CHARGES AGAINST NESTLE OFFICIALS STILL PENDING

"This Could Be The Tipping Point"
by Emil Jurado
04 January 2012, TO THE POINT, Manila Standard Today
(Original article available online here).

"***

Last month, I wrote about developments on the charges filed at the Regional Trial Court in Quezon City against five top officers of Nestle Philippines Inc. Its senior vice president and head legal officer took exception to some items raised in my column about the case.

In its letter to the editor of this newspaper published last December 22, NPI claimed that the complaints of predatory pricing filed against the company by two of its former distributors have been dismissed via a resolution of the QC Prosecutor’s Office dated December 5, 2011.

However, that claim, according to noted lawyer Lorna Patajo Kapunan, is “blatantly inaccurate and misleading.” She says that the Resolution is still the subject of a pending petition for review filed in behalf of the distributors by Kapunan Garcia and Castillo Law Offices before the Department of Justice.

Kapunan points out that the Motion to Withdraw filed in the Regional Trial Court by the Office of the City Prosecutor of Quezon City is still pending, and the outcome of the motion has not been resolved nor granted by the presiding judge. In short, the criminal case filed against the Nestle executives still stands.

But I must have been affected by the holiday daze when I typed out that Nestle was adjudged Employer of the Year during the Philippine Advertising Congress held early last month. “Employer” should have been “Advertiser” and there’s no question about that. Nestle did unload a huge advertising outlay to drum up its 100 years existence in the Philippines. Its prestigious presence here now stands in the balance depending on the outcome of these cases which have a direct bearing on current moves to finally introduce the long overdue Anti-Trust Law.

*** "

ANTI-TRUST CASE AGAINST NESTLE PHILIPPINES FILED IN RTC QC

MORE ON THE COMPETITION AUTHORITY

"DOJ as competition authority"
by
Lito U. Gagni
BUSINESS MIRROR, Market Files, 20 September 2011
(Original article available here)

"CAN the Department of Justice (DOJ) pursue a similar line of complaint that the US DOJ advocated against a looming merger between AT&T and T-Mobile on issues of dominance that is now the subject of a controversy involving Philippine Long Distance Telephone Co. (PLDT) and Digital Telecom, which owns Sun Cellular? This merger issue, we believe, is at the heart of an executive order that sought to make DOJ as a competition authority.

As of yesterday, the state attorneys general of New York, Washington, California, Illinois, Massachusetts, Ohio and Pennsylvania have joined the US Justice Department in its suit against the proposed acquisition by AT&T of T-Mobile.

One needs only to look at what is happening in the US to determine that the proposed acquisition by PLDT of Sun Cellular would mean a 70-percent control of the frequency, the digital roadway, which smacks of dominance and goes against the grain of letting competition dictate the tempo of the business game. This is why it is important to look at what’s happening in the US in the business of telcos to know that PLDT’s acquisition of Sun would have the same impact as that of AT&T’s on T-Mobile and should, therefore, be an occasion for the DOJ to pursue its mandate as the competition authority.

No less than President Aquino sounded the alarm on the return of the monopolies. Remember that it was during the dark days of the monopoly of PLDT when 98 percent of the population was waiting for a line and 2  percent was waiting for a dial tone. This quotable quote from Singapore’s Lee Kwan Yew was what possibly moved then-President Fidel V. Ramos to open the telco industry to other players.

That opening of the telecom industry to other players is what allowed the Philippines to become an investment destination and now we are reaping the benefits of that Ramos vision to rid the sector of the monopolistic situation. As a result, thousands of jobs were created, with the business-process outsourcing industry leading the way. It is thus unfortunate to know that the telco sector is again being threatened by the PLDT-Sun deal. Perhaps, the DOJ can look at the options open to prevent a repeat of the problem. For starters, it may want to google the AT&T-T-Mobile deal and discover how US state attorneys are doing it.

xxx"

POINT OF LAW: ANTI-TRUST WORTHY?

"Is It Antitrust Worthy?"
by
Francis Ed Lim
PHILIPPINE DAILY INQUIRER, Point of Law, 15 September 2011
(Original article available here)

"Since President Aquino mentioned a new antitrust law in his first State of the Nation Address, much work has been done on the antitrust bills filed in Congress.

Legislative hearings have been concluded and proponents say that after decades of waiting (since the Eighth Congress, I’m told), we will finally have a unified, up-to-date and comprehensive antitrust or competition law.  

