100th birthday for Nestlé Philippines

Nestlé Philippines' 100th birthday

by Ducky Paredes

Published 16 June 2011 in MALAYA, Business Insight

(Original article available online here)

"IN commemoration of Nestlé Philippines’ 100th year anniversary, the local subsidiary of the world’s largest food and nutrition company will have two very special visitors -- Paul Bulcke, Nestlé S.A. Chief Executive Officer, and Frits Van Dijk, Nestlé S.A Executive Vice President and Zone Director for Asia, Oceania, Africa, and the Middle East -- for a couple of days in order to make Nestlé’s milestone year even more significant. 

Surely, their presence here will boost the morale of well-meaning Nestlé Philippines (NPI) employees — after all, how many times do the highest-ranking executives of a top-50 global corporation visit the country? The company has invested greatly in its centennial celebration, (including a tri-media and online advertising campaign and various CSR initiatives). The arrival of Bulcke and Van Dijk is therefore envisioned to be the shining star among a long list of activities. 

While goodwill creation may be the primary reason for the visit, my NPI source hints that it is also an information gathering activity. Pardon the coffee-inspired pun, but their trip may also serve a "3-in-1" purpose that will ultimately help Nestlé S.A. decide on whether they will intervene in certain issues that have served as a self-created plague destroying the Nestlé’s Philippine office. 

The first chore for the two Nestlé bigwigs is to examine the unresolved labor issue in their Cabuyao plant. Nine years has passed since more than 600 plant employees went on strike to enforce their right to negotiate their retirement benefits, and this labor-management conflict has drawn the attention of local and international media, human rights advocates, and cause-oriented groups.

The Cabuyao issue is particularly volatile. Very much contrary to the good image that Nestlé promotes for itself, this issue has resulted in 23 strike deaths, including those of union leader Meliton Roxas and the man who replaced him, Diosdado Fortuna. Roxas was killed right in front of the picket line in the middle of a protest, while Fortuna was killed on his way home. Without pointing any fingers, any outside observer would have to conclude that their and the 21 other killings could well have been strike-related.

There are also unresolved legal issues. While our Supreme Court has handed down repeated rulings in favor of the workers, NPI has chosen to simply ignore the Court. Last 2006, in fact, the Court explicitly ordered Nestlé management to call back its workers and initiate formal negotiations. Five years later, NPI has done nothing – NPI has not called back the workers; nor has it resumed formal talks.

Another item supposedly on the Nestlé S.A. agenda is the propensity of NPI’s top management to get themselves into legal trouble. At present, a number of their top executives – John Miller, Shahab Bachani, and Nandu Nandkishore – are facing perjury charges in Regional Trial Courts in both Quezon City and Makati. Miller happens to be the present Chief Executive Officer of Nestlé Philippines. One has to wonder how that looks as far as Nestlé S.A. is concerned.

Moreover, NPI’s legal entanglements do not end with their executives. The Philippines’ largest bank, Banco de Oro, is suing the company for false and deceptive testimony. While lawsuits may be a normal part of doing business when one is the size of Nestlé Philippines, to have the country’s biggest financial institution suing you for lying has to be an entirely different reality.

Finally, another issue that Bulcke and Van Dijk are reportedly monitoring is the possibility of a comprehensive Anti-Trust Bill finally being passed into law. Being alluded to many times as the poster boy for corporate bullying and exemplifying a tyrannical multinational, the spotlight would be right at NPI if ever this legislation pushes through. Even now, a number of their bankrupt distributors have gone to the Department of Trade and Industry (DTI) with complaints of predatory pricing and lack of corporate ethics complaints against NPI. 

The anti-trust issue has gained a lot of legislative momentum and with the diatribes of anti-trust advocate Lorna Kapunan, among the lawyers of anti-NPI clients, the movement towards an anti-trust Law is gaining even more ground. Considering the number of pressing matters that Bulcke and Van Dijk have to attend to, I sure hope they drank a lot of coffee and ate their cereal. They’re going to need Olympic energy to tackle the mess that Nestlé Philippines has made of what Nestlé S.A. means to Filipinos."

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)"

Following Nandu's promotion: Nestle Philippines' troubles continue

"It's all about population control"
By Emil Jurado, TO THE POINT, Manila Standard Today, 19 May 2011
(Original article available online here)

"I recently came across published reports about a product recall being done by Nestle Philippines Inc.

I know that Nestle has recalled many of its products for various reasons—the most noteworthy being 100g glass jars of Nescafe. In this case of contaminated coffee, people were instructed to keep the lids as proof of purchase for a refund, but to “dispose of contents immediately and not to bring the coffee back to the stores where they were bought.”

A variant of Lean Cuisine frozen dinners were recalled as well when consumers reported finding pieces of hard plastic in their food.

Locally, the most recently was the recall of Maggi beef and chicken noodles after traces of salmonella were found in two batches of the beef variant.

Having to take these items off the shelves is just one of the many problems besetting NPI. I believe that the string of cases against the company regarding its dealings with its local partners is, or should be, a major concern. My gulay, it seems that the multinational has made it a habit to squeeze distributors to the point that doing business is no longer profitable. Then, when cases are filed against the company on that very same issue, it tries to squeeze itself out of legal proceedings.

***

I have written at length about a Filipino company that distributes Nestle products and has been on the receiving end of the multinational’s bullying tactics. Nestle created price caps for its goods and simultaneously shortened the time of payment collection for distributed products. The local company took issue with that and filed formal complaints with the Trade and Industry Department as well as with the Regional Trial Court. This has caught the attention of some lawmakers, who are now working on strengthening anti-trust measures.

