Task force set to decide on predatory pricing issue

The Task Force on Predatory Prices will decide within one month the allegations unfair business practices raised by certain quarters against Petron Corp. Pilipinas Shell Petroleum Corp. and Caltex Philippines, Inc.

The task force is composed of representatives from the Department of Energy (DOE) and the Department of Justice (DOJ) with Energy Undersecretary Ben Hur Salcedo as head.

On or before the one-month period, the task force will decide if there are grounds for prosecuting the alleged violators.

Energy Secretary Mario V. Tiaoqui said the first thing that the task force will do is define predatory pricing and list down the conditions under which it exists.

The New Petroleum Players Association (NPPA) and LPG Refillers Association said the oil majors have been undercutting the prices of the new entrants in order to prevent them from gaining substantial market shares.

Under section 11 of Republic Act (RA) 8479, otherwise known as the Downstream Oil Industry Deregulation Act of 1998, predatory pricing is defined as "selling or offering to sell any oil product at a price below the seller’s or offeror’s average variable cost for the purpose of destroying competition, eliminating a competitor or discouraging a potential competitor from entering the market."

Variable cost is defined as cost which varies, such as raw materials. Average cost simply means the sum of all variable costs divided by the number of units. – Ted Torres