April 11, 2016
– Domestic industries with only two dominant players such as telecommunications, aviation and ports are deemed most anti-competition.
National Competitiveness Council (NCC) co-private sector chairman Guillermo Luz made this initial assessment as the Philippine Competition Commission (PCC) is crafting the implementing rules and regulations of the Philippine Competition Act or Republic Act 10667.
Luz was among the speakers along with PCC Chairman Arsenio Balisacan and Globe Telecom Director for Policy Division Ariel Tubayan at the first roundtable discussion of the Economic Journalists’ Association of the Philippines (EJAP) at Max’s Restaurant in Makati.
Easily, both Balisacan and Luz have identified the telecommunications industry for having the most complaints for inefficiency with only two major players – Globe and Smart/PLDT.
Luz also cited aviation and ports for their inefficiencies. These industries have also less than two players. For Manila ports, there are only two major operators – ICTSI and ATI. The local ports are mostly operated by the Philippine Ports Authority. There are also issues hounding the domestic aviation industry where there are only two major players – PAL and Cebu Pacific.
According to Luz, all industries serving domestic markets which industry market share is dominated by less than 3 players may have anti-competitive features.
There is also the issue of whether or not the products of these industries are considered essential or substitutes.
Although Balisacan was more circumspect, the former socio-economic planning secretary said he would be surprised if telco is not on the list among most affected industries in the implementation of the Competition Law.
“Telco is one of sector with some problems, contestable quality of service and charges in relation to neighbors for internet services,” he said.
These issues will be addressed in the PCC’s nationwide scoping exercise to identify industries with anti-competitive issues and to determine where these issues originate from. The study is expected to be completed in May, next month, and will be used as inputs in the crafting of the IRR for Competition Law
This is the reason, Balisacan said determining what is “relevant market” is deemed very contentious in the crafting of the IRR.
Section 17 under Mergers and Acquisitions also provides value of transaction agreement that exceeds P1 billion will be automatically flagged by the PCC.
Although, Balisacan wondered at how this threshold has been arrived at he also noted this varies according to industries.
For instance, he said, this threshold can be easily breached in the telecommunication industry because of its nationwide scope but for an industry that caters only to a specific geographic location, the amount could be so high.
“That is why determining what is relevant market can be very contentious in the crafting of the IRR,” he added.
Balisacan said the PCC is fast tracking the crafting of the IRR, which publication is expected in June this year. The Competition Law, which was approved by President Aquino in August last year, directed the completion of the IRR in six months or last February yet but has been delayed as the PCC was only constituted in February.
“We are fast tracking the IRR and we expect to have it published in June,” he said.
Balisacan, however, said that PCC will not start from scratch in crafting the IRR stressing the quasi-judicial body will take the best practices from other countries like Europe and US and Europe. The commission will also consider best practices from the best cited internal competition policy of Australia and ASEAN fellow Singapore.
Balisacan also said that the Commission has the power to update the IRR noting that the US, which IRR of its 100 year old anti-trust laws are still being updated as industries and companies have to evolve in the market place.
(By Bernie Magkilat)