SEN. VILLAR CALLS FOR THE PASSAGE OF AN ANTITRUST LAW (PART 1)

"Time to pass an antitrust law"
by
Sen. Manny B. Villar
BUSINESS MIRROR, Entrepreneur, 19 September 2011
(Original article available here)

First of two parts

"The time is ripe for the Philippines to enact a comprehensive antitrust law. Let me tell you why.

First, the global financial crisis of 2008, which plunged two-thirds of the world into recession and which continues to threaten the developed economies, has shifted the flow of capital into emerging markets, such as the Philippines, which are now leading economic growth and offering better returns for investments.

The Philippines can expect a bigger share of foreign investments as a result of this shift in capital flow because of its strategic location. It is close to China, which is aggressively investing in other countries not only to make money but to ensure adequate supplies of raw materials and intermediate goods for its own industries.

Second, the volatility in the prices of essential goods like oil and other food commodities, which must be imported. We have to import rice because of our inability to produce enough rice for domestic consumption. We also have to import wheat (for flour) because we don’t grow this cereal.

Third, there are so few players in many of our industries, providing the temptation and the environment for the operation of cartels and monopolies.

The hearings conducted by the Senate Committee on Economic Affairs, of which I’m chairman, and the Committee on Trade and Commerce, on several bills and a resolution proposing the enactment of an antitrust law underscored the relevance and the urgency of such legislation.

In particular, Senate Resolution 123, which I introduced, expresses concern about the undue advantage that cartels and monopolies pose over our micro, small and medium enterprises.

During the hearings, Trade and Industry Undersecretary Adrian Cristobal stressed that a competition or antitrust law would promote investments and facilitate trade between the Philippines and other countries. Attorney Lorna Patajo-Kapunan explained that antitrust provisions could be found in existing laws like the Revised Penal Code, New Civil Code and the Consumer Act of the Philippines.

However, these provisions do not provide for clear-cut guidelines or evidence to determine whether an act constitutes unfair competition, monopolistic behavior or restraint of trade.

Attorney Anthony Abad, managing director of the Trade Advisory Services of the Ateneo Center for International Economic Law, said it was fortunate that the 15th Congress was prioritizing the antitrust bill, enactment of which would have a transformative effect on the way business is done in the country.

The Constitution itself provides the basis for the enactment of an anti-trust law. Under Article XII, Section 19, the state is mandated to “regulate or prohibit monopolies when public interest so requires” and disallows “combinations in restraint of trade or unfair competition.” Section 22 of the same article provides: “Acts which circumvent or negate any of the provisions of this article shall be considered inimical to the national interest and subject to criminal and civil sanctions, as may be provided by law.”

Monopolies exist when one major company has enough power to dictate the prices, quality and selection of products and services, thereby becoming very powerful because competitions are not big enough to threaten that company.

On the other hand, a cartel is a group of companies producing the same product or service which, instead of competing with each other, agree to jointly control the price or supply of their common product or service, to the detriment of consumers.

Since consumers have no other product choices, monopolies or cartels can increase or decrease prices at will. In the end, the people who suffer most are those who already have low purchasing power like the minimum-wage earners or small entrepreneurs.

To this day, the Philippines does not have a comprehensive and developed legislation relating to antitrust and monopoly activities.

We need a comprehensive law that will give meaning to the principles of fair market and discourage monopolies, to afford our micro, small and medium enterprises the opportunity to participate in the growth of our economy.

The Senate Committees on Economic Affairs and on Trade and Commerce have come up with a draft bill, which consolidates Senate Bill 1 introduced by Senate President Juan Ponce Enrile together with Senators Ralph Recto and Antonio Trillanes; Senate Bill 123 by Sen. Serge Osmeña; Senate Bill 1838 by Sen. Miriam Santiago and my Senate Resolution 123.

The consolidated measure, when enacted into law, will encourage competition in the marketplace, help reduce prices and increase the quality of products or services for the benefit of consumers."

Antitrust Law Center Forum

The young lawyers advocating the passage of anti-trust legislation held an anti-trust forum on 31 August 2011 at Pasay AB Function Room of the Makati Shangri-la at 11:00 a.m. The form was called “Bastardization of the Philippine Economy: A Primer on Anti-trust Legislation.”

The forum was organized by the Antitrust Law Center/Young Lawyers In Support of Antitrust Law (YLSAT).

The two main resource speakers were again Atty. Lorna Kapunan and Atty. Anthony Abad.

Atty. Lorna Kapunan spoke on manifestations of monopolies, unfair competition, restraint of trade and price manipulation in the Philippines. 

