More importantly, Forensic Law and Policy Strategies Inc. (Forensic Solutions) pointed out that international mergers pose the biggest threat to developing economies like the Philippines, where anti-trust laws are largely absent to guard against the abuses that could result from such corporate unions.
Forensic Solutions, which is headed by former Justice Secretary Alberto Agra, said the lack of adequate Philippine laws on mergers and other corporate mergers should prompt Congress to pass a new legislation to check against possible abuses.
The latest policy paper, which Agra co-wrote with banking law expert Faye Josephine Miguel Rañola, recommended the crafting of a law calling for review of proposed mergers and the setting up of a threshold above which a corporate merger will be classified as monopolistic.
“Arrangements that do not comply with fair competition guidelines and those that significantly limit competition should not be allowed,” Agra said in the policy paper “Competition Laws in the Face of the Merger Wave.”
Forensic Solutions also said the SEC should be allowed to take remedial action, and impose penalties and sanctions against existing merged corporations that were engaged in anti-competitive practices.
It also proposed the simplification of the current legal mechanisms available to interested parties for them to obtain relief or file injunctions against questionable mergers without going through a protracted litigation process.
The enactment of such laws are necessary, they said, to ensure unfettered competition in local industries and position the Filipino consumer as the “supreme arbiter” in a free market that yields the highest quality of good and services at the lowest prices possible.
Forensic Solutions made this call for new anti-trust legislation at a time when the current trend is toward the privatization and deregulation of vital industries, with governments increasingly ceding state control over economic activities to private businesses.
There are pending bills in Congress addressing certain aspects of corporate mergers.
One of them is Senate President Juan Ponce Enrile’s Senate Bill No. 123, which penalizes combinations or conspiracies in restraint of trade and all forms of artificial machinations that will injure, destroy or prevent free market competition.
The Enrile bill also prohibits stock or asset acquisitions, grant of proxies or voting rights, and board membership in two or more corporations that have the effect of substantially reducing competition or tending to create a monopoly."