In the meantime, Nestle seems to be taking matters in stride as it even failed to give a rejoinder to the Filipino distributor’s claims within 15 days as it was ordered by the court. Santa Banana, is this company that confident about its position, or connections, that it can afford to be complacent?

All these developments come on the heels of news that Nandu Nandkishore is to be promoted Executive Vice President for Asia, Oceania, Africa and the Middle East. Nandkishore was CEO of NPI, who was promptly shipped to the mother company to assume another position when the cases were filed by the Filipino distributor. With his new designation, I presume he is ready to finally face the music."

Malaya responds to Nestle

"That Swiss company" by Ducky Paredes, MALAYA, 13 April 2011

(Original article available online here)

"WARREN Buffett – quite simply – is the greatest investor who has ever lived. He is the primary shareholder, chairman and CEO of Berkshire Hathaway, and the skill with which he has managed billion-dollar funds is the stuff of legend. As of 2011, Buffett’s net worth was estimated at more than US$50 billion – the third richest man in the world.

What drives Buffet who lives in an ordinary house, just like any of his neighbors? For several years now, he has been trying to give away his fortune to philanthropic causes. He travels all over the world, encouraging other billionaires to do the same. Buffett knows that "you can’t take it with you."

Now why exactly am I writing about Warren Buffett? For over a year now, I have written several items calling the public’s attention to the bullying behavior of Nestlé Philippines, Inc. (NPI). Specifically, the way it treats local distributors – in other words, Filipino small and medium enterprise owners – is nothing short of shameful.

A number of these distributors have sought the intervention of the Department of Trade and Industry (DTI), only to be inexplicably told that this is not within their jurisdiction. These ill-treated entrepreneurs have since found an ally in antitrust crusader and noted lawyer Lorna Kapunan, who has brought the matter to the attention of the Senate.

In looking for where to invest, Warren Buffett advises: "Don’t just invest in a company and its ability to turn in a profit. Find out how the company behaves, and the integrity of the people running it. Would you trust them with the keys to your house? The best ship in the world will get lost at sea, or even sink, if the captain and his crew are questionable".

Tomorrow, April 14 is the 44th Annual General Meeting for Nestlé shareholders in Lausanne, Switzerland. I wonder how many of these shareholders subscribe to Warren Buffett’s way of thinking, and are willing to apply it to Nestlé? Is the mother company aware of what’s happening here in the Philippines?

Probably. For instance, last October, the Children’s Food Campaign (CFC) in Britain blasted Nestle for misusing the British government’s Change4Life (C4L) anti-obesity campaign. The whole idea behind C4L was for people to cut down on fattening food, be more active and live longer.

Nestle used the CFC logo in its marketing campaign but Sustain, the alliance behind CFC, soon found out that 24 out of the 27 products included in the Nestle promotion were categorized as high in sugar by the British Food Standards Agency guidelines. CFC finally decided that no company that promotes unhealthy and junk food should be allowed to associate with a government health campaign.

Locally, while the Nestle ad on TV and print featuring Kris Aquino and her son uses the tagline "more milk, less sugar" probably referring to a miniscule difference in sugar content compared to a competing product’s sugar content, isn’t Nestle, in reality, a major sugar pusher with its ice cream, chocolates, iced tea and practically everything that Nestle produces? Is there anything that Nestle produces that is not heavy with sugar?

Clearly, Nestle is not run by anyone close to being a Warren Buffet who cares about what his company represents.

Imagine that one of the highest-ranking officials of the Nestle Company is Nandu Nandkishore, who used to be the Chief Executive Officer of NPI until he got promoted to Nestlé’s Executive Board as Head of Nutrition. That’s a giant leap for someone who actually faces charges of perjury in Makati and Quezon City courts. How many global companies have a person facing criminal charges on their Executive Board?

In the Australian Senate, Senator Gavin Marshall of the Labor Party last March 2, 2011 talked about the unresolved case of the Nestle factory workers in Cabuyao, Laguna. The senator said that these workers have been on strike for over ten years and that over 500 workers have been dismissed for simply trying to exercise their right to have retirement benefits included in their collective bargaining agreement (CBC).

According to Senator Marshall, Nestle has also defied a decision by the Supreme Court to allow a decent retirement plan to be included in the CBA for the factory workers and that Nestle also refuses to reinstate the striking workers and negotiated in good faith on the CBA.

Finally, if you talk about integrity, how can Nestlé in Switzerland tolerate the predatory pricing and vertical price restraint operations of Nestlé Philippines, when these are patently against the laws set forth even in Switzerland itself by the Swiss Competition Council?

*** "

Brew too hot for Nestle?

"Brew too hot for Nestle?"
by Willie S. Baun
Originally published in People's Journal, STREETLIGHT, 26 March 2011
(Also available online here)

"SOMETHING’S been percolating at Nestle Phils., Inc. but the aroma it exudes is unlikely to be as enticing as its world-famous brew. The Swiss company, largest food and beverage on the planet, faces a gamut of charges here, ranging from alleged unjust contract termination, predatory pricing, perjury and deception, to false and fraudulent testimonies.

The complainants are the Sy family-owned Banco de Oro and two of Nestle’s long-time distributors –- Service Edge distribution, Inc. and FDI Forefront II Trading Corp. -– both recognized and awarded as Nestle ace marketing arms.

Pending are charges of false and deceptive testimony filed by BDO against the Swiss multinational. The bank claimed NPI fed it with “fraudulent information” in 2009 on the financial condition of Inter-brand Logistic and Distribution, Inc.

On the basis of the NPI info, BDO trustingly extended 19 loans aside brom renewing the Interbrand credit facility for a total of P19 million exposure, all of it now in jeopardy because the company has closed shop.