Atty. Abad discussed different anti-trust regulations and competition policies in various Asian countries.

Highlights of proposed anti-trust bills

"Anti-trust"
by Ducky Paredes
Originally published in Malaya, 04 March 2011, BUSINESS INSIGHT.

"AFTER years of futile attempts, Congress seems to have generated the political will to enact an anti-trust law that would curb the abuses of big business, particularly giant foreign multinational companies that have been getting away with monopolistic and unfair trade practices.

Recently, the Senate Committee on Trade and Commerce held a forum for the discussion of laws aimed at preventing monopolies, combinations in restraint of trade, abuse of dominant power, and unfair competition practices.

The committee invited resource persons from the government and the private sector. They provided valuable inputs and shared their insights on prevailing anti-trust practices. Among them were Undersecretary Zeny Maglaya of the Department of Trade and Industry (DTI), lawyer Anthony Abad of the Ateneo Center for International Economic Law and consumer advocate Lorna Patajo-Kapunan, who is also a prominent law practitioner.

In particular, Kapunan made a presentation that, among other things, provided clear examples of the unfair trade practices of a foreign multinational that drove several of its Filipino distributors to bankruptcy, resulting in huge financial loses that forced them to lay off hundreds of employees.

Kapunan deplored the weaknesses, ambiguities and inadequacies of current laws "that not only subject our local businessmen to bullying and exploitation but actually encourage these practices because of the leniency of existing legislation."

She pointed out that the bullying behavior of large corporations exerts negative effects on the economy. "Just look at these distributors. They are entrepreneurs who were financially wiped out due to unethical business practices of their principals. Businesses have collapsed, jobs have been lost and many lives have become miserable. That is why we need carefully worded and well-crafted anti-trust legislation,’’ said the lady lawyer who has been engaged in a continuing and sustained campaign for the passage of such legislation.

Lucky for us consumers, as well as for these distributors, key members of the Senate are hot on enacting the needed laws. Precisely for that purpose, Senate President Juan Ponce Enrile filed Senate Bill 123, with Senators Ralph Recto and Antonio Trillanes as IV as co-authors.

Similar bills were also filed by Senator Miriam Defensor-Santiago (S. B. 1838), Sergio Osmeña III (S. B. 150), and Senator Panfilo Lacson (S. B. 1600). Senator Manny Villar has also sponsored Proposed Senate Resolution 123 urging inquiry into cartels and monopolies.

Similar measures have also been filed in the House of Representatives.

The most recent is a bill (in substitution of 12 other similar bills) by Cagayan Congressman Jackie Ponce-Enrile, with Cagayan de Oro City Congressman Rufus Rodriguez as main sponsors with more than 70 other co-authors.

The bill would create an independent Philippine Fair Competition Commission to regulate trade practices, promote ethical business conduct in the country and implement the national policy on fair trade competition. It would penalize anti-competitive agreements, abuse of dominant power and anti-competitive mergers.

So what exactly is an anti-trust law? It is one that aims to prevent the emergence of trusts which come in the form of "mergers, acquisition of control, or any act whereby companies, partnerships, shares, equity trusts, among others.

Assets are concentrated among competition, suppliers, customers or any other business entity." Such a situation is considered inimical to public interest as they usually lead to the rise of unlawful monopolies, combinations in restraint of trade, and unfair competition practices.

A monopoly emerges when a certain type of business or industry is concentrated in one group or in the hands of a few. It prevents the existence or the emergence of competition and can result in the control of prices, or the production and distribution of certain goods and commodities. Hence, even legitimate mergers of companies or business consolidations can lead to monopolies.

Combinations in restraint of trade, on the other hand, refer to "an agreement or understanding between two or more persons, in the form of a contract, trust, pool, holding company or other form of association." Its purpose is to restrict competition, monopolize the trading of a certain commodity, and control its pricing, production and distribution. This results in interference in the free flow of trade and commerce, to the prejudice of consumers. Thus is monopoly achieved.

Unfair competition arises when a dominant business resorts to such practices as price manipulation, spreading false information aimed at discrediting competition, monopolizing any merchandise or commodity, or conspiring with other persons to alter the price of certain goods in order to ruin competition and maintain or increase one’s dominance of the market.

Generally, an anti-trust law is intended to harmonize the legal and regulatory system governing the operation of business. It seeks not only to promote the welfare of consumer but also to prevent giant business firms from bullying and exploiting weaker and undercapitalized businesses, particularly the so-called SMEs or the small and medium enterprises.

