PCC five years on
By Atty. Johannes Benjamin R. Bernabe
10 February 2021
The Philippine Competition Commission commemorated the fifth anniversary of its establishment on February 1 without much of a celebration. We have the pandemic to blame for that, even though the agency has continued to function and carry out its mandate during the past year’s lockdown. It is a bit of a shame because the PCC has been, in the five years of its existence, lauded in international circles for the quality of its rules and guidelines, and the soundness of its decisions particularly in the review of large mergers and acquisitions. Notably, as early as its third year, the PCC had been featured in the 2019 Global Trends Monitor published by PaRR, a competition news and analysis company, as the fifth-ranked competition agency in the Asia-Pacific region in terms of merger review, anti-trust enforcement and policy development.
Merger review evolved early on and remains a strength of the Commission. For all the grumblings it initially provoked in the business sector, the system works effectively and efficiently, weeding out only the most problematic of transactions but otherwise promptly clearing others that have no anticipated anti-competitive effects. The most high-profile of those that have been subjected to conditions or withdrawn after review include Grab’s acquisition of Uber, Universal Robina’s planned purchase of Roxas Holding’s sugar operations in Batangas, and San Miguel Corp.’s proposed acquisition of Holcim’s cement facilities. It is arguably a testament to how well-grounded the Commission’s findings are in these cases that these were not appealed to the regular courts by the merging parties.
Nonetheless, the Commission faces significant challenges as it moves towards concluding its first decade. With only three commissioners on board (the other two members’ terms having expired in January), President Duterte must appoint two new commissioners competent in law and economics, and preferably, familiar with how business is done in the Philippines. These appointments must further ensure that the Commission avoids being politicized, with positions, or worse, rulings taken on the basis of political masters. These standards for appointment will go a long way in enhancing the Commission’s credibility with the business community and consumers.
The Commission also has to further ramp up its pursuit of cases against cartels and entities that abuse their market power. In the last two years, the agency’s Enforcement Office has issued a total of four statements of objections (“SO,” a PCC term for what is essentially a charge sheet) against entities for exclusive arrangements that foreclose competition. These SOs involved the specific market for the provision of Internet services in condominiums in a couple of cases, as well as insurance services in a particular housing market in another. Apart from the obvious curtailment of anti-competitive behavior, the adjudication of these SOs have the additional externality of informing and educating businesses and citizens alike of the thinking of the Commission on, for instance, exclusivity arrangements in Internet service provision. A case in point is after the PCC’s settlement decision on Urban Deca and its affiliate Internet service provider, many property developers rectified their practices and abolished their exclusive arrangements with ISPs. This has redounded to the benefit of presumably millions of Filipinos who henceforth will have a choice of faster, more stable and less expensive alternatives to their existing ISPs. This is critical as the country increasingly trends towards study- and work-from-home arrangements even beyond the current lockdown.
Indeed, if the Commission is to become more directly relevant for ordinary Filipinos, its Enforcement Office has to double up on its output of SOs, especially in other sectors where the perceived need for the agency’s intervention is most felt, e.g., in food and agricultural goods, hygiene and pharmaceutical products (more so during this continuing pandemic), and public services.
Another challenge the PCC must surmount in the near term is improving understanding of competition law and principles by households, small and medium-sized enterprises, and surprisingly, colleagues in government including Congress. It is fairly obvious that the first two groupings, representing consumers and businesses, should be sensitized more about the PCC and its activities. The Commission expects that complaints and information about potentially anti-competitive acts would come from these stakeholders who may experience and suffer from such practices by other businesses. If this expectation is to materialize, then they naturally have to be made more aware of competition principles.
In the case of Congress, however, an even more involved effort must be exerted to make sure that genuine “champions” or “friends of competition law” are nurtured. Proposed economic legislation should be screened and subjected to “competition impact assessment” (similar to what is done in South Korea, for example) to prevent laws that set aside competition principles for the sake of expediency. Otherwise, we ourselves in government run the risk of eroding the “culture of competition” we have been carefully building all these years.
A lawyer by profession, Commissioner Johannes Benjamin R. Bernabe served as adviser to the Congress in the drafting of, and deliberations on the Philippine Competition Act. Prior to his appointment at the Philippine Competition Commission, he served as the Philippines’s lead trade negotiator at the World Trade Organization and was a senior fellow at the International Centre for Trade and Sustainable Development—both in Geneva, Switzerland.
(Originally published on Business Mirror’s Competition Matters column on February 10, 2021 here.)