Tuesday, July 5, 2011

Competition office to deal with monopolies

"Monopoly madness"
Published in People's Journal Online, 23 June 2011
(Original article available here).

"Bigness, as the old saying goes, is badness.

Monopolies stifle innovation because it diminishes, if not eliminates, competition. The result: poor-quality products or shoddy services.    

They are, therefore, inimical to the public interest, particularly consumer welfare.

A monopoly in the telecom sector is one such scenario.

Earlier, Globe Telecom raised the bogey of a return to the bad, old days of monopoly in the telecom sector.

Globe’s fears about the Philippine Long Distance Telephone Co. gobbling up of Digital Telecommunications, resulting in a vast “control of spectrum,” a scarce resource that is crucial to the delivery of services in the telecommunications highway, are understandable .

This spectrum is at the heart of the argument of Globe in protesting what it said was the vesting of a wide swath of the roadway to PLDT after it devoured Digitel.

The spectrum is much like the lanes at the North Luzon Expressway. By letting PLDT control more than the majority of the lanes, Globe argued that it would be put at a disadvantage in the face of considerable costs just to stay afloat since the very lifeblood of the telecom business -- the spectrum -- is in the hands of the telecom titan.

Globe hearkened to the dark days of the monopoly which deprived the country of a magnet for foreign investors. Why? Because the mighty PLDT refused to give access to other telecom carriers.

As a result, the telecom sector endured the dark days when 98 percent of the population were waiting for a telephone line and the other two percent were waiting for a dial tone.

Quite thankfully, the Ramos administration took pains to implement a vibrant business model for the telecom sector, paving the way for the entry of new players. 

But here’s a whiff of good news: Justice Secretary Leila De Lima said she would meet officials of the Department of Justice to formulate guidelines for the investigation of cases involving violations of competition laws.

De Lima  wants to prosecute violators of these laws in a bid to crack down on monopolization, cartels, and the restraint of trade.

“We need to come up with guidelines on competition authority,” De Lima was quoted by a major broadsheet as saying. “The unit will handle anti-trust cases under Executive Order 45,” she said.

EO 45 empowers the DoJ to investigate all cases involving violations of competition laws and prosecute violators.

Under the latest EO, the Justice department is also mandated to “enforce competition policies and laws to protect consumers from abusive, fraudulent or harmful corrupt business practices.”

It is likewise tasked to supervise competition in markets by ensuring that prohibitions and requirements of competition laws are followed. Thus, the DoJ requires government agencies and other entities “to submit reports and provisions for assistance.”

The department also has the responsibility to “prepare, publish, and disseminate studies and reports on competition” to inform and guide the industry, and consumers about their rights and responsibilities."

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