In yet another case, distributors Service Edge and FDI Forefront haled Nestle to court principally for alleged predatory pricing or selling its products at prices way below actual cost. Under duress, they reportedly have had to adopt the illicit practice or face immediate contract termination.

False statements purportedly submitted in court by top NPI executives have incurred perjury charges against Chairman-CEO John Martin who is not as lucky chief financial officer Peter Nozsek who managed to slip out of the country and is now reportedly in the United States.

According to these two complainants, aside from the occasions of misconduct cited, Nestle has not been as transparent and candid in dealings related to the cases filed against it.

Nestle was also allegedly deliberately untruthful when it told media that the predatory pricing suit filed by Service Edge and FDI Forefront had been dismissed by the Department of Trade and Industry for lack of merit.

The truth, they said, is DTI declared it had no jurisdiction over the complaint “due to lack of jurisprudence and the absent of pertinent laws on predatory pricing and unfair trade practies.”

The legal tussle is being watched with keen interest by the business community in light of the massive Public-Private Partnership socio-economic program launched by the Aquino administration. Who else but the giant multinationals, like Nestle, would indeed most likely to be in the PPP – given the billions in investments the program envisions?

Needless to say, the Aquino government is expected to even now be legally on red alert for oppressive practice some multinationals would perpetrate or perpetuate to shortchange their local partners.

Streetlights kibitzer Jose is saying that NPI has just celebrated it 100th year of operations in the Philippines. He winks as he handed me a statement of the NPI about how its business conduct has been “consistent with universally accepted practices adhering to fairness, transparency, and compliance with all applicable laws.”

I do not wish to believe that for so long a time now, some multinationals hosted by the Philippines have been pulling the wool over the eyes of their Filipino partners and the government."

Manila Standard responds to Nestle allegations

"That party line on impeachment" by Emil Jurado
Published on 23 March 2011, Manila Standard Today, TO THE POINT (original article may be viewed online here).
*In reaction to Nestle's response here.

"Allow me to congratulate Nestle for its 100th year in operation in the Philippines. According to its CEO John Miller, “one hundred years of service to the Filipino consumer is a great source of pride within Nestle Philippines,” and that the company’s centennial “signifies its continuing commitment to the country.”

Well said, Mr. Miller. Unfortunately, there are many Filipinos—ironically, your very own distributors—who assert that your presence here in the Philipines has been anything but a service. These entrepreneurs initially held on to the promise of your company’s international reputation, only to find out latter on that Nestlé operates quite differently here in the country.

I summarize many of the woes experienced by Nestle distributors in my column last March 11. Edith de Leon, head of Nestlé’s corporate affairs office, wrote the Manila Standard Today an official response “categorically rejecting the assertions” mentioned in my column.

I read the points cited by Ms. De Leon very carefully, hoping that Nestlé could provide some clarity on the issue. More importantly, I wanted to hear what they had to say about the company’s being constantly regarded as the poster boy of corporate bullying in the Philippines. However, she must have had too much Nestlé coffee as her reply was filled with generic motherhood statements, as well as some “facts” which left me scratching my head. Santa Banana, is this what we can expect from Nestlé in the next 100 years?

* * *

Let’s rewind a bit and analyze Nestle’s rejoinder to my column. First, Nestlé implies (quite creatively) that the cases filed against it by Service Edge Distribution Inc. (SEDI and Forefront II Trading Inc.) were dismissed by the Department of Trade and Industry for “lack of merit.”

The fact is, the Order dated Jan. 5, 2011 clearly stated that the dismissal was due to “lack of jurisdiction.” I also understand that not a single case filed by SED1 and FD2 against Nestle has been dismissed.

Perhaps, it is the same tactics that have gotten several perjury cases filed in Quezon City and Makati courts. These cases were filed against top Nestlé executives that include, aside from Mr. Miller, Shahab Bachan and Doreswanby Nandkishore. My gulay, is the Nestlé head office in Switzerland aware of what’s happening here?

Second, to dismiss the complaints filed by these distributors as “unfounded” is to have a rather short memory. It was only five years ago that the Supreme Court itself (Nestle Philippines Inc. vs. FY Sons Inc. May 5, 2006 G.R. No. 150780) ruled that FY Sons (yet another distributor) was “lured to invest huge sums of money, time and efforts” by Nestlé only to have the latter “breach the distributorship agreement by committing various acts of bad faith such as, but not limited to, failing to provide promotional support, and concocting falsified charges to cause the termination of the distributorship agreement without just cause.”

If this sounds painfully familiar, it’s because Nestlé distributors are still singing the exact tune now. Fact two.

Third, Nestlé claims that it cannot possibly be accused of predatory pricing simply because its goods are not the cheapest in the market. Likewise, there is this assurance that its pricing policy are “compliant with the laws as well as recognized standards of trade practice in the country.”

* * *

At last, Nestlé and I agree on something: its goods are certainly not cheapest in the market. But if a company imposes vertical price restraint agreements with its distributors, isn’t that predatory pricing as well? My friends, who are experts in marketing, point out that this practice of setting a minimum price by which its distributors are required to sell Nestle products does not take into consideration the operational costs which are shouldered by the Filipino SMEs. Turning out a profit then becomes an immense struggle, considering capital outlay and lack of marketing and promotional support from the multinational.

Furthermore, how can Nestlé possibly be “complying with the country’s laws and standards” when there is no standard on vertical price agreements to begin with? To date, Philippine courts have no actual guidelines for determining whether or not predatory pricing has occurred or whether a vertical price agreement is restrictive of trade and monopolizes competition. Fact three.

