Scrap the Competition Act
Credit to Author: BEN KRITZ, TMT| Date: Wed, 20 Feb 2019 16:16:15 +0000
DISPLAYING a blissful unawareness of the concept of irony, Quezon Representative Danilo Suarez has called for the formation of a congressional oversight committee to review the implementation of the Philippine Competition Act (RA 10667) and the actions of the Philippine Competition Commission (PCC).
Suarez, who is the minority leader in a House of Representatives that doesn’t actually have a minority, made the call this week in response to “the clamor from business entities in the private sector to revisit the Act and the rules of the Commission,” he said.
Under RA 10667, Congress can convene a Congressional Oversight Committee on Competition (COCC) to “oversee the implementation” of the Competition Act, because the Filipino political mind takes it as an article of faith that the solution to an unwieldy and inconsistent bureaucratic process is to add another layer of government to it.
The COCC would be made up of the House Committees on Trade and Commerce, Economic Affairs, and Appropriations, and will be tasked “to oversee the implementation of the law, the rules and to prescribe the necessary amendments to void arbitrariness in the acts and decisions of the commission and the proper implementation of the national competition policy,” Suarez said.
According to Suarez, the PCC’s efforts so far have largely been a waste of government resources because of changes in guidelines implemented since the PCC was formed and started its work. The source of the problem, he suggested, is in the implementing rules and regulations (IRR) for RA 10667, which took nearly 10 months to develop; the law was passed in July 2015, but the IRR was not finalized until May 2016.
“The wide latitude of the commission’s powers under the Act has necessitated the issuance of several rules and guidelines, in addition to the Rules, resulting in ambiguity and contentious interpretation by the Commission and an undue exhaustion of the resources of the Commission and thus, the government,” Suarez said. “Neither the Act nor the Rules provide for adequate guidelines in the exercise of the Commission’s power to declare transactions void.”
Reading between the lines of Suarez’s bluster, the problem is apparently not that the PCC actually voids merger and acquisition transactions – it has only disallowed two of the 146 cases it has reviewed since 2016 – but that it exists at all, and serves as a brake on business activity.
How adding another level of regulatory examination by way of the least technically competent or efficient branch of government is supposed to solve that problem, if that is really what Suarez and the business interest he speaks for is getting at, is not really clear.
Unless, of course, Suarez’s real intention is to ditch the Philippine Competition Act entirely, which certainly seems plausible given the overall irrationality of what he is proposing. The acceptance and support for the idea of a competition-monitoring agency has always been lukewarm at best, and it is not surprising that it has been so. This is an economy built on oligopolies – two telecommunications providers, two airlines, only three or four major retailers, and a limited number of banks for the size of the population – and so competition as a matter of practice is scorned and feared. The only reason it was prioritized and given formal government attention at all was for the purposes of virtue-signaling; most developed economies maintain some kind of competition and anti-trust framework, and so if the Philippines is to maintain its big-league aspirations, it must have one, too.
The PCC has pursued its mandate sincerely and as faithfully to the terms of RA 10667 as it can, but it is the defective creation of an insincere and defective law. Written as shoddily as most legislation in the Philippines – where the substantial work of actually creating the law is left to those responsible for writing the IRR – RA 10667 makes it difficult for competition to be monitored and encouraged in an effective way. And with the inclusion of the provision authorizing the formation of the COCC, Congress simply added the insurance of being able to scuttle the whole framework without the need for formal repeal that might attract unwanted attention.
Since Suarez’s real aim is to free the business sector from the nuisance of a competition watchdog, perhaps Congress should oblige its patrons by scrapping RA 10667 entirely. A Competition Act that restricts regulation of competition to mere lip service is “an undue exhaustion of resources” to no one’s benefit; the PCC, despite its sincerity, has had precisely no impact on the business landscape in terms of improving competition.
The Philippines quite obviously does need a competition framework. But it needs one that is created by a substantial piece of legislation, one that clearly sets forth actionable parameters, the regulatory process, and the operational authority of the oversight body. That requires real work, which of course, the common species of Philippine legislator may neither be willing nor competent to do. Filipino voters who value choice and reasonable prices for civilized life’s necessities may want to give that matter some thought when they go to the polls in May.
Email: ben.kritz@manilatimes.net
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