What are antitrust laws? Antitrust or competition laws are laws that regulate and maintain market competition by prohibiting or regulating anti-competitive behavior. Three acts that antitrust laws normally seek to prohibit are monopolies, cartel-like behavior and abuse of dominant market position.

In an economic sense, antitrust laws are in place to promote a freer market and more open trade, which will result in substantial efficiency and welfare gains for everyone.

A hot topic

The proposed acquisition of Digitel by PLDT has sparked even more interest on an antitrust law for the country. Globe, a competitor, argues that the transaction will lead to PLDT controlling close to 70 percent of the market and will eventually lead to higher prices and rates. However, PLDT and Digitel maintain that the deal will result in continued “unli” benefits, to use telco lingo, for consumers.

Aside from the PLDT-Digitel deal, Nestlé has its own antitrust controversy: Allegedly, it has been engaging in predatory pricing to drive out competition from the market. Expectedly, Nestlé contends that its products are not the cheapest in the market and that competition among lower-priced products remains intense.

Justice Secretary Leila de Lima also had reportedly ordered a review of antitrust cases filed against Fraport AG (Fraport), a German company, and its local partner Philippine International Air Terminals Co. (Piatco), in connection with the Ninoy Aquino International Airport Terminal 3.

Interestingly, perhaps in an attempt to respond to these antitrust controversies, the President issued Executive Order No. 45, which created an Office of the Competition Authority in the Department of Justice, to help enforce our antitrust laws.

Current law

This is not to say that our country has no antitrust laws at all. From myriad sources of law, one can find snippets of an anti-competition framework that serves as some sort of precedent for the current bill.

Foremost is Article XII, Section 19, of the Constitution, which mandates the State to regulate or prohibit monopolies when required by public interest and at all times to prohibit combinations in restraint of trade and other unfair competition practices.

There are implementing pieces of legislation, like the Revised Penal Code which, in Article 186, punishes monopolies and combinations in restraint of trade.

Meanwhile, the Civil Code under Article 28 authorizes the collection of damages arising from unfair competition in agricultural, industrial or commercial enterprises or in labor.

There are other laws that attempt to penalize anti-competition activities. However, with very few exceptions, many of these laws have but skeletal provisions and do not provide meaningful guidance to the market on how our competition policy should be implemented.

Salient features

What is clear from the bills (at least after the Senate and House committee hearings) is that they do not prohibit monopolies per se, perhaps taking their cue from the Constitution and our Asean neighbors.

At the core of the bills are more detailed provisions on anti-competitive agreements (like price-fixing, market allocation), abuse of dominant position (like predatory pricing), anti-competitive mergers and more detailed enforcement mechanism.

Unlike its Senate counterpart, the House version proposes to create a five-man Philippine Competition Commission as a single venue for anti-competition issues. Similarly, the House version proposes to adopt non-adversarial methods of enforcement, like a request for binding ruling to make the law more business-friendly.

Anti-antitrust law

There are, of course, those who are against an antitrust law. Some economists argue that the need for an antitrust law stems from the wrongful notion that an unhindered and unregulated market leads to coercive monopolies. They assert that no unfair monopoly can ever be created by means of free trade in a free market economy.

Surely, there are policy issues yet to be decided in the plenary sessions of both Houses before an antitrust law becomes part of our statute books.

A basic policy issue, of course, is whether we really need a new antitrust law. If so, do we adopt the American system or the European model? What acts should be outlawed and what type of enforcement mechanism should be adopted considering the stage of our economic development? Should the law go for a separate competition commission or just create an office in the DoJ? How should the competition authority interface with other government agencies, like the Department of Energy, Department of Trade and the Securities and Exchange Commission on antitrust-related matters that, by law, are currently under their jurisdiction?

The big question is, whether a new antitrust law will finally see the light of day or will the bills suffer the same fate as the preceding measures?

Your guess is as good as mine.

(The author, formerly the president and CEO of the Philippine Stock Exchange, is now the co-managingpartner and head of the corporate and special projects department of Accralaw. He may be contacted at felim@accralaw.com.)"

Nestle execs face trial

"A Climate of Uncertainty"
by Emil Jurado
MANILA STANDARD, To The Point, 06 September 2011
(Original article available here)

"***

Calls for the passage of an effective and all-embracing anti-trust law in the country appear to have received renewed interest in the wake of a resolution handed down by the Office of the Quezon City Prosecutor in a case filed against multi-national Nestle Philippines Inc.

