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Amicus Curiae

Electronic documents/data are covered by subpoena powers of the Philippine Competition Commission

John Frederick E. Derije

May 30, 2018

One of the policy declarations of the Philippine Competition Act (Republic Act No. 10667, or the PCA) is to “[p]enalize all forms of anti-competitive agreements, abuse of dominant position and anti-competitive mergers and acquisitions, with the objective of protecting consumer welfare and advancing domestic and international trade and economic development [Section 2(c)].

Chapter III of the PCA provides for the prohibited acts under the said law. Section 14 thereof defines and prohibits anti-competitive agreements, while Section 15 prohibits abuse of dominant position (also known as anti-competitive conduct). Chapter IV provides for Review of Mergers and Acquisitions.

Accordingly, the Philippine Competition Commission (PCC), which is the independent quasi-judicial body tasked to implement the national competition policy and to attain the objectives and purposes of the PCA, is empowered to motu proprio “[c]onduct inquiry, investigation, and hear and decide cases involving any violation of the PCA xxx” [Section 12(a)]. To complement PCC’s investigation powers, they are expressly given the authority to “[i]ssue subpoena duces tecum and ad testificandum to require the production of books, records, or other documents or data which relate to any matter relevant to the investigation x x x” [Section 12 (f)].

To be sure, aside from written, paper-based documents i.e., books and records, other kinds of documents/data i.e., electronic documents/data may be subject to the PCC’s subpoena powers, so long as it is relevant to the ongoing inquiry/investigation.

The Rules on Electronic Evidence (REE) [A.M. No. 01-7-01-SC] expressly provides that it is applicable to quasi-judicial cases [Section 2, Rule 1], like the inquiry/investigation that PCC is empowered to make motu proprio.

The REE defines an electronic document as “information or the representation of information, data, figures, symbols or other modes of written expression, described or however represented, by which a right is established or an obligation extinguished, or by which a fact may be proved and affirmed, which is received, recorded, transmitted, stored, processed, retrieved or produced electronically. It includes digitally signed documents and any printout or output, readable by sight or other means, which accurately reflects the electronic data message or electronic document [Section 1(h), Rule 2].”

On the other hand, an electronic data message “refers to information generated, sent, received or stored by electronic, optical or similar means [Section 1(g), Rule 2].” The term “electronic document” may be used interchangeably with “electronic data message.”

When the electronic document/data is not recorded, is erased or is not retained, it becomes an ephemeral electronic communication [Section 1(k), Rule 2], which is still subject to the PCC’s subpoena powers.

Examples of these electronic documents/data are e-mails, PowerPoint presentations, text messages, instant messages, chatroom sessions, telephone conversations and streaming audio/video, among others.

As the PCA is barely three (3) years old (took effect on Aug. 9, 2015), there is no existing Philippine regulation and jurisprudence pertaining to inquiries/investigations on anti-competitive agreements and conduct involving electronic documents/data. We can, however, refer to the PCA’s origins in United States of America (USA), and European Union (EU) competition laws (known as Antitrust laws), guidelines and jurisprudence.

For example, USA’s Federal Trade Commission (FTC) and the Antitrust Division in the Department of Justice (DoJ) are mandated to enforce the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR), which provides that a party to a merger or an acquisition valued above a certain threshold must provide these agencies with information that will allow them to analyze the proposed merger/acquisition transaction. Thus, USA’s FTC and DoJ conduct electronic document review, which require parties to produce all associated documents, including electronic information maintained by companies in the ordinary course of business. Such process ensures that FTC and DoJ gain access to all important information from all relevant employees so that they can properly assess the likely competitive effects of the transactions they review. As part of this process, USA’s FTC and DoJ have assertively pursued corporate documents and data, particularly in e-mails, that enable them to evaluate a transaction’s potential anti-competitive effects. This process is known as e-Discovery.

Further, in the USA case of Conwood Company, L.P. v. United States Tobacco Company (No. 00-6267), an e-mail was one of the evidence used to prove anti-competitive conduct, thus:

“In one such instance, Blattberg opined that an e-mail sent by a USTC regional vice president and USTC director of national accounts showed that the company abused its position of category manager. The e-mail stated that USTC believed it could continue to be the category captain in certain stores in the Texas area, and “we may be able to control the number of price value product introductions and their pursuit of a private label brand.” (J.A. at 1610.) Blattberg testified that the significance of this document is that it shows that USTC planned to control competition. It shows USTC intended to control the number of price value brands and other products, which he stated meant that if USTC could convince retailers not to stock those items, the result would be to prevent rapidly growing or lower priced items from entering the marketplace. He testified that this is not consistent with the concept of category management, which is based on trust.

xxx

The evidence Conwood presented in this case regarding USTC’s exclusionary conduct must be considered in the context of Conwood’s theory. xxx The theory Conwood advanced at trial is that USTC engaged in a concerted effort, directed from the highest levels of a national monopoly, to shut Conwood out from effective competition through the elimination of its racks and POS advertising, all in the unusual moist snuff market, where POS is the central marketplace battleground. xxx There was ample documentary and testimonial evidence supporting this theory. The jury could have found, and apparently did find, that USTC’s pervasive practice of destroying Conwood’s racks and POS materials and reducing the number of Conwood facings through exclusive agreements with and misrepresentations to retailers was exclusionary conduct without a sufficient justification, and that USTC maintained its monopoly power by engaging in such conduct. Therefore, the district court did not err in holding that there was sufficient evidence for a jury to find willful maintenance of monopoly power.”

It is thus likely that PCC will follow the e-Discovery process practiced in the USA for Antitrust laws implementation and enforcement.

Corporations/entities in the Philippines or those which engage here in trade, industry or commerce having direct, substantial, and reasonably foreseeable effects in the Philippines (including those that result from acts done outside the territory of the Philippines) should therefore be mindful of the exchanges of information and storage of data via e-mails, PowerPoint presentations, text messages, instant messages, chatroom sessions, telephone conversations, streaming audio/video, and other processing, transmission and storage media for electronic documents and data, which may come under the scrutiny in the course of the implementation of the PCA.