Policy experts say: more competition, more stories to write

Imagine the time when PLDT was the dominant player in telecommunication for more than half a century, the oil industry only had three players --- Pilipinas Shell, Petron and Caltex, and Philippine Airlines was the only choice for an airline. 

“Lee Kwan Yew once quipped that in the Philippines, 99 percent of the population waited for a phone line, while the remaining 1 percent waited for a dial tone,” said Dr. Ronald U. Mendoza, executive director of the Asian Institute of Management (AIM) Policy Center in a media forum on competition policy at the AIM organized by the Center for Media Freedom and Responsibility (CMFR). 

Deregulation changed all that in the mid-1990s.  The emergence of competition in various industries have policy makers and competition advocates now thinking if this is favorable to the consumers, new players or small-scale businesses.

“Are consumers and taxpayers really any better off today, well over a decade after this deregulation wave?,” Mendoza said.  He said there are some gains but also evidence of emerging challenges to promote competition and safeguard consumer welfare.  “Mergers for example have been written a lot and the presence or absence of competition is one of the many areas to write about.”

Competition as defined by the Philippine Institute for Development Studies (PIDS) is the “process that allows sufficient number of producers I the same market or industry to independently offer different ways to satisfy consumer demands”. 

“Since competition is often equated with rivalry, it pressures firms to become efficient and offer a wider choice of products and services to consumers at lower prices,” said Dr. Rafaelita Aldaba, senior fellow and research associate at the PISD.  She however said that it is better to focus on economic efficiency rather than the size of the market alone.  “Competition is a means and not an end in itself.”

An advocate of competition policy since 1993, Trade Advisory Services managing director Atty. Anthony Abad said it has fallen on deaf ears.  “One cannot have a market economy without a completion policy.  Otherwise, you will have an oligarchy and monopoly,”  Abad said.  “Competition is not necessarily fair but will lead to fairness,” he said.

Article 12, specifically sections 1, 6, 11, 19 and 22 of the 1987 Philippine Constitution prohibits anti-competitive practices.  Monopolies per se are not prohibited but only when public interest so requires.  It also “prohibits combinations in restraint of trade and unfair competition”.  But same constitution provides no imposable sanctions for violations of these provisions.

In addition, special laws and statutes address competition-related practices in specific sectors such as the Price Act, Cooperative Code, Downstream Oil Industry Deregulation Code and the Corporation Code which provides for merger control.

“If such were not created, there is going to be market abuse,” said Atty. Lai-Lynn Barcenas, associated director at the AIM Policy Center.  Barcenas cited the proliferation of small and medium enterprises (SMEs) that protects the general welfare of the consumers.  “Provide more opportunities and make growth inclusive,” she said.

Anthony Ian Cruz, co-founder of TXTPower, a consumer advocacy group, thought otherwise.  “It is long way to go for the full protection of the consumers,” Cruz said.  “Monopoly historically is bad for consumers.”  He said that it still exists to this day.  “We need to make a broad coalition.”

Financial Times correspondent Roel Landingin said that if there is more competition, there will be more stories to write about.  “Mergers for instance were an issue in the 1990s up to the present.  Better regulation and consumer empowerment are important,” Landingin said.  He said that there is a need for business reporters  to let the public understand what jargons like competition, oligopoly, and oligarchy are all about and that media have to draw lessons from the past.  “What has this to do with local business?  What is it significance to ordinary consumers and readers?,” he said. 

Executive Order No. 45 issued on June 9 this year has mandated the Department of Justice to be the (1) government legal counsel and advisor and (2) investigator and prosecutor of crimes.  It meant that the Justice Department will enforce competition laws and policies, and investigate violations and prosecute offenders.

“It is going to be the best bill in the world  on or about competition,” said Assistant Secretary Geronimo Sy, co-chair of the Senate Technical Working Group on Anti-Trust Legislation.  He said that regulatory capture is the worst kind of graft and corruption.

Sy made a reference to House Bill 4835 also known as the Philippine Fair Competition Act of 2011, which reflects the creation of Philippine Fair Competition Commission that will impose fines and penalties, and file criminal complaint before DOJ.  “We learned our lessons.  What happened in Indonesia should not happen in the Philippines.  This bill at least has nine best practices all over the world,” he said.  “The overall model is multidisciplinary because of the presence of MOAs and regulators.”

Chapter 3 of the Bill have price fixing and bid rigging as prohibited acts.  “It shall be unlawful for firms to engage in horizontal and vertical agreements that prevent, distort or restrict competition, unless otherwise exempted,” Section 8 of the Bill said.

The forum made these recommendations:  a clear development and policy guidelines, a competition authority that must be independent whose members and staff must possess the highest level of skill and expertise, penalties should not provide opportunities for bribery, consider market constraints and administrative weaknesses, and have education and information dissemination. 

“Think of the economy, of the Filipino consumers.  We should all benefit from these,”  Dr. Ronald Mendoza said.

(Photos courtesy of CMFR)