PCC: We’re good for business

When former president Benigno Aquino III appointed then socioeconomic planning secretary Arsenio Balisacan as chairman of the Philippine Competition Commission (PCC), the government’s antitrust body, he already had his hands full at the National Economic and Development Authority (NEDA).

There were so many infrastructure projects up for approval – the agency was so busy.

But Balisacan, a well-known economist who holds a PhD in Economics from the University of Hawaii, did not hesitate to accept the job.

Inclusive growth

An expert on economic development, poverty and inequality, Balisacan believes a competitive market is necessary to achieve inclusive growth.

“The growth that we’re seeing is not as inclusive as what we would have wanted. It’s these anti-competitive factors that contribute to that. It’s really a big part of the story – that lack of competition that concentrates the benefits to a small group of people,” Balisacan told The STAR.

“If there is level playing field, growth becomes inclusive,” he said.

The Philippines posted a stellar economic growth of 6.8 percent in 2016, but such growth has yet to be inclusive with 25 percent of the 100 million population still living below the poverty line.

Balisacan recalls that it wasn’t easy to set up the PCC, the first for the country.

“We started from scratch. It’s never been done in this country. We started in February last year and all I had was the commissioners with me and five borrowed staff from NEDA,” he said.

But he and his team persevered because of the crucial role the PCC can play.

Without the PCC, Balisacan said, “the big companies can kill SMEs. They can simply reduce prices so the SMEs won’t be able to compete. This is a very common practice of cartels. The big ones eat the small ones.”

Balisacan, who has been studying the behavior of industries and other players in the economy, said industries that are vulnerable to anti-competitive behavior are those with few players.

Thus, in looking at mergers and acquisitions, PCC makes sure the merger will not substantially lessen competition.

“These merged companies could have a much larger influence in the market,” he said.

The PCC also makes sure that the merger would not prevent any potential competitor to come in if there is no competitor yet.

“We have to look at the barriers to entry,” he said.

The PCC is also strongly pushing for its advocacy of having a competitive environment in the Philippines, the PCC’s scope is not limited to reviewing M&As.

Good for business

Given the role of the PCC, Balisacan said that in the end, businesses should realize how good the PCC could be for the country’s business environment.

“The PCC is actually good for business because competition is good. They will improve on their products and services,” he said.

Businessmen don’t necessarily agree. They argue the PCC is just another layer in the already labyrinthine Philippine bureaucracy.

However, Francis Lim, a prominent corporate lawyer who is a senior partner at ACCRA Law Offices and who has worked as an antitrust lawyer in Washington, said the creation of the PCC is good for the country.

“It’s good overall. All businesses have a chance. What is important is to have a competitive environment for everyone. Those big businesses have nothing to fear if they don’t do anything illegal,” Lim told The STAR.

So far, the PCC has reviewed 114 mergers and acquisition transactions, of which 95 deals have been approved.

Now whether or not the approved deals would actually lead to a more competitive environment, prevent market leaders from abusing their dominant position, and improve businesses’ products and services – and in the process translate to inclusive growth for the Philippines – remains to be seen.