Anti-trust legislation is anchored on provisions of the Philippine Constitution, particularly Sections 19 and 22 of Article XII. Section 19 provides that "The State shall regulate or prohibit monopolies when the public interest so requires. No combinations in restraint of trade or unfair competition shall be allowed."

On the other hand, Section 22 calls for the enactment of laws that would impose civil and criminal penalties against parties who violate the prohibitions. This provision specifically states: "Acts which circumvent or negate any of the provisions of this article shall be considered inimical to the national interest and subject to criminal and civil sanctions, as may be provided by law."

Why are others so eager to call for amendments to our constitution, when we have not yet even touched some of the tasks that it mandates for the State?"

*Original article also available online here.

Proposed competition measures seeks to protect small enterprises

"Proposed competition measure seeks to protect small enterprises"
by Ritchelle Alburo, PHILEXPORT News and Features
Originally published in the Philippine Exporters Confederation, Inc.'s site here.

"6. Proposed competition measure seeks to protect small enterprises

A recent proposed legislative measure on competition responds to a glaring need to address unfair competitive practices to the disadvantage of micro, small and medium-scale enterprises.

While protection of consumers from unreasonable pricing has been the rationale for the enactment of many of the country’s competition-related laws, Senate Resolution No. 123 of Senator Manny Villar seeks to operationalize fair market principles and discourage monopolies to allow MSMEs to participate in the growth of the economy.

Atty. Lorna Patajo-Kapunan of Capunan Lotilla Garcia & Castillo Law Offices was very pleased with said bill.

I would like to thank Senator Villar for recognizing the need to protect the MSMEs, said Kapunan, during a forum on Understanding Anti-trust held yesterday at the Philippine Senate, mentioning that many of the country’s small enterprises are disadvantaged by the restrictive agreements and arrangements of giant companies.

These restrictive agreements, as cited by Anthony Abad of Trade Advisory Services during said forum, include price-fixing, collusive tendering, market or customer allocation, sales or production restraints, concerted refusal to purchase or to supply and collective denial of access to an arrangement or association that is crucial to competition.

Aside from SB No. 123, there are four other proposed measures on competition in the Senate. These are SB No. 1 authored by Senator Ponce Enrile, SB No. 175 of Senator Anthony Trillanes IV, SB No. 123 of Senator Sergio Osmena III, and SB No. 1838 of Senator Mirriam Santiago.

Many of these bills seek to respond to the need to codify existing competition laws and come up with a comprehensive competition law that is workable and effectively deters anti-competitive practices.

Kapunan noted that Senate Bill No.1 of Senator Ponce “defines with particularity prohibited acts constituting monopolization and cartelization”.

By increasing the penalty for violation of Article 186 of the Revised Penal Code, Kapunan likewise intimated that SB No. 1838 will serve to deter the anti-competitive measures.

SB No. 1838 seeks to increase the number of years of imprisonment from the current six months to six years and the fine from P200 to 1,000,000.

To effectively enforce a competition law and achieve its desired outcome, Atty. Geronimo Sy of the Department of Justice laid emphasis on the need to fine-tune the evidentiary architecture of competition bills, citing that despite sectoral regulation of basic commodities, such as sugar, tobacco and rice, prices of the same remain prohibitively high, due mainly to the difficulty in providing sufficient evidence demonstrating violation of competition-related laws. -- Ritchelle Alburo, PHILEXPORT News and Features"

In BusinessWorld

Published in BusinessWorld, 01 March 2011, BULLETINS, page 6/S2

(Click on image to enlarge)

Senate anti-trust forum provides key trade insights

Senate anti-trust forum provides key trade insights

Metrofile, The Daily Tribune, 27 February 2011

"02/27/2011

Senators from the committee on trade and commerce invited noted experts from a variety of fields to share valuable insights on existing anti-trust practices in the country. According to Sen. Manny Villar, the need for such a forum cannot be overstated. “We need to cover all the bases by conducting public hearings and hosting a series of lectures, so we may all understand the intent of the law and its benefits,” he pointed out. The proposed anti-trust law seeks to penalize unfair trade and anti-competitive practices in restraint of trade, unfair competition and abuse of dominant power. Consequently, it intends to encourage competition in the market place, which will help reduce prices and increase the quality of products and services. “Our committee is dead-set on passing the bill,” Villar further noted. The senators listened to the resource speakers who provided key inputs that are expected to make the final version of the law more effective. Among them were Undersecretary Zenaida Maglaya of the Department of Trade and Industry, lawyer Anthony Abad from the Ateneo Center for International Economic Law, and prominent lawyer and consumer advocate Lorna Patajo-Kapunan. After her presentation, a number of local distributors of a multinational corporation (MNC) from the audience approached Kapunan and the senators who were in attendance. It was learned later on that these distributors were driven to bankruptcy by what they deemed to be grossly unfair practices of this MNC. “This is precisely why we need carefully-worded and well-crafted legislation,” Kapunan said in response. “Our current laws not only allow our local businessmen to be bullied and exploited, but the level of leniency actually encourages it,” she emphasized. The committee is also tackling related bills on anti-trust legislation, namely, the Competition Act of 2010, co-authored by Senate President Juan Ponce Enrile and Senators Ralph Recto and Antonio Trillanes IV, Senate Bill 123, authored by Sen. Sergio Osmeña III, Senate Bill 1838 filed by Sen. Miriam Defensor Santiago, and Senate Proposed Resolution 123 urging inquiry into cartels and monopolies sponsored by Villar."

