Tuesday, April 5, 2011

Nestle Philippines gets away with vertical price restraint in the Philippines but NOT in its mother country!!!

It is actually ironic how Nestle Philippines can get away with vertical agreements here in our country when its head office, based in Switzerland, is governed by very stringent anti-trust laws.

In fact, the U.S. even adapts a more liberal approach than Swiss law with respect to vertical price restraint agreements. Vertical agreements are not illegal per se in the U.S., but the court there considers economic effects of such agreements when applying the Rule of Reaosn to determine whether vertical price restraint is anti-competition or not. There is a little more flexibility.

Under Swiss law, vertical agreements are considered threats to competition if those agreements eliminate competition through retail price fixing or minimum retail price imposition. In Switzerland, in applying the Rule of Reason, the Swiss Competition Council has more specific guidelines, and considers both the economic and social impact of vertical price restraint agreements.

Sadly, in the Philippines, we can’t even judge whether our anti-trust law is liberal, like in the U.S., or stringent, like in Switzerland since there is no comprehensive regulation in the Philippines which directly tackles the issue of retail price fixing, minimum retail price imposition, or vertical price restraints. We only know that we are supposed to apply the Rule of Reason as well, but the big question is: How do we apply the Rule of Reason here?

Without a better anti-trust law, companies like Nestle will continue getting away with certain practices here which would otherwise not fly in other countries. Even the hands of our judiciary are tied. Without any guidelines, how will our courts determine what is reasonable or not?

This is why the call for a tougher, stronger, and more comprehensive anti-trust policy in the Philippines is something that should be taken seriously by those people supposedly advocating it. Walk the walk. Otherwise, our country will just continue to be a dumping ground for unfair and illegal practices condoned in other parts of the world.

1 comment:

  1. "There are no masters where there are no slaves." Dr.Jose Rizal