Finally, the company assures the public that its activities are conducted “in compliance with Nestlé Corporate Business principals adhering to fairness, transparency and compliance to laws and regulations.” Perhaps as far as Nestlé Philippines is concerned, yes. But, considering its main headquarters is in Switzerland, a vertical price restraint is patently against the standards of the Swiss Competition Council.

Santa Banana, this appears to be a case of the hand doing something that the head is not aware of!"

Oh what a tangled web you weave

Nestle claims dismissal on the merit and rejects predatory pricing. Similar articles were sent by Nestle to Business Mirror and Manila Standard (see below). Responses by Manila Standard here.

Anti-trust issues fester

"Anti-trust issues fester"

by Willie S. Baun

Originally published on 08 March 2011, People's Journal, STREETLIGHTS, p. 4

Also available online here.

"WHENEVER a mall opens in a sleepy town, the local community is normally drawn to imaginings of bustling economic activity, hopefully jobs as well, including small businesses in the vicinity linking with the mall to supply it with backdoor goods and services.

But what if the mall owners and operators were a bunch of bullies only out to dominate the local market, or even drive smaller enterprises out of business? Or plague their suppliers with delayed payments and oppress their employees to meet unrealistic production targets?

What then if not just like the small town the Philippines were viewed as such by some giant multinational companies with absolutely no intention, apparently, to be apostles of fair trade helping to grow the domestic economy?

Noted lawyer and anti-trust advocate Lorna Patajo Kapunan has shown the MNC-victimized Filipino entrepreneurs, small and medium enterprise owners, and employees they can fight back – if only to arouse the government to look at their desperate straits.

This was brought to light recently when a client of Kapunan filed a case of predatory pricing and unfair trade practices against a Swiss food and beverage multinational. The client actually was a group of the distributors allegedly driven to bankruptcy by the MNC’s violation of free-market standards.

The group went straight to the Department of Trade and Industry for redress of numerous grievances only to be told, at the end of tedious documentations, that their case was ultra vires, “not within DTI jurisdiction.”

Admittedly, state agencies were at a loss about which bureau has jurisdiction of such cases, not to mention that the penalties for anti-trust and monopolistic conduct are “laughably negligible,” according to Kapunan.

Thankfully, relief is in sight of the distributors and similarly situated small businessmen. Parallel to relevant Senate measures, House Bill 1980 has been filed by Reps. Jack Ponce-Enrile, Rufus by Rodriguez, and (whadyanno?) Gloria Macapagal-Arroyo.

HB 1980 seeks to stiffly penalize “anti-competitive agreements, abuse of dominant power and anti-competitive mergers” and above all, the “establishment of the Philippine Fair Competition Commission.”

In virtual leap from immunity of restraints in trade, the bill threatens the MNC bullies with up to P750-million in fines if found to be in violation of anti-trust regulations.

Moreover, a fine shall be imposed in an amount double the gross proceeds gained by the violators or double the gross loss suffered by the plaintiffs. Damn right, Jose, from a nation of MNC-dependent distributors, the enactment of HB 1980 into law would call for standing ovation.

Kapunan and her clients, of course, deserve a big applause that, I believe, is bound to strike a resonant chord in the Senate and among the hundreds of thousands of small and medium entrepreneurs all over the country."

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.

Nestle: clean up your mess!

"Nestle Philippines' Centennial: Clean Up Your Mess!"

By EQ PostSentinel, originally published on 03 March 2011 here.

Excerpts:

"Nestle:1911-2011

In 2011, Nestlé will celebrate 100 years in the Philippines. One hundred years of service to the Filipino consumer is a great source of pride within our company and it is fitting that most of the Tanauan factory’s construction will take place during Nestlé Philippines’ centennial, signifying our continuing commitment to the country.” JohnMiller, Nestle Philippines CEO

John Miller:Current President and CEO of Nestle Philippines Inc.

Problems did not occur under him but being unfamiliar with the situation or perhaps covering his own ass, he does not want to “take the bull by the horns”. He allegedly lets his committee decide what should be done, whether right or wrong, especially with how they are trying to weasel their way out of problems. Could be guilty of sin of omission. Must step up and be morally upright to salvage reputation.From Consolidated Amalgamated

Why does NESTLE have such a bad corporate reputation in spite of its excellent products?

1) They try to muzzle the press.

With the aid of their large advertising budgets,Nestle Philippines media team work on mainstream media to recycle press releases and to suppress news that might adversely affect Nestle.

EXAMPLE:The news blackout on Milo Marathon tragedy.

Is it true that a man collapsed and died of heat stroke two days after in the recent 34th Milo Marathon eliminations last July 4 and Nestle is suppressing the news in mainstream media??? EQualizer Post :July 16

There has been no report on this tragedy in mainstream media!

2) They bully their trade customers.

In business and economics, predatory pricing is the practice of selling a product or service at a very low price, intending to drive competitors out of the market, or create barriers for entry by potential new competitors. In the Philippines, or in the crap that Nestle Philippines pulls, it's the distributors who are the victims of this nefarious practice.

Distributors cannot sustain equal or lower prices without losing money, they go out of business or choose not to enter the business. Nestle is able to meet its quota while leaving its distributors losing money or worse borrowing money just to keep its business afloat. It's a vicious cycle and they can hardly raise prices above what the market would otherwise bear.

In many countries predatory pricing is considered anti-competitive and is illegal under anti-trust laws. It is usually difficult to prove that prices dropped because of deliberate predatory pricing rather than legitimate price competition. In any case, competitors may be driven out of the market before the case is ever heard.

In the short term predatory pricing through sharp discounting reduces profit margins, as would a price war and will cause profits to fall.