In an August 15 resolution, City Prosecutor Donald Lee approved the recommendation of First Assistant City Prosecutor Meynardo Bautista Jr. that charges be filed in court against high officials and executives of NPI for violation of Article 186 of the Revised Penal Code.

This particular provision contains a prohibition against entering into, or being a party to, any contract or agreement, or from taking part in any conspiracy or combination in restraint of trade or commerce, for the purpose of preventing by artificial means, free competition.

Those recommended for indictment are NPI chairman and CEO John Martin Miller, Chief Finance Office Peter Oszek, Business Executive Manager Shahab Bacani, Regional Sales Manager Jose Ceballos and Area Sales Manager Elisa Lupena.

***

The case stemmed from complaints filed against Nestle by service Edge Distributors Inc. and FDU Forefront II Trading Corp. (FDI 2), two Filipino firms serving as distributors of Nestle products in Metro Manila.

The allegations against Nestle include predatory pricing, violation of the terms of distribution agreement between Nestle and the two distributors, unjust termination of the said agreement, imposition of inflexible price bulletins that resulted in huge losses to the distributors, unilateral withdrawal of promised marketing support, perjury and offering false testimony in evidence.

Investigations established the existence of a vertical agreement between Nestle and its distributors, wherein the former fixes the resale price of the products. The agreement compels the distributors to sell the goods only at the price dictated by Nestle, otherwise, their distributorship contract will be revoked.

The resolution also said that the respondents, who were then officials of Nestle Philippines, Inc., knowingly committed the crime or permitted or failed to prevent the commission of the said crime. Hence, they are criminally liable.

Nestle was also accused of fixing the resale price of its products and imposing upon its distributors that these prices be maintained. This is in violation of Article 18 of the Revised Penal Code, which says that price fixing is automatically illegal and there will be no valid justification to legitimate price-fixing agreement.

If I may read between the lines, I would say that the resolution represents a triumph not only of the two Filipino distributors, but also of the common Filipino consumer. This case sends a strong message to other multinationals that their abusive practices will not be tolerated. Significantly, it also encourages similarly situated Filipino distributors and marketing outfits that they can rely on the government to uphold and to protect their rights."

NESTLE PHILIPPINES: MONSTER MNC

"MONSTER MNC IS 100"
by Ducky Paredes
MALAYA, Business Insight, 05 September 2011
(Original article available here)

"PEOPLE and multinational corporations both have birthdays but with a big difference. Humans tend to become kinder as they approach the end of their time on earth; multinationals get to be more powerful and, as their reach expands, more dominant, exploitative and even criminally abusive. Not all, of course; as with humans, there are good and bad multinationals.

One multinational celebrated its hundredth year recently by bullying and throwing its weight around to the detriment, not just of its competitors, but also even of its own business partners.

At last, the multinational is getting its comeuppance. For starters, the force of the law, imperfect as it is in this country, seems to be working against the multinational. A judge is looking them over and entertaining complaints filed by Pinoys who were abused by the MNC and forced into a state of near-bankruptcy.

There is even more trouble due the MNC in the form of bills pending in the Senate and the House of Representatives intended to improve current laws against monopolistic behavior, predatory pricing and restraint of trade, sponsored by Senate President Juan Ponce Enrile, Senator Sergio Osmeña and Representative Rufus Rodriguez. .

The giant multinational, which is Nestle Philippines, Inc. (NPI), just turned 100 recently. Nestle, as with most other MNCs, celebrated its longevity by launching corporate social responsibility (CSR) projects backed up by lavish advertisements in print, radio, television and cinema showing how the multinational has been a good corporate citizen. In the case of Nestle in the Philippines, one wonders whether this the true picture of the company.

NPI’s festivities were somewhat rained on when the Office of the City Prosecutor of Quezon City issued a resolution on August 15 finding sufficient evidence to hold NPI for trial for violation of Article 186 of the Revised Penal Code.

This article penalizes any person "who shall enter into any contract or agreement or shall take part in any conspiracy or combination in the form of a trust or otherwise, which results in restraint of trade or commerce and prevents, by artificial means, free competition in the market."

