Ph Competition Act 101418_by Niel Falconite.docx

A Quick Review on the “Philippine Competition Act” By: Niel Baraquia Falconite

The Philippine Competition Act (Republic Act No. 10667) was signed into law by President Benigno S. Aquino III on July 21, 2015 and established the quasi-judicial Philippine Competition Commission to enforce the act.(1)(2)(3)(4) The act is intended to ensure efficient and fair market competition among businesses engaged in trade, industry, and all commercial economic activities.(1) It prohibits anticompetitive agreements, abuses of dominant positions, and mergers and acquisitions that limit, prevent, and restrict competition.(4) A comprehensive competition law was first proposed in the late 1980’s during the administration of President Cory Aquino.The Philippines was the only country in ASEAN without a competition law and the integration of ASEAN into a single market was an impetus to pass the act. (4) Senator Bam Aquino, as the principal author of the 2014 Philippine Competition Act, which seeks to prevent the abuse of cartel in the garlic industry as unfair business practice as prices of garlic more than doubled almost overnight.(5) Also, the cartels and dominance in rice, public utilities, transportation, especially the duopoly of Telcos (PLDT & Globe). Under Article 186 of the Revised Penal Code, these traders would probably have smuggling cases filed against them. “Article 186 outlaws monopolies and combinations of trade but no one has ever been convicted of violating the 80-year-old law,” Aquino said. (5) Former National Economic & Development Authority (NEDA) chief of Ramos Administration, Dr. Cielito Habito, reiterated that “the opponents of the law, big businesses, were always very successful in stopping it and have done so for decades until now. Moreover, the telecommunications and energy industries may feel the initial pressure, that the proposed Philippine Competition Commission, will headed by NEDA chief, Mr. Arsenio Balicasan, and the commission will most probably look at the telecommunications industry and analyze why there are only two players in it. That’s not to say they are doing anything wrong. But most economists say that you need at least 3 players to have an active market.”(5) Newly appointed PCC Chairperson, Mr. Balicasan said, an exclusive interview with Ms. Cathy Yang, on Market Edge, ABS-CBN News. (6)The process of a preliminary review, when it shows that there is a compelling case for an extensive and formal investigation, and if there is an evidence of indeed an anticompetitive behavior (high cost of internet, anti-competitive agreements or conduct, poor quality products) then we can sanction the Telcos and penalties and compel the sector(s), and we need brilliant staff of economists, lawyers, finance experts and we have applied 200 plantilla positions for it. Furthermore, the issue on the energy sector, is that country now as one of the highest cost in Asia, due to anti-competitive behavior or conduct as oppose to public policy, technology, regulatory processes, and that is the big challenge that we observed initially, and of course the abuse of dominant positions in the sectors of the economy.(6) The Commission would be pursuing not just championing the consumer rights down the line, but economic development and prosperity, decisions would need not to be a poorer investment climate, facing the big people behind cartels & mergers, our ultimate goal is to improve consumers welfare, a big challenge for the coming circulars. (6)

In an interview with Mr. Wowie Wong, IT expert and partner, by Jerry Liao of DoubleClick InfoChat TV, the entrance of an aggressive player, the third telco company from China, the China Telecom, the first question, would it be healthy for the Philippine economy? Mr. Wong says, given the current situation today, where we have issue of price, cost, and reach, and then it can be very positive for the Filipino people. Also, imagine Metro Manila alone, not all covered by internet connection. I think, these twin telecommunication giants, a duopoly of PLDT and Globe are reaping profits over time, and are always collaborating on the way they charge their customer, and relative to our neighboring countries, Philippine internet connection is way much higher in price. (7) Mr. Liao reiterated that, so, this long awaited coming of the third one, a serious player, and not just a fly-by-night company proposed by China, the giant China Telecom. Competition is healthy; hopefully we can open doors for possible 3rd player in the telco industry, and why not to fourth and to fifth players? Opportunities will come to our country and the users will benefit to choose and can avail of quality service and connection. One of the ways to attract foreign investors, a fast, reasonable price, and reliable internet connection that will be a good tool and best strategy for business expansion and cooperation with ASEAN partners and other economies as well.(7) The coming of the third Telco, by invitation and initial public bidding, which was promised by the Duterte Administration this coming November 2018 on a one on one interview of PCOO Sec. Salvador Panelo to Pres. Duterte. In the meantime, with a Temporary Restraining Order (TRO) from the Court of Appeals review on a possible buy out deals of PLDT and Globe from the San Miguel Corporation shares stocks amounting to P70 Billion, PCC was denied by CA, allowing it to review the deal by providing significant, important, and meaningful inputs and as a test case for a newly form agency. Futhermore, the PCC wants to seek the loopholes in the National Telecommunications Communication (NTC) on its permits and penalties and the amendments in the old law, the Commonwealth Act 146, regarding Public Utilities and its 60:40 sharing which leads to a higher profits for foreign companies who will invest in our country in the different sectors especially in the telcos, energy, and public utilities. (8) The author would like to wish for a relevant contribution and defending the rights of common people by this newly formed agency, the PH Competition Commission, given more vigor and endurance in structuring its developmental framework, formulating and circulating new decisions, sanctions to an Oligarch and anti-competitive behavior, opportunities for other players with reasonable bounds to compete in our local counterparts, and regulations for the betterment of our rapid developing economy for the future generations to come.

References: 1. “NEDA statement on Balicasan move to Competition Commission” (http://www.bworldonline.com/content.php?section=Economy&title=neda-statement-on-balicasan-move-tocompetition-commission&id=122017).BusinessWorld Publishing Corporation. 25 January 2016. Retrieved 28 January 2016. 2. Viray,Patricia Lourdes (25 January 2016). “NEDA chief to head new Philippine Competition Commission”(http://www.philstar.com/business/2016/01/25/1546184/neda-chief-head-new-philippine-competitioncommission). The Philippine Star. Retrieved 28 January 2016. 3. “RepublicActNo.10667PhilippineCompetitionAct”(http://www.pcc.gov.ph/2015/07/21/republic-act-no-10667/). Official Gazette of the Republic of the Philippines. 21 July 2015. Retrieved 28 January 2016.

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Schnabel, Chris (July 13, 2015). “What consumers need to know about the PH Competition Act” (http://www.rappler.com/business/economy-watch/98287-philippine-competition-act-part-1). Rappler. Retrieved 14 June 2016. Senator Paolo Benigno “Bam” Aquino IV said in an interview with Rappler. (Watch: Rappler Talk: Senator Bam Aquino on the Fair Competition Bill). ABS-CBN Market Edge. An Interview with Cathy Yang. Newly appointed PH Competition Commission Chairperson, former NEDA chief, Mr. ArsenioBalicasan. DoubleClick. An Interview with IT Expert, Mr. Wowie Wong, by Mr. Jerry Liao. www.infochatTV.com. Is it Healthy for the Philippine Economy? Why are Filipinos paying for a more Slow Internet connection?, we should welcome the 3rd Telco player, China Telecom. ABS-CBN News on Youtube. 30 March 2017. Can PCC make PH telco industry more competitive? Commissioner Stella Luz-Alabastro-Quimbo’s latest statement.