The only winner is that bird on the damned nest.

That is why the Department of Trade and Industry should step in. Down with these multinational buggers! From Consolidated Amalgamated "

*Read full article in the Equalizer here.

Anti-trust bills timely

"Anti-trust bills timely"
by Willie S. Baun
Originally published in People's Journal, 01 February 2011, STREETLIGHTS, p. 4

"Multinational companies, particularly those dealing in "fast-moving goods," have enjoyed an array of privileges that otherwise would not be available to them, not even in their own countries.

What makes the FMCGs so profitable in the domestic market, apart from the usual bias for the "imported," is the participation of local distributors.

Numerous small enterprises take on the difficult job of bringing the FMCGs to the buying public, and set their profit margins based on standard retail prices and bulk-discount costs.

In effect the MNC plays commissary that merely takes care of administrative matters but somehow gets the lion's share of the income earned by the distributors.

'In and of itself,' observed a trade official, 'this is already a rather one-sided business deal.' It was added when flagrantly abused by a giant MNC to the graver prejudice of the distributors - the alarm bells should ring against anti-trust.

Two distributors in particular claim to have fallen under the mercy of one such MNC due to its alleged predatory pricing in direct conflict with the corporate codes enforced by the Department of Trade and Industry.

As this case wider currency in business circles, so has "Anti-Trust" attained buzzword standing. Soon enough, I believe, Senate President Juan Ponce Enrile and Sen. Miriam Defensor-Santiago would be asked to include FMCG distributors and other such outsource companies in appropriate bills they have proposed.

Legal proceedings between the MNC and the distributors showed the multi-national may have perjured. That, moreover, the MNC's counter-affidavits and joint counter-affidavits versus the predatory pricing charge are inconsistent with one another and with the facts of the matter at bar.

When their attention was reportedly called, the MNC executives seemed unmindful of the resulting perjury charges. 'Their rebuttals were at best amusing, and, at worst dismissive. Yeah, as in 'we didn't know or realize we were lying!''

They also posited that 'privilege' and 'right' were synonymous and took issue with the distributors for the focusing on semantics. Cited in the MNC's defense, the Webster's Encyclopedic Dictionary defined 'privilege' as a 'right, immunity, or exemption only by a person beyond the advantages of the most.'

On the other hand, Black's Law Dictionary, the authority on legal terms and legal definitions, indicates 'privilege' as a 'particular and peculiar benefit or advantage enjoyed by a person, company, class, beyond the common advantages of other citizens.'

Common sense, of course, tells us that a right is inherent while a privilege is bestowed. Then again, there's no guarantee that common sense is precisely what it says it is.

In any case, here's Mr. Webster just once more; Anti-trust, adj., Pertaining to the regulation of or opposition to trusts, cartels, pools, monopolies, and other organizations and practices in restraint of trade.

So there, Jose, and trust JPE and Miriam to get it right all the way."

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.

Gaining momentum - the crusade for better anti-trust laws

"Anti-trust laws" by Ducky Paredes.

Published 22 February 2011 in Malaya. (Original article also appears online here).

"IT’S good to know that not everyone in the Senate is taken up by the investigation into the corruption in the military. While that is also important, the reality is that this investigation may just eventually peter out and, as a lot of other legislative investigations "in aid of legislation" have gone, this one could still go the way of a lot of similar investigations that never even merited an official report in the files of the Senate or the House, much less any attempt at legislation that could cure what was investigated.

Hopefully, these will lead to a time when we will be proud of an uncorrupt military, police and government. For that to happen, however, we would need five of six presidents whose holy grail is the "daang tuwid."

In the event that the one after P’Noy is not committed to taking to the straight and narrow, there goes the PH!

Thus, it is good that the Senate has not placed all of its eggs in that one basket ad that Sen. Manny Villar is trying to pass an anti-trust law through the Committee on Trade and Commerce, which he heads.

This is certainly a welcome development, as the Philippines does not have any comprehensive anti-trust law to protect business owners or consumers.

The Department of Trade and Industry (DTI), the line agency that is tasked to look after trade and business operations, as well as consumer welfare, does not have the legal ammunition to fight unfair trade practices.

This is precisely why the DTI or relevant government agencies have been ineffective in dealing with or prosecuting blatant price fixing by players in certain industries.

The Competition Act of 2010 was proposed by Senate President Juan Ponce Enrile, and co-authored by Senators Ralph Recto and Antonio Trillanes.

The public forum also focused on related bills, namely, SB 123 authored by Sen. Sergio Osmeña III, SB 1838 filed by Sen. Miriam Defensor Santiago and Senate-Proposed Resolution No. 123 by Villar urging the holding of an inquiry on cartels and monopolies. These long overdue proposed antitrust measures seek to penalize unfair trade, anti-competitive practices and the abuse of dominant power by certain institutions – a.k.a. monopolies, cartels and some big, bad MNCs.

During the forum, Atty. Lorna Kapunan, a friend and one of the champions of this issue, presented a critique on existing legislation on anti-trust. She explained that while there are some existing laws that touch on anti-trust, the provisions do not provide clear-cut guidelines or evidence to determine whether an act constitutes unfair competition, monopolistic behavior or restraint of trade.

Speaking from experience, she shared with legislators the fact that some multinational giants often act like bullies and take advantage of the leniency present in the Philippines in order to get away with violations like predatory pricing.

Kapunan bared the ugly truth that it is very hard to do business in the Philippines if you are a Filipino. Given this bitter reality, it is high time we protect the interests of local entrepreneurs simply because SMEs are the backbone of our economy.

