Belmonte pushes passage of Fair Competition Act

MANILA, Philippines - Speaker Feliciano Belmonte, Jr. is seeking the swift enactment of his proposed Philippine Fair Competition Act of 2013 that aims to minimize unfair competition and dismantle monopolies and cartels to protect consumers and the economy from powerful business interests.

Belmonte’s House Bill 1133 is pending at the House Committee on Trade and Industry chaired by Las Piñas City Rep. Mark Villar. It is a refiled measure of HB 4835 of the 15th Congress with some improvements.

The Speaker said the measure “aims to encourage fair and free economic competition by prohibiting the abuse of market dominant positions and the excessive concentration of economic power by regulating improper concerted acts and unfair business practices, thereby stimulating creative business activities, protecting consumers and promoting the balanced development of the national economy.”

“The economy continues to be dominated by groups of businesses with substantial market power and political influence. Also, competition in the domestic market remains restricted in key sectors,” Belmonte said.

He said the 1987 Constitution expressly provides that “the State shall regulate or prohibit monopolies when the public interest so requires.” The Constitution also stipulates that “no combinations in restraint of trade or unfair competition shall be allowed.”

Belmonte said despite the constitutional guarantees and the existence of laws that affect competition, such laws have proven to be inadequate.

He cited the lack of genuine competition in certain industries impairs public welfare and undermines the country’s credibility to provide a business climate conducive to investment. 

The House said the presence of a comprehensive competition policy would further boost the country’s gross domestic product (GDP) to rise at par with the country’s first world counterparts; improve real wage; and lead to lower consumer prices. 

Belmonte said as outlined in the ASEAN Economic Community (AEC) blueprint adopted in 2007, all ASEAN member states, including the Philippines, would endeavor to introduce competition policy by 2015.

The bill provides for the creation of a Philippine Fair Trade Commission (PFTC) to be under the Office of the President and which would investigate, gather evidence and initiate prosecution of those engaged in unfair trade practices. It would also look into the description of cartels and monopolies, and impose defined sanctions and penalties for violation of the Fair Competition Act.

The bill also mandates that the exercise of regulatory powers by different government agencies, including local government units (LGUs), over an industry or subsector thereof should be cumulative and should not be construed in any way as derogating from the power and authority of the PFTC.

While the PFTC would have primary and sole jurisdiction over competition issues, the regulatory bodies would continue to exercise jurisdiction over all matters with regard to the firms’ operation and exercise.

The bill provides it would be unlawful for firms to engage in anti-competitive acts that prevent, distort, or restrict competition unless otherwise exempted. These prohibited acts should include price fixing and bid rigging.

The bill also provides that it would be unlawful for one or more firms to abuse their dominant position by engaging in unfair methods of competition, or in unfair or deceptive trade practices, or entering into combinations in the form of trust or otherwise, or conspiracy, with the purpose and effect to prevent, restrict or distort competition. Among the prohibited acts should be: predatory behavior towards competitors; limitation and control of markets; market allocation; arrangements to share markets or sources of supply; price discrimination; exclusivity arrangement; tie-in arrangements; and boycott.

The measure also prohibits anti-competitive mergers. It provides that no firm engaged in commerce or trade should  acquire, directly or indirectly, the whole or any part of the stock or other share capital, or the whole or any part of the assets, of one or more firms engaged in any line of commerce or trade where the effect of such acquisition of such stocks, share capital, or assets, or of the use of such stock by voting or granting of proxies or otherwise maybe to substantially lessen competition, or tend to create a monopoly.

The bill offers a leniency program to any person or firm that should cooperate or furnish any information, document or data to the PFTC before or during the conduct of the preliminary inquiry that constitutes material evidence as determined by the Commission.