Consumers at the heart of Competition Policy
by Arsenio M. Balisacan, PhD
January 2, 2019
For nearly three years now since its establishment in 2016, the Philippine Competition Commission (PCC) has sustained its momentum in promoting consumer welfare and competitive processes under the game-changing Philippine Competition Act (PCA).
The transitory period provided by the PCA ended on August 8, 2017, two years after the law’s enactment. Affected parties were given this two-year grace period so that they could adjust their business practices to fully comply with the law. Considering the lag between policy issuance and firm uptake, we can reasonably say that the year 2018 was truly the first full year of the new regime of Philippine competition policy.
The past year also proved to be challenging for the Philippine economy. Prices of basic goods rose at a faster clip and major players in the global market enacted disruptive protectionist measures stemming from populist sentiments within their domestic spheres.
Thus, the country’s transition to a new competition regime came at a time when Filipino consumers and businesses were experiencing pressing challenges. Nonetheless, the PCC forged ahead steadily to fulfill its mandate. As we welcome the new year, let me share with you the key accomplishments of the commission in 2018 in our core functions of competition enforcement, merger review and competition advocacy.
First, cognizant of how spikes in prices of necessities disproportionately harm the poor, the commission opened and continues its investigation of the rice, energy and fuel markets. It is unfair and unacceptable that a few unscrupulous businesses and groups should benefit at the expense of millions who are left with increasingly meager budgets for their basic needs. In 2018, we opened four new investigations, so that there are now seven ongoing full administrative investigations. To aid enforcement efforts, the commission executed memorandums of agreement with the Department of Justice-Office for Competition and the Office of the Ombudsman. These agreements aim to strengthen enforcement action through complementation of resources and sharing of institutional capacities.
Second, the commission continued to review mergers and acquisitions that have a potentially high impact on consumers. In 2018, we received 39 M&A transactions with a total value of P438 billion, of which 33 were approved.
The commission has exercised its power to subject M&As to commitments that seek to remedy anticompetitive effects expected to arise from such transactions. For example, we subjected Grab’s acquisition of Uber to stringent pricing and quality standards to address competition issues arising from the merger of the country’s two biggest ride-hailing apps.
Moreover, we have been studying the voluntary commitments proposed by concerned parties in two other M&A transactions: one in the sugarcane industry and the other in the passenger and cargo shipping services. When a transaction is expected to harm market competition, the commission is ready to act and implement measures to correct for outcomes that are disadvantageous to both consumers and the competitive process.
Third, we directed the commission’s competition advocacy efforts in 2018 at sectors, such as telecommunications, that need significant reform through the injection of a healthy market competition. To ensure that the principles of competition are considered in the selection process for a third player in the telecommunications market, the commission provided inputs to the Department of Information and Communications Technology and the National Telecommunications Commission. We, likewise, provided comments on complementary legislative measures such as mobile number portability, open access in data transmission, spectrum management reform and the common tower policy. These pro-competition reforms are expected to benefit Filipino consumers who may soon enjoy improved service at lower costs.
The commission has undertaken several issue papers on priority sectors, such as rice, pharmaceuticals, poultry and livestock, manufacturing, and transportation and logistics. These studies assist the PCC to identify risks to consumers and the competitive process that may require our enforcement or advocacy intervention. The commission also successfully organized numerous advocacy and capacity-building activities to educate consumers, businesses and public institutions, keeping in mind that fostering a culture of competition is a building block of a strong competition regime.
In summary, consistent with the Philippine Development Plan (PDP) 2017-2022, the PCC has allocated its resources toward enforcement, merger review and advocacy activities in sectors with the highest impact on consumers. Having set up our institutional architecture within a short time, I am proud to say that the commission has transitioned quickly by accumulating experience and enhancing competencies in its core functions.
As the country’s economy is expected to continue on a high-growth trajectory, the commission firmly believes that the benefits of economic growth must be felt by all through a fairer distribution of incomes and opportunities. Our commitment to Filipino consumers is this: we will staunchly carry out PCC’s mandate of protecting and promoting a free and fair competition landscape. This is because consumers are at the heart of the Philippine competition policy. Our track record in 2018 attests to this.
I look forward to what will surely be an exciting year ahead for competition!
Dr. Arsenio M. Balisacan is the chairman of the Philippine Competition Commission and a professor of economics (on secondment) at the University of the Philippines. Prior to his appointment to the Commission, he served as socioeconomic planning secretary and, concurrently, director general of the National Economic and Development Authority. He also served as dean of the School of Economics in UP Diliman.
(Originally published on Business Mirror’s Competition Matters column on January 2, 2019 here.)