The resolution found merit in the complaint filed by Nestle distributors FDI Forefront II Trading Corporation and Service Edge Distributors, Inc. that their agreements with Nestle were anti-competitive since they were obligated to sell Nestle products at the price fixed by NPI, regardless of the fact that the set price provided too thin a margin for the distributors to make a profit. Failure by the distributors to sell under these terms would result in the unilateral termination of their agreement with NPI. Their complaint pointed to a situation when NPI forced them to sell to a set of customers at a loss because of the fixed price set by NPI.

According to the QC Prosecutor’s resolution, "the act of Nestle in fixing the resale price maintenance for its products, imposing it on complainant is illegal, a per se violation of paragraph 1 of Article 186, Revised Penal Code which means that price fixing is automatically illegal and there will be no valid justification to legitimate price fixing agreement."

The resolution further stated that an analysis of the agreement shows that the act is also unlawful "because of its harmful anti-competitive effects against consumers and complainants, with no competitive economic benefits. Harmful to the consumers because Nestle exercised monopoly power of price fixing, the resale of its goods which means that consumers cannot buy the product at a lower price than that fixed by Nestle."

High ranking NPI executives, former Chief Executive Officer Doreswamy Nandkishore, current CEO John Martin Miller, Shahab Bahcani and Peter Noszek were impleaded for conspiring to commit anti-competitive acts as they were found to have knowingly committed the crime or to have permitted or failed to prevent the commission of the crime, and will stand trial before a Regional Trial Court of Quezon City.

The resolution is a welcome development, not only to the complainants, but to those who support the passage of an Anti-Trust Law, coming as it does on the heels of President Noynoy Aquino’s signing of Executive Order No. 45 giving full jurisdiction to the Department of Justice over matters related to competition and fair trade practices.

Lawyer Lorna P. Kapunan recalled the president’s assurance that the matter of monopolies and corporate bullying tactics was one of the first issues that he would look into. "His signing that E.O. shows that he is taking active steps to back up his promise," Kapunan said.

Nestle insiders say that the top honchos in the company’s main office in Switzerland are closely monitoring the woes that the local hundred-year-old outfit is experiencing. The rift between NPI and its distributors was reportedly on the agenda when the mother company’s chief executive Paul Burke and executive vice president Frits Van Dijk came all the way from Switzerland to meet with NPI officials (and also incidentally, to participate in the company’s centennial celebration).

Will the mother company in Switzerland do anything to convert the image of the centenarian company into a more grandfatherly one in its dealings with its business partners or will Nestle continue to exhibit the worst traits of a MNC monster?"

PEOPLE V. NESTLE

"People v.Nestle"
by Horacio Paredes
Abante, 03 September 2011
(Original article available here)

"Tila nagbunga na rin ang pagsisikap ng dalawang kumpanyang Pinoy na mabigyan ng katarungan ang pagmamalabis at pang-aaping dinanas ng mga ito sa kamay ng isang dayuhang multi-national.

Lumabas na rin ang Resolusyon ng Office of the City Prosecutor ng Quezon City tungkol sa mga kasong isinampa ng Service Edge Distribution, Inc. (SEDI) at ng FDI Forefront II Trading Corporation (FDI 2) laban sa Nestle Philippines, Inc.(NPI).

Ang kaso ay tungkol sa predatory pricing na ipinatutupad ng Nestle kaugnay ng pagbebenta ng iba’t ibang produkto nito. Sa ilalim ng mga patakaran ng Nestle Philippines, ang mga distributor ng kumpanya ay hindi maaring magbenta ng mga produkto sa presyong labas sa idinidikta ng Nestle, kahit na ma­ging dahilan ito sa kanilang pagkalugi.

Ang mga nasakdal ay sina Nestle Chairman at CEO John Martin Miller, Chief Financial Officer Peter Noszek, Business Executive Manager Shahab Bacani, Regional Sales Manager Jose Ceballos, Area Sales Manager Elisa Lupena at dating Chairman at CEO Noreswamy Nandkishore.

Sinabi ni First Assistant City Prosecutor Meynardo M. Bautista Jr. na may sapat na ebidensya upang dalhin ang kaso sa hukuman.

Ayon kay Bautista, may nagawang paglabag ang Nestle sa Article 186 ng Revised Penal Code na nagsisilbing batas ng Pilipinas hinggil sa isyu ng anti-trust practices. Ang nabanggit na artikulo ng Kodigo Penal ay nagtatakda ng sumusunod:

“Any person who shall enter into any contract or agreement or shall take part in any conspiracy or combination in the form of trust or otherwise, in restraint of trade or commerce to prevent by artificial means free competition in the market.”

