Wednesday, May 25, 2011

BusinessWorld: Atty. Lorna Kapunan on Anti-Trust

"Anti-trust protection for SMEs" (1st of 2 parts)
by Atty. Lorna Patajo-Kapunan
Published in BusinessWorld Online Edition on 24 May 2011

(Original article available here).

"Part I

The recent PLDT-Smart buy-out of Sun Cellular emphasized once again the need for a more comprehensive anti-trust law in the country. Public awareness of the lack of a determinative anti-trust policy has heightened. While the National Telecommunications Commission (NTC) has been tasked with investigating any anti-trust policies in the Sun Cellular sale, there continues to be much criticism for the lack of an anti-trust law with "teeth."

And while the NTC may be called forth to investigate possible anti-trust violations in the telecommunications sector, the question remains as to who will "police" similar violations in other industries, such as consumer goods, manufacturing, food, retail, and distribution.

The current business climate in the Philippines highlights the need not only for a comprehensive anti-trust policy but a regulatory body with teeth. Apart from NTC, there is the Department of Trade and Industry (DTI) tasked by law to implement and monitor compliance with trade and industry laws. But then, when an issue like predatory pricing or vertical price restraint comes up, DTI itself claims it has no jurisdiction. There is thus much confusion as to which and what agency has the expertise to regulate trade and industry laws. Who monitors and who metes out the punishment? Are the penalties even sufficient to prevent anti-trust violations in the Philippines?

Admittedly, "anti-trust" remains a somewhat vague concept in our country, especially to the general public. Lawyers and businessmen may understand the general idea, but would themselves be hard-pressed to define, much less abide with, perimeters surrounding anti-trust violations, precisely because of a lack of a comprehensive anti-trust law that provides such guidelines. What it all boils down to is the prevention of monopoly and the promotion of free competition. Why is this important to the common tao? The answer is because, when there are no clear-cut rules and regulations, foreign companies, multinationals, and large local companies, will continue doing anti-trust practices which ultimately affect not only the consumer but the Filipino worker, employee, and entrepreneur. And they will continue to do such prohibited acts precisely because they can get away with it here in our country.

While there are existing provisions on anti-trust in Philippine law, these provisions are scattered across different codes and republic acts. There are no implementing rules and regulations. The various and existing anti-trust provisions do not provide clear-cut guidelines, elements/requisites, and quantum of evidence required to determine whether an act constitutes unfair competition, monopolistic behavior, or restraint of trade. The penalties meted out alone by certain provisions are dismally insufficient as preventive measures.

These are the issues that the Philippine Senate hopes to address in various proposed anti-trust bills. During the Senate "Understanding Anti-Trust" public forums held last February 2011, facilitated by Senators Manny Villar, Juan Ponce Enrile, and Sergio R. Osmeña III, the following proposed anti-trust bills were presented to the public and extensively discussed: Senate Bill No. 1, authored by Senatore Juan Ponce Enrile; Senate Bill No. 125, authored by Senator Sergio R. Osmeña III, Senate Bill No. 175, authored by Senator Antonio F. Trillanes IV, and Senate Bill No. 1838, authored by Senator Miriam Defensor Santiago. While the Senate can be lauded for recognizing the need to strengthen our anti-trust laws, with the intention of providing greater protection to the consumers, Filipino small-to-medium enterprises (SMEs), and middlemen, these proposed bills have yet to be approved.

The absence of rules and regulations implementing anti-trust laws also translates to less anti-trust cases filed in and ruled on by the Philippine courts. In fact, in the Senate’s "Understanding Anti-Trust" Forum, it was reported that right now there is only just ONE anti-trust case filed before the Department of Justice. In the same Senate public forums, Senator Manny Villar called for the need for greater protection for the middlemen -- the Filipino SMES who provide retail, distribution, and other BPO services to multinationals and other foreign companies. There is an urgent need to provide for a level playing field and for penalties that will actually deter corporations from committing anti-trust and other prohibited acts.

(To be continued)"

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