Competition Law & Anti-Trust

CA affirms ERC Jurisdiction over Energy Sector Competition Cases

Date: 01 July 2018; Type: Legal News; Source: Philippine News Agency

MANILA, July 1 (PNA) - The Court of Appeals (CA) affirmed that the Energy Regulatory Commission (ERC) has the power to resolve cases of anti-competitive behavior and other unfair trade practices in the energy sector.

In a 25-page resolution dated May 23 penned by Associate Justice Apolinario Bruselas, Jr., and concurred by Associate Justices Carmelita Salandanan Manahan and Rafael Antonio Santos, the CA’s Twelfth Division junked the petition filed by power distributor Manila Electric Company (Meralco) and the subsidiaries of Aboitiz Power Corp. questioning the ERC's jurisdiction to resolve competition matters in connection with the shutdown of Malampaya gas facility which affected the country's power supply in 2013.

The appellate court did not give weight to the petitioners’ argument that it is the Philippine Competition Commission (PCC) which has jurisdiction over the complaint.

While it agreed with the petitioners that the Philippine Competition Act (PCA) did not only repeal Section 43 (u) of the Electric Power Industry Reform Act (EPIRA) but its Section 45, which give the ERC the power to monitor and penalize anti-competitive or discriminatory behavior in the electric power industry, the CA pointed out that the jurisdiction to hear and resolve the complaint remains with the ERC considering that the PCA has no retroactive effect.

It noted that the complaints against the petitioners were filed with the ERC on June 24, 2015 and June 9, 2015 while the PCA was signed into law only on July 21, 2015.

“Verily, the PCA was still non-existent and the EPIRA was still the governing law when the complainants against petitioners were filed. EPIRA, then the law in force, explicitly vested the ERC with jurisdiction to resolve petitioners’ cases,” the CA declared, citing Section 56 of the PCA.

“Because the legislature did not intend for the PCA to apply retroactively, however, the PCC may only exercise authority and jurisdiction over anti-competition cases and complaints prospective to its creation,” the CA said.

“Since the complaints against the petitioners were validly filed prior to the enactment of the PCA, the PCC has no jurisdiction over the petitioners’ cases. The jurisdiction to try their cases remains with the ERC, the body conferred with jurisdiction by EPIRA, the law then in force when the complaints against them were filed,” it further explained.

On December 26, 2013, the ERC issued an order constituting an investigating unit (IU) to probe the possible commission of anti-competitive behavior, abuse of market power, or other unfair trade and practices in connection with the Malampaya plant shutdown.

Following an investigation, the IU found prima facie case against Meralco, Aboitiz subsidiaries Therma Mobile Inc., (TMO) and AP Renewables, Inc.

On June 4, 2015, a formal complaint for anti-competitive behavior was lodged before the ERC against Meralco, TMO and AP Renewables, Inc. particularly for alleged “economic withholding” under Rule 11, Section 1 of the EPIRA.

The said provision prohibits electric power industry participants from using physical operating practices or bidding strategies that will limit the market participation of a generation unit under conditions that will result in significant increases in market prices.

In seeking the dismissal of the complaint, the petitioners insisted that all competition related issues under the PCA or Republic Act No. 10667 has been conferred to the PCC. The ERC denied Meralco and Aboitiz's motion to dismiss the complaint, prompting them to elevate the issue before the appellate court.

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