Court of Appeals junks pricing raps vs Big 3

MANILA, Philippines - The Court of Appeals (CA) has dismissed the predatory pricing charges against Pilipinas Shell Petroleum Corp., and the rest of the Big 3 oil companies.

In a statement, Shell said the CA has ruled in favor of Shell in its petition questioning the orders of Judge Silvino Pampilo Jr. of the Regional Trial Court (RTC) of Manila involving allegations of monopolistic behavior, including predatory pricing and cartelization, filed by the group Social Justice Society (SJS) against Shell, Chevron and Petron.

Predatory pricing refers to the practice of selling a product or service at a very low price, intending to drive competitors out of the market, or create barriers to entry for potential new competitors. If competitors or potential competitors cannot sustain equal or lower prices without losing money, they go out of business or choose not to enter the business. The predatory merchant then has fewer competitors or is even a de facto monopoly, and hypothetically could then raise prices above what the market would otherwise bear.

In a 41-page decision, the CA set aside the orders issued by the Manila RTC judge on April 27, June 23, and July 7, 2009, which denied Shell’s motion to dismiss, as well as allowing the intervention of public transport group Pasang Masda in the case.

Consequently, the CA order dismissed the petition for declaratory relief filed by SJS and Atty. Vladimir Cabigao for lack of cause of action.

CA presiding justice Andres Reyes Jr. ruled that SJS failed “to sufficiently state neither right nor act in imminent violation thereof. (SJS) merely conjectured that (Shell’s) price hikes are in violation of the laws in question.”

The CA further asserted that the Department of Energy - Department of Justice (DOE-DOJ) Task Force has primary jurisdiction over the case. In a report submitted by the DOE-DOJ Task Force on Sept. 3, 2008 related to the case, it found that Shell did not violate any of the anti-monopoly provisions of the Revised Penal Code and the cartelization and predatory pricing provisions of the Downstream Oil Deregulation Law.

The intervention of Pasang Masda was also dismissed as it “falls short of the interest required of an intervenor, that is, ‘interest that is direct and of an immediate character’” and as such, “the intervenor has no legal standing to sue.”

The CA held that Pampilo deprived Shell of due process “by failing to deport himself in a manner necessary to uphold confidence against impartiality.”

The ruling also cited Pampilo’s public statements, which the CA said were “reasonably expected to affect the outcome of the proceedings before him.” 

The CA pointed out that Pampilo’s orders “erred not on difficult, but very fundamental points of law”.