Let’s pass stricter laws that will protect the weak – the Pinoy dealers --from the double dealing and bullying multi-nationals that this column has been writing about for the last several years."

ATTY. LORNA KAPUNAN IN "THE MORNING SHOW" TALKS ABOUT ANTI-TRUST

Following her lecture on anti-trust in the Senate Public Forum, Atty. Lorna Patajo-Kapunan appeared as a guest at NBN 4's "The Morning Show" this morning to discuss the plight of Filipino small-to-medium enterprises (SMEs) and Filipino distributors under the existing anti-trust policy in the country.

During the show, which aired live at 7:00 a.m. this morning, Atty. Kapunan spoke of the "bullying" that Filipino SMEs have to endure under existing distributorship agreements with large multinationals (MNCs). She discussed the pending Senate bills on anti-trust as authored by Senators Sergio Osmena III and Juan Ponce Enrile. Atty. Kapunan highlighted the important thrusts of these proposed bills - the setting up of a Fair Trade Commission, a special force to monitor trade violations, and the imposition of higher and stiffer penalties.

Atty. Kapunan also mentioned how agencies like the Department of Trade of Industry has chosen to "wash" their hands off the matter, particularly with respect to a pending case against Nestle Philippines, by passing the buck to the Department of Justice. The litigator pointed out that DTI is the agency with the expertise and mandate to oversee, monitor and ensure compliance with existing trade laws.

Atty. Kapunan further compared our existing anti-trust policy with that of countries like the U.S. and Switzerland, and thanked programs such as "The Morning Show" for highlighting the problem. The host, Veronica Baluyut-Jimenez, urged the public to constantly monitor our legislators, particularly with respect to the proposed anti-trust bills, so that they do not remain merely laws "on paper." Baluyut-Jimenez likened Atty. Kapunan as David going up against Goliath (i.e. large MNCs) and lauded the lady lawyer on her crusade.

The morning news show airs at 7:00 a.m. every day and is hosted by noted broadcasters Veronica Baluyut-Jimenez and Aljo Bendijo.

A CRITIQUE OF PHILIPPINE ANTI-TRUST LAWS

Atty. Lorna Patajo-Kapunan was a resource speaker at the second "Understanding Anti-Trust" Public Forum held at the Philippine Senate last February 10, 2011. Atty. Kapunan gave a detailed and very informative talk on previous and existing anti-trust laws in the Philippines, the issues surrounding what she described as these "scattered" provisions, and the need for a comprehensive anti-trust framework. A brief outline of Atty. Kapunan's presentation during the public forum appears below:

A Critique of Philippine Anti-Trust Laws

by Atty. Lorna Patajo-Kapunan

Senior Partner

Kapunan Lotilla Garcia & Castillo Law Offices

Various Existing Anti-Trust Laws in the Philippines

• THE PHILIPPINE CONSTITUTION, Article XII, Section 19
• The Revised Penal Code of the Philippines, Article 186
• The New Civil Code of the Philippines, Article 28
• Republic Act No. 7394, the "Consumer Act of the Philippines"
• Republic Act No. 7581, the "Price Act"
• The Corporation Code of the Philippines, Section 79
• The Intellectual Property Code of the Philippines
• Republic Act No. 8479, the "Downstream Oil Industry Deregulation Act of 1998"
• Republic Act No. 7042, the "Foreign Investments Act of 1991"
• Republic Act No. 8762, the "retail Trade Liberalization Act of 2000"

Problems of the Current Anti-Trust Laws

• All laws relating to anti-trust are scattered in different codes.
• Existing anti-trust laws do not provide for clear-cut guidelines, elements/requisites or evidence to determine whether an act constitutes unfair competition, monopolistic behavior or restraint of trade.
• Lack of judicial experience in determining anti-trust laws, caused also by inadequate laws.
• Need for proper body to determine whether there was any violation of anti-trust laws.

"In the case of SEDI and FDI 2 vs. Nestle Philippines, Inc., the DTI refused to assume jurisdiction over an administrative complaint for violating Article 186 of the Revised Penal Code, which is a trade and industry law. DTI itself is confused with its jurisdiction when it ruled that the proper office to assume jurisdiction is the DOJ because Article 186 of the Revised Penal Code is a penal law."

• Codification of anti-trust laws into one statute.
• Recognition of the rise of Small and Medium Filipino Enterprises (SME) and the need for protection.
• Clearer protection against vertical agreements which have the effect of restraining trade.

• Definition of vertical price restraints and predatory pricing.
• Recognition of the disadvantage of vertical price restraint to the distributor or retailer.
• Recognition that protection from vertical price restraint is not a novel concept as other countries have protected against such form of anti-trust practice.

Proposed Bills

• Senate Bill No. 1 (Senator Juan Ponce Enrile)
• Senate Bill No. 123 (Senator Sergio R. Osmena III)
• Senate Bill No. 175 (Senator Antonio "Sonny" F. Trillanes IV)
• Senate Bill No. 1838 (Senator Miriam Defensor Santiago)
  

Growing buzz for new anti-trust policy doesn't bode well for companies like Nestle

Cebu Rep. Eduardo Gullas caused a ripple when news broke out that he was strongly pushing for stronger anti-trust laws in the Philippines.

The ripple is building up into a tidal wave. Senators Sergio Osmena III, Manny Villar, and Juan Ponce Enrile have been championing a new anti-trust law. Several public forums were held for the public to introduce the proposed bills and to increase public awareness and understanding on the need for a more comprehensive anti-trust policy.

The good thing is that these new laws will champion the cause of not only the consumer but the middlemen as well - distributors, retailers, mom and pop stores, even your neighborhood sari-sari. It seeks greater protection from the big bad multinational.

