PCC @ 3: A disruptor among disruptors
by Atty. Macario R. De Claro, Jr.
February 20, 2019

 

“Disruption” and “disruptive innovation” are buzzwords making their rounds in business and tech circles lately. They describe the phenomenon of rapid change in the environment, practices, and culture shaping business, government and many other fields. In the Philippines, alongside technologically driven disruption, another kind of disruption is taking place. A disruption of anticompetitive attitudes and practices has been spearheaded by the Philippine Competition Commission (PCC), which for the past three years has worked toward ensuring fair competition in all markets for the benefit of all Filipinos.

On the occasion of its third anniversary, the PCC held the 2019 Forum on Competition in Developing Countries, themed “Technological Disruption: Market Competition Issues and Challenges.” Having laid the groundwork for sound competition policy and enforcement in the Philippines, the PCC is bent on staying at the forefront of competition developments in Southeast Asia and among developing countries. The Forum gathered key stakeholders from business, government, the academe, and the international community for a timely discussion of how competition authorities must respond to the technological disruptions that are transforming the business landscape.

The keynote speaker, Dr. Ndiamé Diop, head of the World Bank Group’s Macroeconomics, Trade and Investment Global Practice, appropriately framed the day’s discussion. Everyone was gathered there to discuss the latest technology, cyberthreats, and cyber opportunities, but Dr. Diop reminded the body that, at the end of the day, effective competition policy and enforcement, especially in developing countries, must necessarily lead to poverty reduction via competition in labor markets among firms and real wage growth. After all, poverty reduction is the best proof of consumer benefit and economic development.

The panel discussions focused on the opportunities and challenges posed by technological disruption. For example, technological disruptions alter cost structures and allow easier market entry due to lower fixed and average costs, affecting traditional business models, like that of exclusive franchises for “natural monopolies.” Presently, these effects should be considered in responding to clamors from certain business sectors seeking relief from disruptors entering their markets.

Meanwhile, it has become ever more crucial for regulators to weigh their regulatory mandate against consumer welfare considerations. A commendable example cited in the forum was the response of the Bangko Sentral ng Pilipinas to recent developments in financial technology. The BSP’s liberal but prudent approach to the regulation of new financial technology services has allowed the industry to flourish and serve the country’s large unbanked population.

Generally, the adoption of outcomes-based regulation has allowed the rapid testing and development of new products and business models and innovation to prosper. Competition cooperation does not end with sector regulators.  All agencies across national and local government, however, should be equipped with a mindset that fosters innovation.

Businesses, big and small, stand to benefit from the productivity gains generated by disruptive innovation.  Small market players can gain access to smart operations solutions, which could cover accessible business services and manufacturing facilities. But as with all other emerging technologies, there are risks to be faced. Artificial intelligence can reinforce anticompetitive behavior even without human instruction. Data itself can become a barrier to entry or may be leveraged for anti-competitive agenda. Potential efficiency gains and convergence of technologies may be limited by the extent of interoperability of physical and digital infrastructure.

Two recurring themes on disruptive technologies were discussed during the forum. First is the call for closer collaboration among the government, industry and the academe, to facilitate adaptive regulation design, align development objective with existing and available talents and resources, and build and promote mutual capacity.    Second is the inclusivity of access to disruptive technology, which will open up potential markets and increase the size of the economic pie.

The same can be applied to PCC as a disruptor promoting market competition. Multisectoral cooperation is vital; all markets and market players must have access to competitive conditions and outcomes, when applicable. These past three years have not been easy.  Every concluded case and signed memorandum of agreement are but small steps for the PCC not only in upholding competition within the local and international business environment but also in promoting consumer welfare and benefit.  Surely, there will be more uphill battles in the coming months and years. Rest assured, the PCC will remain steadfast in disrupting unfair competition.

***

Commissioner Macario R. De Claro  Jr., a CPA lawyer, has worked in companies in the fields of manufacturing, mining, telecommunications, real estate and banking and finance prior to his appointment to the Philippine Competition Commission.  A litigation and corporate lawyer, he once served as legal consultant to the Department of Environment and Natural Resources. He earned a Bachelor of Laws degree from the Ateneo de Davao Law School and graduated from the De La Salle College with a BS in Commerce, Major in Accounting. 

(Originally published on Business Mirror’s Competition Matters column on February 20, 2019 here.)