Competition law pushed

Published by rudy Date posted on October 20, 2011

FOREIGN BUSINESSES are pressing the government to enact a competition law that had eluded its predecessors due to reported strong lobbying by affected parties.

In a press release, dated Oct. 14 but e-mailed to reporters only yesterday, the Joint Foreign Chambers of the Philippines (JFC) said such a law would help spur business activity in the country.

The group said it was “firmly of the opinion that a well-drafted and sensibly implemented competition law would contribute considerably to President (Benigno S. C.) Aquino (III)’s promise of a level playing field for investors in the Philippines.”

At the same time, it lauded the current administration for having issued Executive Order No. 45 last June which designated the Justice department as Competition Authority — with an Office for Competition as operating arm — to enforce relevant provisions of existing laws.

“JFC sees this decision of the Aquino Administration as a move to hit the ground running, address competition issues immediately and create the level playing field that consumers deserve,” the statement read.

Guidelines and staffing of the envisioned competition office are still being finalized. But Justice Secretary Leila M. de Lima said late in September that her department had already been looking at antitrust provisions of existing laws that would help that office, when finally formed, determine the legality of the planned purchase by Philippine Long Distance Telephone Co. of Digital Telecommunications Philippines, Inc. that was announced last March but which has yet to win regulatory approval.

A well-crafted and -implemented competition law will develop and preserve the competition process, with the ultimate goal of safeguarding and promoting consumer welfare, JFC added.

“Competitive rivalry forces firms to minimize production and distribution costs to avoid losing customers’ patronage to… other firms, thereby enhancing competitiveness,” the group explained.

“Also, firms are forced to invest in research and development and… innovate in order to maintain the lead vis-a-vis competitors,” it added.

“Finally, through effective competition, consumers are placed in the position to choose among competing offers, selecting those goods and services which are better able to meet their needs.”

Leveling the business environment will also enhance market access for entrepreneurs, thereby generating more jobs.

JFC said that, in order to achieve these desired results, a competition law should:

• apply equally to all entities that engage in economic activity, “including those not pursuing profit,” covering both state-owned and private enterprises;

• enable authorities to promptly identify and act on competition-restricting agreements — among competitors, potential competitors or firms operating in the same production-distribution chain — like those that fix prices, curb output, share markets or rig auctions; and

• establish an enforcement agency and courts “involved in the application of the legislation.”

Antitrust measures had been filed in Congress since at least the 9th Congress (1992-1995) but had never reached the bicameral conference committee stage due to strong opposition from “lobby groups,” Deputy Minority Leader Danilo E. Suarez (3rd district, Quezon), an author of the current bill in the House of Representatives, said by phone yesterday.

An envisioned competition act was in the list of 23 priority measures the Legislative Executive Development Advisory Council drew up last February.

Currently, Senate Bill (SB) No. 1 and House Bill (HB) No. 4835 both prohibit and penalize cartels, monopolies and other anti-competitive arrangements and practices.

But they differ when it comes to enforcement, with the House measure entrusting the task to an envisioned five-man Philippine Competition Commission and the Senate bill vesting this authority in the Justice department.

HB 4835 was approved by the House committee on trade and industry last June, while SB 1 has been pending at the counterpart Senate committee since July 2010.

Majority Leader Neptali M. Gonzales II (Mandaluyong City) said via text on Wednesday that the House leadership targets approval of the measure on second reading when the chamber “reconvenes in November.” Senate leaders could not be reached immediately for comment.

Congress is on a break from Oct. 15 to Nov. 13. — FJGDLF and NMG, Businessworld

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