2020: Toward a more robust competition regime
By Arsenio M. Balisacan, PhD
January 15, 2020
In last week’s column, I discussed how 2019 proved to be a banner year for the Philippine Competition Commission. Having gained significant experience in the past three years, the PCC confidently flexed its enforcement muscle by deciding on several landmark cases and imposing stiff fines on competition law violators. Our strong position reflects the commission’s commitment to fostering efficient markets and advancing consumer welfare.
Yet, many challenges still need to be overcome. Many sectors that have significant impact on consumer welfare and economic development are still characterized by high levels of market concentration and barriers to entry. Consequently, the full benefits of competition—lower prices, better quality, and wider variety of goods and services—are yet to be felt by most Filipinos.
Therefore, for the year 2020, the commission will prioritize the sectors of telecommunications, retail, energy and electricity, transportation, construction, health and pharmaceuticals, and food and agriculture. In carrying out competition analysis and enforcement activities, we intend to unleash the full economic potential of these sectors that have long been held back by highly restrictive regulation.
This year, the commission’s topmost priority is to effectively investigate anticompetitive agreements and conduct, bearing in mind that effective deterrence requires not only the threat of penalties but also effective detection and prosecution of infringements. With the fully launched leniency program and the strengthened ability to conduct dawn raids added to our armory of enforcement tools, we are now more equipped to exercise the full range of our investigative powers.
On the mergers and acquisitions front, we will further streamline our review process by issuing several important circulars and guidelines. In the first half of this year, we intend to issue circulars on the process for exemption from compulsory notification of joint ventures under the Neda JV Guidelines, as well as unsolicited public-private partnership projects. Guidelines on merger remedies, which parties may use to inform their proposals for voluntary commitments to the commission, will also be issued within the year.
We will undertake in-depth research to support merger reviews and competition enforcement and to provide inputs for advocacy initiatives. These include competition assessments of sector regulations and market conditions, and an impact evaluation of PCC’s decisions. The commission also intends to conduct research on the impact of government subsidies on the competition landscape, as well as on industry practices, such as vertical restraints between upstream and downstream segments of various industries.
On the matter of strengthening our enforcement networks, we look forward to solidifying and formalizing interagency ties with other sector regulators, particularly with the Land Transportation Franchising and Regulatory Board, the Intellectual Property Office, and the Department of Information and Communications Technology. These partnerships will effectively speed up investigation of cases and facilitate better policy coordination.
Along with this, the commission plans to formally propose to Congress amendments to the Philippine Competition Act (PCA) to address salient issues that have emerged during its first three years of operations. The proposed amendments will include raising the amount of pecuniary penalties, giving PCC the power to conduct dawn raids without court order, and reinforcing its primary, original, and exclusive jurisdiction over all competition cases. Following global trends, we will also explore expanding our mandate to include consumer protection, recognizing the complementarity between competition and consumer protection work.
Recently, the commission and the Asian Development Bank launched the $23.3-million Capacity Building to Foster Competition Project, the first capacity building loan in recent years. This six-year project, currently ongoing, will help strengthen PCC’s institutional capacity while furthering the culture of competition in other government agencies and in the academe.
Further, to cater to the growing appetite for expansion across our country’s major economic centers, PCC will ramp up preparations for the establishment of regional offices in Cebu and Davao, by 2021.
By issuing several rules and guidelines that streamline PCC’s processes and clarify the scope of its powers, as well as introducing programs that bolster its operations, the commission looks to further improving the quality of its operations and reducing the risks and costs to doing business in 2020.
Now, having laid down the future actions on the country’s competition policy regime, the PCC recommits itself to fulfilling its mandate of protecting competitive processes to advance consumer welfare and achieve sustained and inclusive development.
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 15, 2020 here.)