Business laments competition policies
Competition policies are meant to ensure fairness in doing business with consumer protection at the center of it all. Thus, the true test of decisions, rules and policies of the Philippine Competition Commission (PCC), the country’s anti-trust body, is if these results in consumer welfare, not just in the short term but, in the longterm horizon.
But the initial foray of the powerful PCC has put businesses out of their wits.
Highly-respected businessman Jaime Zobel de Ayala, chairman of Ayala Corp., one of the country’s largest conglomerates, during the Manila Forum on “Competition in Developing Countries” raised concerns about competition policies that are targeting big enterprises.
Zobel, a panelist during the first session of the forum on “Competition in Development: Special considerations for Developing Countries” then called for a balance in competition policies and consumer welfare protection stressing that competition policies are “stifling businesses.”
The Ayala Group is a party to the ongoing PCC case over the acquisition of the third telco player in the country by its subsidiary Globe Telecommunications, in tandem with another player, Smart Communications. The acquisition has raised eyebrows since telco services are now left at the mercy of the duopoly in a market where internet is second worst to Afghanistan only.
Zobel’s position was supported by the Philippine Chamber of Commerce and Industry (PCCI), the country’s largest business organization.
“I sort of echo Mr. Jaime Zobel De Ayala that enterprises are the targets of competition policy,” said former PCCI President Alberto Fenix, who represented PCCI at the forum’s session on “Competition Policy and the Quality of Institutions.”
“Our goal as business enterprises is to be able to compete, so (with) big vol- ume and when successful (these) drive markets,” Fenix added.
Fenix explained that good business enterprises would definitely have more of the market, or more than 50 percent, although it is difficult to attain that.
“That is a goal of every enterprise as they put innovation to get bigger share of the market at lower cost. Does that make me anti competition? No, we love innovation and competition,” stressed Fenix.
Meantime, Tony Fernandes, CEO of Air Asia who was also a panelist on the topic “Conglomerates and Competition Policy” lamented as to how government ownership in the airline industry has made it unfair to his startup airline company.
Fernandes related how tough it has been for Air Asia to compete in an environment where the Malaysian government, which is a regulator in the airline industry, also owns the Malaysian airline. He lobbied a lot to separate regulators from owning a business but that this also happens in other ASEAN countries.
He said this situation stifled competition and gave rise to over regulation which in the end kills innovation.
Actually, he said, the problem in the issue of competition is the big corporations. PCC: No Targetting
of Big Business The PCC was quick to say that they are not targeting the conglomerates. “As far as PCC is concerned, as far as the law is concerned, business is not our target, we try to work with business,” said PCC Commissioner Johannes Bernabe at the forum.
Bernabe explained that the new Competition Act, which took 25 years to pass seeks to ensure consumer welfare, attract investments and assure opportunities for all.
“Now that the law is in place, we are working together with business to ensure all businesses including small and medium enterprises can have a share and consumer welfare is at the forefront of our economic policy,” he said.
Legitimate means to acquire substantial market is allowed and that businesses could pursue this. PCC will only come in when such position is abused.
PCC intervenes in business transactions in the name of consumer welfare because that is public interest. But its mandate even goes beyond consumer welfare such as in economic development, quality of
MSMEs Shun Competition Policies Entrepreneur Jose Ma. “Joey” Concepcion III has another take on competition issues as he urged government not to regulate the digital space because that is the best tool for micro, small and medium enterprises (MSMEs) which could not compete in businesses dominated by big conglomerates.
A panelist on “SMEs and Competition Policy” at the same forum, the presidential adviser on entrepreneurship stressed that the digital market place is the great equalizer for MSMEs.
“Government should be careful to regulate the digital marketplace,” the founder of Go Negosyo said.
He lamented the recent moves of the government’s Land Transportation Franchising and Regulatory Board (LTFRB) to regulate the number of TNVs, which he said curtails the entrepreneurial spirit of online businesses.
Access to online services disrupts offline, but Concepcion said this is the only business model that is changing the business landscape for the small players. “That is the way forward. Will you even regulate Uber and Grab which are knocking off others,” he said.
“You don’t need competition law to protect them but with the right size and niche market you would be profitable.”
Concepcion pointed out that the competition law should only apply to big firms. He recalled that when he started Selecta, now the largest ice cream brand, it was fighting against the local giant ice cream brand, Magnolia.
Pop Cola beat other cola players after he built it for 13 years. When it was finally sold by its new owners, it paved the way for new entrepreneurs to grow.
“If you talk to micro entrepreneurs they don’t know that PCC exist … they don’t need PCC to succeed,” he said.
Instead of competition policies, Concepcion said the MSMEs need help on 3Ms. “Without these 3Ms, it is impossible for these micro enterprises to grow,” he said. Through mentorship, MSMEs can be guided how to make use of the digital economy.
“Common sense, so what law is going to protect them? I believe that free enterprise is the way forward. The digital economy, this is where we should not regulate,” he said noting that competition policies are indeed only for the big enterprises, which control business because they are the dominant players.