Original article appears on Tribune Online here.

Senators at anti-trust public forum

Image source: Philippine Senate official website/ PRIB Photo by Albert Calvelo/ 10 February 2011

"ANTI-TRUST FORUM: Senate President Juan Ponce Enrile, together with Sen. Manny Villar, chair of the committee on Trade and Commerce, attend the second day of “Understanding Anti-Trust”, a forum presented by the Committees on Trade and Commerce, Economic Affairs and the Special Oversight Committee on Economic Affairs. Also in photo is Senate Deputy Secretary for Legislation, Atty. Edwin B. Bellen. (PRIB Photo by Albert Calvelo/10 Feb 2011) "
(Original photo release with text appears here).

*Resource speakers for the Senate anti-trust public forum were Usec Zenaida Malaya of the Department of Trade and Industry, Atty. Anthony Abad, and Atty. Lorna Patajo-Kapunan.

Villar holds series of forum on Anti-trust law

Original article appears here.

"Villar holds series of forum on Anti-trust law
Press Release
February 10, 2011

Sen. Manny Villar today hosted the second installment of a series of discussion to better understand the anti-trust law now being studied by the Committee on Trade and Commerce. "I would like to cover all the bases by conducting public hearings and hosting this series of lecture so we may all understand the intent of the law and its benefits," Villar said.

The proposed Antitrust law seeks to penalize unfair trade and anti-competitive practices in restraint of trade, unfair competition and abuse of dominant power.

Villar said the law will encourage competition in the market place which will help reduce prices and increase the quality of products or services and gave the assurance that his committee is dead set on passing the bill.

Usec. Zenaida Maglaya of the Department of Trade and Industry gave a presentation expounding on the need for an antitrust law in the country during "Lecture II: Understanding Antitrust" held Thursday morning at the Recto Room.

Maglaya underscored the need to enact a Competition/Antitrust Law to promote investment and facilitate trade among neighboring countries.

Atty. Anthony Abad, managing director, Trade Advisory Services/ Ateneo Center for International Economic Law explained the United Nations Conference on Trade and Development (UNCTAD) Model for Antitrust Law while Atty. Lorna Patajo-Kapunan presented a critique on existing legislations on antitrust.

Abad said it is fortunate that the 15th Congress is prioritizing the Antitrust bill, as this is one piece of legislation that will have a transformative effect on the way business is done in the country.

For her part, Kapunan recognizes that there are antitrust provisions scattered in different laws like the Revised Penal Code, New Civil Code, Consumer Act of the Philippines, etc. but argued that these provisions do not provide for clear-cut guidelines or evidence to determine whether an act constitutes unfair competition, monopolistic behavior or restraint of trade.

Reactions on the presentations were given by Atty. Geronimo Sy, assistant secretary, Department of Justice; Atty. Rod Libunao, legal counsel, Chevron Philippines; Mr. Reiner Aaron Villasenor, student leader, San Beda College; and Atty. Jose Cabrera, governor, Integrated Bar of the Philippines.

Villar said the country needs a comprehensive antitrust law that will complement the prevailing economic conditions and put in place the atmosphere for companies to deliver better goods and services to consumers.

"We need this law because we want to prohibit anti-competitive practices like monopolies and cartels," he added.

The first forum was held last week where Senate President Juan Ponce Enrile, who co-authored with Sens. Ralph Recto and Antonio Trillanes IV Senate Bill No. 1 or the Competition Act of 2010, shared his insights on the matter.

The committee is also tackling related bills on antitrust legislation namely, SB 123 authored by Sen. Sergio Osmena III, SB 1838 filed by Sen. Miriam Defensor Santiago and Senate Proposed Resolution No. 123 urging inquiry on cartels and monopolies sponsored by Villar."