Ang paglabag ay kaugnay sa mga ipinatutupad ng Nestle na mga limitasyon sa presyo ng mga produkto nito, sa mga gawaing pumipigil sa malayang kalakalan at nagbibigay-daan para mangi­babaw ang monopolyo, kasama na ang kapangyarihang magtakda ng mga presyo at pigilan o harangan ang mga karibal sa negosyo sa isang partikular na lugar.

Lumabas sa imbestigasyon na may kasunduan ang Nestle at ang dalawang distributors kung saan itinakda ng NPI ang mga presyo na dapat sundin ng mga distributors. Inobliga ng NPI ang SEDI at FDI 2 na ibenta lamang ang mga produkto nito sa itinakdang mga presyo, kasabay ng bantang pawawalang-saysay ang distributorship agreement kapag ‘di sila sumunod.

Sinabi ni Bautista na ang ginawang ito ng NPI ay ilegal at isang paglabag sa Paragraph 1 ng Article 186 ng Revised Penal Code. Aniya, ilegal din ang nangyaring price fixing at walang sapat na katwiran upang maging lehitimo ang pagtatakda ng mga presyong nabanggit.

Ang kasunduan sa pagitan ng dalawang panig, ani Bautista, ay labag sa interes hindi lamang ng dalawang distributors kundi pati na ng mga consumers o mamimili. Wala rin aniyang benepisyong ekonomiko na matatamo rito.

Ayon kay Bautista, ang mga isinakdal, na mga responsableng opisyal ng Nestle Philippines, ay hayagang isinagawa ang krimen, o pinayagang mangyari ito, o nabigong pigilan ang nasabing krimen, kaya mayroon silang pananagutan dito.

Inirekomenda ni Bautista na ipaghaharap ng sakdal sa korte ang mga nabanggit na opisyal ng NPI bunsod ng reklamong ini­hain ng FDI Forefront II Trading Corporation. Ang rekomendasyong ito ay inaprubahan at sinang-ayunan ni City Prosecutor Donald T. Lee.

Matinding dagok sa Nestle Philippines ang naging pasiya ng Quezon City Prosecutor’s Office. Panay pa naman ang papogi ng Nestle sa telebisyon at sa mga pahayagan kaugnay ng katatapos pa lamang na selebrasyon ukol sa nakaraang 100th Anniversary nito sa Pilipinas. Parang binagyo ang parada ng Nestle.

Sa kabilang dako, pinawalang-saysay naman ang sakdal ng Service Edge Distributors, Inc. sa dahilang ang negosyo ng Service Edge ay sumasaklaw lamang sa Caloocan, Malabon, Navotas at Valenzuela na pawang nasa labas ng Quezon City. Kaya walang hurisdiksyon ang Quezon City Prosecutors Office sa kaso.

Gayun pa man, napag-alaman na puwede pa ring magsampa ng demanda ang Service Edge sa piskalya ng alin sa mga lugar na sumasaklaw ng operasyon nito. Hindi pa ligtas ang mga nasabing opisyal ng Nestle sa demanda ng Service Edge kapag ito ay iharap ng distributor sa tamang korte.

* * *"

Nestle to stand trial in Quezon City for anti-competitive acts

In light of all the debates and discussions on anti-trust practices revolving around the PLDT-Smart-Sun deal, another giant multinational, Nestle Philippines, Inc. (NPI) is actually going to be held for trial for criminal violation of anti-competition provisions.

On 15 August 2011, the Office of the City Prosecutor of Quezon City issued a resolution finding that there is sufficient evidence to hold NPI for trial for violation of Article 186 of the Revised Penal Code, which penalizes any person who shall enter into any contract or agreement, or shall take part in any conspiracy or combination in the form of a trust or otherwise, which results in restraint of trade or commerce and prevents by artificial means free competition in the market. 

High-ranking officers of NPI, namely Doreswamy Nandkishore (former CEO), John Martin Miller (current CEO), Shahab Bachani and Peter Noszek were impleaded for conspiring to commit anti-competitive acts.   The resolution found that NPI’s practice of resale price maintenance constituted price-fixing which results in exclusion of competition in a particular market. 

