PCC pushes level playing field

The Philippine Competition Commission (PCC) is seeking to provide equal footing between private and public businesses as part of its mandate to weed out all anticompetitive practices in the country.

Recognizing that not all businesses are created equal, the PCC said it plans to address what is typically regarded as “undue advantage” of some state-owned enterprises (SOEs) over their private counterparts.

“This is a way for us to honor the mandate given to us by Congress and the significance of promoting the culture of competition in the country,” PCC commissioner El Cid Butuyan said.

Pierre Horna, a competition expert and legal officer from United Nations Conference on Trade and Development (UNCTAD), said governments “historically” have the advantage in dealing with businesses.

He said some SOEs in different countries enjoy tax perks, have explicit or implicit government guarantees on debts, concessional interest rates on loans, free land use, effective immunity from bankruptcy, procurement priority, and other privileges as advantage not readily available to private companies.

However, Horna pointed out that SOEs have been subjected to a level playing field when adhering to a country’s competition law and policy.

“Private businesses coexist with government businesses in a variety of markets. They do not always compete on equal terms,” he said.

Since the Philippines established its competition authority only this year, Horna said there is a need to “survey the scope of state-owned enterprises, assess costs and benefits, test the public interest, compliance and complaints mechanism.”

For Johann Carlos Barcena, director of the Governance Commission on Government-Owned and -Controlled Corporations (GCG), competitive neutrality has been one of its guides in assessing the impacts of the government’s many SOEs, including whether an agency still serves its purpose or not.

From 2011 to 2016, Barcena said GCG has abolished 26 state corporations, financial institutions, and GOCCs, while three more has been set for privatization.

The PCC has initiated a National Competition Policy Review that maps the whole competition landscape in the Philippines. It is expected to be finished early next year.

In its preliminary assessment, the review panel has identified four main types of modes where government engaged in businesses. These are government-owned monopolies, government- authorized private monopolies, government control of entry and expansion, and government provision of similar goods and services that directly or indirectly compete with the private sector.