In fact, on the "Understanding Anti-Trust" public forum held in the Senate building last 26 January 2011, Senator Villar's closing remarks focused squarely on the plight of Filipino small-to-medium enterprises who act as distributors for foreign multinationals. The Senator, no doubt the poster boy for Filipino entrepreneurship in his classic rags-to-riches story, threw around such fighting words like "dapat patas ang laban" ("it should be an equal fight") "paano na ang mga distributors?" ("what about the distributors") "dapat bigyan ng pag-asa ang mga Filipino SMEs" ("we should give hope to the Filipino SMEs").

Well said, Senator.

There's another anti-trust public forum this week on 10 February 2011. Atty. Lorna Kapunan will be one of the speakers, no doubt in light of her crusade to seek a forum where the needs and grievances for distributors can be heard. Her recent case against Nestle Philippines, for predatory pricing, is on appeal with the Department of Trade and Industry because the latter claims they do not have jurisdiction. This despite the fact that the case filed before that agency wasn't even a criminal case. So if DTI can't protect distributors and middle men against big bad multinationals, who then is the protector? And isn't the DTI precisely the government body tasked with regulating and ensuring compliance with all trade and industry laws???

Go DTI! Cheers to Director Subido!

Man in the Mirror

FROM THE STANDS By Domini M. Torrevillas (The Philippine Star) Updated August 19,

Ten days from now, Michael Jackson — the often misunderstood, yet ultimately revered King of Pop — would have turned 52 years old. While I am nowhere near being a die-hard MJ fanatic, I admit that I always found his music unique and awe-inspiring. Add his talented songwriting to his otherworldly dance moves, singular vocals, and the most technically-magnificent stage productions ever made, and one can easily argue that Jackson was the most influential entertainer of the 20th century.

Personally, I am more inclined towards (and familiar with) his classic Motown work with the Jackson Five, as well as earlier albums like “Got to Be There” (1972) and “Off the Wall” (1979). One truly interesting Michael Jackson song, however (and many sources claim that it was the artist’s best-loved work as well), is the relatively recent hit “Man in the Mirror”. Straying from his usual dance-inducing funk, this poignant song was first released as a single in early 1988, off his seventh solo album “Bad”. Owing largely to its powerful message, it has become one of Jackson’s most critically acclaimed songs. Whether in times of difficulty or transition — as our country is undergoing right now — Man in the Mirror’s refrain offers a stirring perspective on how we can best move forward, individually and as a nation:

I’m starting with the man in the mirror

I’m asking him to change his ways

And no message could have been any clearer:

If you want to make the world a better place

Take a look at yourself and then make the change

Undoubtedly, we are experiencing a renewed air of hope brought about by P-Noy’s uncontested victory and the seamless turnover of power. Many of those who were around to witness the EDSA People Power Revolution have drawn positive comparisons between the sentiments then and the sentiments now. Our social consciousness — apathetic at best, thanks to a lifetime of being desensitized by acts of daily corruption — now banks on the promise that this corruption can finally be eradicated.

Given this overwhelmingly positive outlook, the challenge for every Juan dela Cruz is to avoid turning into Juan Tamad, passively waiting for the guava to fall into his mouth. If the promises delivered during the most recent Presidential inauguration and State of the Nation Address have inspired us, we must remember that we each have a role in fulfilling them. While it is true that vision, leadership, and implementation begins from the top, accomplishing all of these ideals is a collective responsibility. If you want to make the world a better place, take a look at yourself and then make the change.

Consider a taxi driver from Tagbilaran City named Iluminado Boc, who returned $17,000 (more than four years worth of his earnings) that was left behind by a passenger. The irony of this situation is that if he had been corrupt, he would no longer be mahirap. But most likely, he looked at his rearview mirror, saw his reflection, and decided that his integrity did not have a dollar equivalent.

Then there is the case of DTI Legal Director Benjamin Subido, who drew the ire of a large multinational corporation engaged in food manufacturing and distribution, for apparently doing his job too efficiently. In line with P-Noy and DTI Secretary Greg Domingo’s mandate to streamline bureaucratic procedures, eliminate red tape, and expedite paperwork, Director Subido acted swiftly on a complaint filed against the MNC. Allegedly, the company had already made arrangements to ensure that this complaint would never see the light of day, so it filed a Motion to Inhibit Subido from the case. Undaunted, Subido pressed on and the company’s Motion was eventually denied.

While these may be exceptional examples of honesty and courage, our daily lives give us enough opportunities to create a ripple effect of optimism. Indeed, the so-called little things — obeying traffic rules, refusing to buy pirated DVDs or illegally downloading content, being on time for all appointments — amount to a lot. As the King of Pop himself says: no message could have been any clearer.

John Miller: WTF?! Why did you say you're not leaving?!!!

Amidst various reports of sex scandals, bullying, bankruptcies of small Pinoy entrepreneurs, beleaguered banks (from the bankruptcies), predatory pricing and anti-trust practices from different sectors regarding our favorite imperialistic trans-national corporation (TNC), Nestle, the top broadsheets have reported that according to Nestle Philippines chairman and CEO, John Miller, Nestle is here to stay.

*Insert favorite expletive here*!!!! Damn! Double Damn!!

