2019: A banner year for competition enforcement
By Arsenio M. Balisacan, PhD
January 8, 2020
Despite the many headwinds it continued to face, the Philippine economy received some welcome news at the end of 2019: poverty estimates recently released show that the country’s full-year poverty incidence dropped from 23.3 percent in 2015 to 16.6 percent in 2018. Additionally, economic growth for 2019 is expected to hover at 6 percent despite the slowdown in the first half of the year. We are on track to achieve AmBisyon Natin 2040, our long-term vision for the Philippines.
To ensure that our growth is sustainable and results in the inclusion of the poor in the economic mainstream, the effective enforcement of competition law and policy must remain part and parcel of the country’s long-term development agenda.
I am quite pleased to say that the year 2019 was a banner year for the Philippine Competition Commission (PCC) as it flexed its enforcement muscle to protect and promote market competition. The past year saw the Commission issuing landmark decisions, instilling discipline in the competitive landscapes across different industries, and imposing sizable penalties on erring firms.
Quite significantly, the Commission decided on its first abuse of dominance case—a milestone in Philippine competition enforcement. It involved Urban Deca Homes, a property developer that imposed a sole Internet service provider on its residents. This prevented them from availing themselves of alternative and cheaper Internet service.
Among its corrective measures, the PCC ordered the property developer to pay a fine of P27 million, and invited other Internet service providers to offer their services to residents. Such was the impact of this decision that other property developers with similar conduct initiated remedial actions on their own practices—a clear example of deterrence and voluntary compliance as a result of effective enforcement.
Another important “first” for the country’s antitrust regime was the merger prohibition in January 2019. The PCC blocked Universal Robina Corp.’s proposed acquisition of Central Azucarera Don Pedro as it would substantially lessen competition in the market for sugarcane milling services in Southern Luzon. The prohibition of the transaction
prevented the creation of a monopoly that could significantly harm the welfare of sugarcane farmers. This demonstrates how the Commission’s work has significant impact on stakeholders who belong to our priority sectors.
The Commission has vigorously enforced the Philippine Competition Act, its rules, decisions and issuances. The PCC stood guard in monitoring Grab’s compliance with the Commission’s Commitment Decision, which subjected Grab’s acquisition of Uber in 2018 to pricing and quality standards. Since opening a motu proprio review of this transaction, and for numerous violations of orders and commitments, the PCC has exacted fines on Grab totaling P39.60 million, of which P19.2 million shall be refunded to affected Grab riders.
The PCC remains committed to the robust enforcement of its rules to penalize violators, encourage compliance, and deter the conduct of unfair market practices. Indeed, the total amount of fines it imposed in 2019 reached P114.6 million—four times greater than in 2018.
Efforts from previous years produced two significant enforcement tools that augment our current processes. First, the Commission’s Leniency Program, a whistle-blower-type program that is a staple in most jurisdictions, was launched in January 2019. More recently, the Commission got a boost from the Supreme Court through its issuance of the Rule on Administrative Search and Inspection, which strengthens PCC’s ability to conduct dawn raids. These two frameworks are expected to significantly advance our case-building and increase the number of cartel prosecutions in the coming years.
To fast-track investigations and to facilitate better policy coordination, the Commission in 2019 established agreements with regulators in sectors it has prioritized. These include the Departments of Trade and Industry; Energy; Agriculture; and Energy Regulatory Commission. These partnerships are being utilized as the Commission continues to bear down on complaints of anticompetitive conduct across a broad range of industries.
In summary, our experiences in the course of our work, the past three years, have strengthened the Commission’s confidence in engaging with participants from various industries and in steadfastly enforcing its rules and decisions. Our strong stance in favor of consumers, as reflected in the stiff fines we have imposed on noncomplying entities, shows the Commission’s seriousness in its commitment to making markets efficient and advancing
This new year, the Filipino people can only expect the PCC to sustain its momentum in delivering more and better competition enforcement.
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 8, 2020 here.)