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Competition body mulls challenges to ensure fair business environment

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Arsenio M. Balisacan

By Janina C. Lim
Reporter

TWO YEARS and four months since its formation, the Philippine Competition Commission (PCC) endeavors to implement the law aimed at ensuring fair business competition, while facing up to the bigger challenge of impressing on the public the need for that law.

“Initially, there was a lot of distrust,” PCC Chairman Arsenio M. Balisacan said in a discussion with BusinessWorld last Friday, June 1, when asked about attitudes in business toward the anti-trust body.

Republic Act 10667, known as the Philippine Competition Act of 2015, has been touted as a game-changer as it aims to sustain a business environment of equal opportunities, encouraging as well private investments, facilitating technology development and enhancing resource productivity.

“Unencumbered market competition also serves the interest of consumers by allowing them to exercise their right of choice over goods and services offered in the market,” the competition law read.

Lawyer and PCC Commissioner Johannes Benjamin R. Bernabe said the law has a “very good solid set of provisions” in addressing anti-competitive acts, abuse of dominant positions and reviewing big transactions.

“We have cherrypicked the best provisions in different jurisdictions,” he said, noting too that competition authorities abroad even laud the country’s model. However, implementation remains one of the main challenges of PCC.

“It’s going to be a very long road to develop a culture of competition in the Philippines. Not just a culture of competition but compliance with competition laws,” Mr. Bernabe said.

Mr. Balisacan voiced the same view, as he noted the perception in the Philippines that government agencies “are a kind of hindrance to business.”

“The ease of doing business gets complicated as another agency is created. That kind of perception is, of course, [there] when the competition commission was created,” the PCC chair said.

Indeed, much remains to be done to improve the country’s standing in the global landscape. In November last year, the World Bank released its annual ease of doing business report which showed that the Philippines dropped 14 notches to 113th among 190 countries covered.

Add to this the Sweden-based International Institute of Management Development’s (IMD) recently released World Competitiveness Yearbook rankings for 2018 wherein the country also saw a decline, this time, by nine places to 50th out of 63 economies surveyed.

The slump marked as the country’s largest annual decline over the last decade and the sharpest drop in the region.

Mr. Balisacan said it’s possible other countries are progressing faster than the Philippines in terms of bringing ease of doing business. He also noted, however, indicators in the IMD report as reflecting an upward movement in developments being done here.

“The challenge is really for us to speed up the pace of reforms so that we could improve our ranking,” the PCC chief said. “The Competition Commission has been part of that reform efforts to allow us to move fast to competitiveness….”

Commissioner Stella Luz A. Quimbo said the PCC’s entry also elicited some confusion as some businesses deemed the body’s mandate as being similar to that of the regulators assigned in each sector.

“In the case of Grab and Uber, people ask us what is PCC supposed to do versus LTFRB,” the economist said.

Ms. Quimbo cited the body’s mandate of monitoring prices post-mergers and acquisitions which has often been taken as similar to price-monitoring activities by some agencies.

When prices increase following a transaction, the PCC is tasked to find out if these “are not unreasonable.”

“So it would now seem like we’re coming in as a price regulator but actually not. It’s a price remedy that we are actually allowed to implement,” Ms. Quimbo said.

For her part, lawyer and PCC Commissioner Amabelle C. Asuncion said, “Some of them are even saying that we’re substituting our own evaluation for their business decisions which they’re supposed to have the right to do. That’s their business after all. That’s their perspective.”

But for the smaller players, the PCC has become their “guardian” in leveling the playing field.

“If you talk to, say, the small and medium enterprises, most of them will tell you that it is long overdue,” Ms. Asuncion said. “It’s about time. Obviously there is some dynamics going on there. Most of them are saying they’ve been suffering from some of these practices which make it more difficult for them to flourish in that sector in that industry.”

She also noted that some businesses, even big ones, are beginning to regard the agency with more positivity.

“As we progress, as we show the outcomes of our decisions, even big business is starting to appreciate why we’re here and what we’re doing. Again, it’s a work in progress but we recognize that there is that [perception] and we consider that challenge,” Ms. Asuncion said.