A common defense of used by TNCs such as Nestle in spite of their highly imperialistic practices is to try to hold a developing country's balls by threatening, subtly or otherwise, that they will be stopping or withdrawing their purported investments in that particular country. Sometimes, it works; most of the time, though, it does not, most especially for our favorite TNC. In fact, these TNCs should be encouraged to leave! Here's why:

1. Nestle is one of the primary causes of inflation. Insiders in their marketing department have said that they have been encouraged by their mother company to incorporate as many price increases in their brands as possible. Look at Nescafe, a rough computation of the price index in 2001 versus 2010 reveals that the prices have grown to as much as 70% depending on the variant! Compare this to a developed country where the price increase is as low as 4% to a high 14% in the same period. Consider also the supply side of coffee. It is widely documented that in Vietnam, one of the world's largest producers (if not the largest already), farmers have even resulted to destroying some of their produce as their over supply has caused prices to drop! Supply cost has been low at most times yet price increases continue to hound our poor country. All of this, of course, is at the name of profit! Geesh! Talk about squeezing blood from a stone!!! Our poor country is a victim of this TNC's greed. Damn! Double damn!

2. Nestle's products are commodities. Coffee, milk, non-dairy creamer, chocolate are products that are easily replaceable by a competent manufacturer and there is no glut of these! San Miguel, URC, Alaska, Kopiko, Columbia, etc. can easily fill up a purported vacuum that Nestle insiders claim they will leave. The other manufacturers, I bet, were so unhappy about John Miller's announcement today.

3. The economic impact of the loss of exports are mitigated. A third of Nestle Philippines sales (est. PhP30 Billion) are exports to other countries and they are saying that leaving will have a tremendous negative impact in our economy. Hogwash! I say this for several reasons: a. They export their products ONLY to fellow subsidiaries and revenues are posted as merely accounting entries and not actual cash to the country. b. If indeed there was cash remitted to the country, it stays here for just a short while and is then traded in other markets or remitted to the mother company. The company maintains just enough working capital that it needs and places the excess cash to instruments that make more in its idle state! Guess what? The Philippines does not have high paying instruments compared to the rest of the world. So, no the loss of exports are mitigated because they were NEVER HERE IN THE FIRST PLACE.

It should now be clear why Nestle should leave. Our country will not be beholden to arrogant ASSHOLES like you, John Miller. You can fool some people all the time. You can fool all people some of the time. But you can never fool all people all the time.

Repost from Domini Torrevillas, Philippine Star 3/13/10

A lesson plan for DTI

As of the latest, and most likely last, Cabinet reshuffle, Secretary of Education Jesli Lapus will be moving to the Department of Trade and Industry (DTI) by the end of the month. I’d like to express my congratulations to Lapus for accepting the position. A three-term congressman before being named secretary of education, he previously earned his stripes as the chief executive officer of the Landbank of the Philippines, transforming it from a medium-sized development bank to the premiere state bank of its time.

Holding a doctorate in public administration, a master of business administration (MBA) from the Asian Institute of Management (AIM), and a post-graduate of Harvard University, Lapus first joined the government service in 1987 as undersecretary of the Department of the Agrarian Reform.  

Having held top executive positions in some of the largest manufacturing companies in the country, Lapus presents the most credible and capable choice for DTI head, aside from incumbent Trade Secretary Peter Favila.

Since the announcement, Lapus has been lauded by the business community, with highly-respected Philippine Chamber of Commerce and Industry Chairman Donald Dee welcoming him to the position; Executive Director Rob Sears of the American Chamber of Commerce of the Philippines (AmCham) has also given Lapus high marks for his unblemished reputation and intimate understanding of business. Hailed by Sears as being “pro-business,” the onus now lies on Lapus to inspire investors and businessmen alike to achieve greater things with our economy.

From the stands, it seems that the route of localization is the best trail if Lapus wants to make an immediate impact at the helm of DTI. Instead of following the worldwide trend of overextended economies, a logical course of action would be to turn inwards to another economic and cultural exchange, hinged on Small and Medium Enterprises (SMEs). These localization efforts entail increased attention to the tangible, the interpersonal, and the community; direct connections with SMEs and ties with businesses will surely prove useful for Lapus in the following months.

A turn to local business would necessarily move Lapus to ensure the protection of SMEs from unfair trade practices perpetuated by multinational companies that enjoy monopolies, which is a goal perfectly in line with Senate Bill No. 3099, or the Anti-Trust Act of the Philippines. As penned by Sen. Miriam Santiago-Defensor, the Act prohibits monopolies when public interest so requires it.

Presently, developed countries use anti-trust regulation to maintain healthy competition and promote an efficient working market economy; the circular flow of income between producers and consumers in these countries is, for the most part, uninterrupted by unscrupulous practices such as pressuring distributors and other SMEs to continually meet and exceed aggressive sales targets while simultaneously downsizing marketing and promotional support. In the Philippines however, there have been numerous instances of this exact behavior by multinationals forcing their distributors to close up shop, using bullying tactics and pointless mediation.

A well known multinational, for instance, makes it a habit to pass on non-performing accounts onto their distributors and insist that they deal with the problem instead. The same company has been known to cut off their in-house financing for distributors, leaving them to suddenly deal with the higher rates of a third-party bank. Combined with unreasonable quotas and the constant threat of termination, these distributors have no other recourse but to bite the bullet.

While SB 3099 and a slew of other bills on competition law are in enforcement limbo, the often-overlooked yet fully-empowered Ministry Order (MO) No. 69, Series of 1983, puts Lapus at the head of the crusade against unfair practices such as the ones described above.

MO 69 covers everything from price tags to monopolies and unfair competition. As a consumer — but a Filipino foremost — I urge Lapus to see the good he can do in his new position. He can put a stop to our SMEs being trampled under the feet of multinational giants, and maybe even spur our ailing economy to pull itself up by the bootstraps.

I for one am quite excited to see what Lapus has in store for us. If his record at the Department of Education is any indication, the DTI will become yet another feather in his very capable cap.