39 Boracay dive shops fined PHP 2.17M for price-fixing

By Rjay Zuriaga Castor

The Philippine Competition Commission (PCC) has imposed a total of PHP 2.17 million in fines on the Boracay Business Administration of Scuba Shops (BBASS) and 39 dive operators after finding that they engaged in an illegal price-fixing scheme that restricted competition in the island’s diving industry.

In its ruling, the PCC found that BBASS and its member establishments violated Section 14(a)(1) of Republic Act No. 10667, or the Philippine Competition Act, by coordinating prices and other commercial terms instead of competing independently.

Aside from imposing monetary penalties, the commission directed the association and its members to immediately discontinue the pricing arrangement, saying it distorted competition and deprived consumers of competitive pricing.

The PCC investigation showed that BBASS, an organization representing dive operators on the island, orchestrated the scheme through its 2016 internal rules and formal pricing agreements adopted in 2018 and 2019.

These measures required member shops to observe minimum rates for diving services and prohibited them from undercutting one another through discounts or promotional offers.

Among the standardized rates imposed were PHP 3,000 for introductory discover scuba diving sessions and as much as PHP 25,000 for open-water diver certification courses.

The association likewise barred members from offering complimentary items or services — including extra dives, diving masks, meals, T-shirts, and souvenir photographs — to entice customers.

The PCC also flagged that the association capped commissions paid to hotels, tour guides, and booking agents at 10%, while members who failed to comply with the agreed pricing rules risked fines or expulsion from the group.

BBASS argued that the uniform pricing policy was intended to promote diver safety, protect the livelihood of operators, and maintain stability in the local diving industry.

The group also claimed the practice was implemented with the knowledge of the local government.

The PCC, however, rejected those arguments, stressing that agreements among competitors to fix prices are inherently anti-competitive and prohibited under the law regardless of the parties’ stated objectives.

The commission further clarified that although industry associations may adopt standards to improve safety and service quality, they cannot dictate market prices or restrict competition among their members.

It added that local ordinances requiring businesses to secure endorsements from associations do not grant those organizations authority to set commercial prices or shield them from liability under competition laws.

In determining the penalties, the PCC took into account that the association and its member dive shops are classified as micro, small, and medium enterprises.

Still, it held them liable for coordinating and enforcing the anti-competitive arrangement.

The regulator noted that BBASS, as the central facilitator of the scheme, drew a heavier penalty than its individual members, whose fines were set lower on account of their MSME status.

The commission also urged local government units to review and harmonize local ordinances with the National Competition Policy to ensure that tourism destinations remain open to fair and competitive business practices.

The decision extends the PCC’s competition enforcement into the tourism sector, one of the economy’s largest employers, and signals that local business associations cannot invoke safety or livelihood to justify uniform pricing.

The case originated from an administrative complaint filed in 2021 by the PCC’s Competition Enforcement Office against BBASS and its member dive shops over agreements that allegedly restricted competition by fixing prices and other trading conditions.