 14(b) of the PCA, and (c) immunity from civil actions initiated by the PCC on behalf of affected parties and third parties.

The benefit of immunity from suit is available until it is granted to an entity. Hence, in case the first qualified entity is only granted reduction of fines, the second qualified entity may be granted immunity from suit if it submitted the Marker Request Form prior to the start of a fact-finding or Preliminary Inquiry, or at the discretion of the PCC if the Marker Request Form was submitted after the start of the fact-finding or Preliminary Inquiry, subject to the following conditions:

1.  At the time the entity comes forward, the PCC has not received information about the activity from any other source i.e., from an entity that has been granted conditional immunity from suit;
2. Upon the entity’s discovery of illegal activity, it took prompt and effective action to terminate its participation therein;
3. The entity reports the wrongdoing with candor and completeness, and provides full, continuing, and complete cooperation throughout the investigation until finality of any and all administrative case(s), as well as civil case(s) initiated by the PCC on behalf of affected parties and third parties; and
4. The entity did not coerce another to participate or to continue participating in the activity, and clearly was not the leader in, or the originator, of the activity.

The benefit of reduction of fines only applies to the administrative penalty that may be imposed by the PCC. Further, an entity that is not eligible for the benefit of immunity from suit may be considered for the benefit of reduction of administrative fines.

The PCC may also grant Conditional Leniency subject to the entity’s continuing, full and genuine cooperation with the PCC until finality of any and all administrative case(s), as well as civil case(s) initiated by the PCC. If no investigation is ongoing, conditional leniency may be granted if: (a) the information or evidence enables the PCC to carry out a targeted investigation on an alleged anti-competitive agreement; or (b) the entity provides the PCC with a sufficient basis for initiating adjudication through the filing of a Statement of Objection under the Rules; if investigation is however ongoing, conditional leniency may be granted if the information and evidence provided add significant value to the same.

Procedure

Any entity, or any current or former director, officer, trustee, partner, employee, or agent of a juridical entity who may be liable for violations of Sections 14(a) and 14(b) of the PCA may apply for leniency, by requesting a “Marker” from the PCC. Such Marker protects the entity’s place in the queue for applicants under the Program. No fee is imposed on such request. Thereafter, an initial period of 30 days is granted to the subject entity to gather and submit information and evidence relating in particular to the following:

1. The entities involved in the alleged anti-competitive agreement;
2. The affected product(s) or service(s);
3. The affected geographic area(s) or territory(-ies);
4. The duration of the alleged anti-competitive agreement;
5. The reasons why the entity is eligible under the Program;
6. The nature of the alleged anti-competitive agreement; and
7. Information on any past leniency applications with the PCC and other competition authorities outside the Philippines in relation to the alleged anti-competitive agreement.

Notably, if the entity fails to submit the information and evidence within the allowed period, the succeeding entity in the Marker queue that timely submits shall be considered for the benefit of immunity from suit or reduction of fines, as the case may be.

Joint applications between or among parties (entities) to an anti-competitive agreement shall not be considered, however two or more directors, officers, trustees, partners, employees, or agents of the same juridical entity that is a participant to an anti-competitive agreement may jointly apply.

In case of denial of an application for leniency or a revocation of the grant of conditional leniency by the Leniency Committee, the aggrieved entity may file an appeal with the Leniency Appeals Committee.

Confidentiality and Other Protections

The identity of an entity applying for leniency and of those who have been granted leniency, conditional or otherwise, shall be confidential and will not be disclosed by the PCC unless the PCC determines that such entity’s testimony or a sworn statement is necessary for the administrative or civil case filed by the PCC.

In cases where the application for leniency is denied or where the entity notifies the PCC that it will withdraw its application prior to the denial or grant of conditional leniency, any self-incriminating information and documents provided shall not be used against the entity or any of its current and former officers, directors, trustees, partners, employees, and agents who have come forward to the PCC. Such circumstances shall not however preclude the PCC from initiating or continuing an investigation on the basis of independently obtained information and documents or from using the same as evidence. In cases where the application is considered abandoned prior to the denial or grant of conditional leniency and there is no written notification made by the applicant, the documents and information submitted may be used by the PCC as it deems necessary.

Acts of reprisal or retaliation (i.e., removal, discharge, demotion, suspension, threats, harassment, or any form of retaliation in the terms and conditions of employment, agency, or engagement) are prohibited and may be penalized. Any entity that commits any form of reprisal or discrimination against anyone cooperating or furnishing information, document, or data to the PCC in connection with an investigation or proceeding being conducted, shall, after due notice and hearing, be penalized in accordance with the 2017 Rules of Procedure of the PCC.

Further, should the PCC find it necessary, the PCC may refer any entity granted leniency, conditional or otherwise, to the Witness Protection, Security and Benefit Program of the Department of Justice under Republic Act No. 6981, or any other witness protection program available with the DOJ or other law enforcement agency.

The success of the PCC’s Leniency Program shall be a deterrence to the proliferation of cartels and shall aid in the uncovering and prosecution of existing ones. Thus, the benefits under the Program are designed to ensure cooperation from current and former cartel participants who possess information and/or evidence necessary for a productive investigation, case build up and prosecution of violations of Sections 14(a) and 14(b) of the PCA.