Saturday, July 2, 2011

Possible implications of EO 45

"Palace evasive over EO 45 effect on PLDT-Digitel deal"
by Aytch S. de la Cruz
Published 17 June 2011, The Daily Tribune Online
(Original article available here).

"MalacaƱang yesterday refused to venture an opinion whether the freshly issued Executive Order (EO) 45 that aims to stop monopolistic practices by big-time business groups would have an impact in the impending merger being hatched by leading telecommunications firms, Philippine Long Distance Telephone Co. (PLDT) with rival Digitel Telecommunications (Digitel).

Economic managers along with the National Telecommunications Commission (NTC) were previously ordered by President Aquino to look into all the possible consequences that may develop in the event PLDT and Digitel push through with the merger following the complaints lodged by Globe Telecom.

Until now, however, MalacaƱang has yet to update media on the results of the supposed study and whether or not Aquino has made a decision in response to the concerns raised by Globe Telecoms insofar as the state of competition among the industry players is concerned.

Presidential Communications Development and Strategic Planning (PCDSP) Secretary Ramon Carandang said he is uncertain whether EO 45 which empowers the Department of Justice (DoJ) to act as “Competition Authority” would have an effect in the looming PLDT-Digitel merger.

“I’m not sure if that particular EO will have an impact on the merger. We’re still trying to figure out how to respond to that. Again, let me bring up the issue we raised before: Will it have negative impact on consumers? Will it have a negative impact on the competitive environment in the telecoms industry? Those were the issues we’re looking at right now and we’re going to make a decision based on that,” Carandang told reporters during a press briefing.

Aquino through his EO 45 has mandated the DoJ to “investigate all cases involving violations of competition laws and prosecute violators to prevent, restrain and punish monopolization, cartels and combinations in restraint of trade.”

Carandang said this particular order aims to strengthen the Aquino administration’s campaign against monopoly, cartel, and other anti-competitive practices that weakens the country’s business environment.

“It (EO 45) is just one of many things — I know there are pending bills in Congress — which seek to address also anti-monopolistic practices. So this is all part of what is going to be different measures, different policies put in place in order to maintain a level playing field,” explained Carandang.

Globe’s primary argument in opposing the impending merger between PLDT and Digitel is that it might result in a lopsided distribution of communication frequencies thus making the competition among telecom-munications industries unhealthy.

EO 45 failed to specify the industries it would cover but Carandang assumed that the order would generally “apply to all situations, whether maybe accusations or suspicions of monopoly or cartel behavior.”
Interestingly, it is the NTC, not the President, that is empowered to settle the issue between PLDT and Globe, and this new EO comes after Globe’s letter to the president signed by Globe chairman, Jaime Augsto Zobel seeking the awarding of the frequency, which should be auctioned by the NTC and not awarded by the president.

Carandang also said that while DoJ serves as the lead agency in this particular endeavor, other government institutions such as the Department of Trade and Industry and other economic agencies are expected to participate in determining situations where monopoly and cartel exist.

“The DoJ will handle one aspect to that which is the legal aspect. There are the economic and the industry aspects as well — the competitive aspects, there’s the consumer aspect. So the decision whatever it may be will have to be done based on a more holistic approach,” Carandang explained.

“We cannot look at it based purely on legal (aspects), so it’s an interagency decision, the concerned Cabinet agencies will be weighing in on these issues,” he added.

EO 45 has mandated the DoJ to “enforce competition policies and laws to protect consumers from abusive, fraudulent, or harmful corrupt business practices and monitor and implement measures to promote transparency and accountability in markets.”

DoJ is also tasked to “supervise competition in markets by ensuring that prohibitions and requirements of competition laws are adhered to, and to this end, call on other government agencies and/or entities for submission of reports and provision for assistance.”

Moreover, the DoJ under the same order carries the responsibility of preparing, publishing and disseminating studies and reports on competition to inform and guide the industry and consumers as well as promote international cooperation and strengthen Philippine trade relations with other countries, economies, and institutions in trade agreements.

EO 45 also created the Office for Competition under the Office of the Secretary of Justice to carry out the duties and responsibilities set forth in the Section 1 of EO 45. It shall be manned by such number of staff including legal and technical experts, consultants and resource persons to effectively and efficiently pursue its mandate."

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