Competition body walks a tightrope as it intensifies enforcement this year

COMPETITION authorities will have to strike a balance between allowing investments to flourish and protecting the welfare of consumers as the Philippine Competition Commission (PCC) ramps up enforcement this year.

In a panel discussion at the 2018 Manila Forum on Competition in Developing Countries in Makati City, Ayala Corp. Chairman Jaime Augusto Zobel de Ayala cited the experience of advanced Asian economies whose governments have created an environment for businesses to build strength before putting competition restrictions in place.

The Ayala chief executive noted that the Philippines has a development cycle and a new regulatory framework that, if not handled correctly, can become “burdensome” and limit the long-term success of industry.

“The Philippines is going through a cycle where promoting investments and encouraging investment-led growth should be balanced in some way with consumer welfare and the need to create a competition policy,” Mr. Zobel said.

In its first two years of operation, the PCC has collided with the country’s biggest conglomerates as it implemented the national competition policy.

The most notable case involves a court battle with Ayala- led Globe Telecom, Inc. and PLDT, Inc. after the duopoly acquired the telecommunication assets of potential third player San Miguel Corp. for P70 billion, widely seen as a litmus test for the young agency as it carries out its mandate of curbing anti-competitive practices.

Yesterday, the SM Group, owned by the country’s richest man Henry Sy, Sr., shelved a plan to purchase Goldilocks Bakeshop, Inc., citing changes in the business environment.

It was not clear if the decision — the first deal to be rescinded after being approved by the PCC — was a result of the

voluntary commitments SM made to the antitrust body to resolve potential anti-competitive issues stemming from the transaction.

In a briefing on the sidelines of the forum, PCC Chairperson Arsenio M. Balisacan welcomed the comments of Mr. Zobel, noting that it is crucial “to learn from each other, hear their concerns and engage with them.”

PCC Commissioner Stella Luz A. Quimbo acknowledged that awareness of Republic Act No. 10667, or the Philippine Competition Act, which was signed into law in July 2015, remains “very low” in the country.

“Business is not a target. The way we perceive it is we want to work with business to ensure compliance with the law,” PCC Commissioner Johannes R. Bernabe said.

Moving forward, the PCC hopes to step up enforcement after the transitory period that allowed businesses to restructure their contracts to comply with the law ended last year.

“We expect to be very busy in the third year of the PCC and the years ahead with enforcement. Hopefully, we can finish this year some of the guidelines to tighten the enforcement mechanism of PCC,” Mr. Balisacan said.

There is no ideal model for a competition body that fits all situations, Frederic Jenny, chairman of the Organization for Economic Cooperation and Development’s Competition Committee, said, explaining that authorities have to consider issues relevant to domestic circumstances and trade-offs they have to make.

In Europe, competition authorities have enhanced effectiveness by reducing the scope of judicial review and focusing discussions more on remedies and less on the characteristics of the violation, Mr. Jenny said.

“At this stage, I would not waste resources on an active search for the optimal model; rather, for a provisional model shaped in time by a willingness to adapt,” said Raul V. Fabella, academician at the National Academy of Science and Technology.

Yasuyuki Sawada, Asian Development Bank’s chief economist, said rapid growth has elevated Asian economies from low- to middle- income status, and productivity- centered growth is needed for them to reach high- income level, hence, avoiding the middle-income trap.