Since current anti-trust bills are still pending in Senate, the OCP made reference to the US Sherman Act which considers resale price maintenance as illegal per se.   According to the resolution, the vertical agreement existing between NPI and its distributors, FDI Forefront II Trading Corporation and Service Edge Distributors, Inc., was anti-competitive since Nestle fixed the resale price of its products, while its distributors were obligated to sell Nestle products only at the price fixed by NPI.   Apparently, failure by the distributors to sell the products at the prices fixed by NPI would result in the unilateral termination of their distributorship agreement by NPI.   The price fixing was found to be harmful to consumers because it meant that consumers cannot buy the product at a lower price than that fixed by NPI.

This practice of price-fixing by NPI was deemed as a violation of Paragraph 1 of Article 186 of the Revised Penal Code.   Nandkishore, Miller, Bachani and Noszek were found to have knowingly committed the crime or to have permitted or failed to prevent the commission of the crime.   The NPI officers will stand trial before a Regional Trial Court of Quezon City.

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.

ADB supports SMEs

"Asian Development Bank backs support for MSMEs in Phl"

by Ted Torres

Published 21 July 2011, The Philippine Star

(Original article available online here).

"MANILA, Philippines - The Asian Development Bank (ADB) said the Philippine government should redirect its support to the micro-, small and medium enterprises (MSMEs) instead of continuing to favor large corporations.

In a report, the ADB also said the Aquino government should continue to pursue the Public-Private Partnership (PPP) program, especially in the infrastructure sector.

The ADB report highlighted that one of the constraints for growth is the “disconnect” between large companies and the MSMEs.

“One constraint is the bias for large companies (mostly in the export industry) and domestic SMEs, many of which do not prosper due to lack of capital, unreliable supply chains, and weak demand for their output,” it said.

The report urges the government to help MSMEs by lowering the cost of doing business. This can be done by improving infrastructure; streamlining and removing excess administrative procedures; and creating a fair competitive environment through anti-trust laws and good business practices.

“The inability of MSMEs to provide efficient and cost-effective support to large firms on the one hand, and the lack of demand from large firms for such support from MSMEs, on the other hand, present a vicious cycle that debilitates the sector,” the report said, adding that the vertical integration of MSMEs into large enterprises has been less successful in the Philippines than in countries like Germany and Japan.

The report also said the Philippines critically needed better infrastructure as well as technical expertise to help move the economy.

Socioeconomic Planning Secretary Cayetano Paderanga, a former professor at the University of the Philippines’ School of Economics and author of the report, said the PPP program in the Philippines have typically been shunned by business because of unclear policy and regulatory frameworks, a cumbersome government approval process, and a lack of bankable projects. Other impediments, such as controversial judicial decisions, have also constrained PPP growth.

To encourage partnerships, the government should improve transparency in PPP project selection, provide better accounting of revenues and expenditures, and have a higher-profile anti-corruption drive, he added.

“The success of reforms in both rules and administrative processes and infrastructure support is expected to result in higher foreign direct investments and an increase in fixed capital,” the report added.

Meanwhile, ADB country director for the Philippines Neeraj Jain said it makes concrete proposals to realize the potential contribution of the private sector to inclusive economic growth in the Philippines.

“We are gratified that these proposals have contributed to the policy directions embedded in the Philippine Development Plan for 2011-2016,” Jin said."

Office of Competition rules nearly ready

"Office of Competition rules nearly ready"

Published in BusinessWorld Online, 04 July 2011

Hit the stands on 05 July 2011

(Original article available online here)

"THE JUSTICE DEPARTMENT expects to soon begin tackling competition issues with guidelines implementing the Palace-ordered mandate likely out next week, a Cabinet official yesterday said.

Justice Secretary Leila M. de Lima said the rules that will govern the planned Office for Competition under her department are still being finalized.

“We are still discussing the guidelines. We hope to release it by next week,” Ms. de Lima said.

Among the issues the competition office will study is Philippine Long Distance Telephone Co.’s (PLDT) planned purchase of rival Digital Telecommunications Philippines, Inc. (Digitel).

“[T]here are [alleged] anti-trust issues in the deal,” Ms. de Lima said.

Executive Order 45, signed by President Benigno S.C. Aquino III on June 9, designated the Justice department as the country’s Competition Authority. It was tasked to investigate violations of competition laws and prosecute violators; “supervise competition in markets” by enforcing such laws; as well as prepare, publish and disseminate studies and reports on competition to inform and guide industry and consumers. It will target monopolies, cartels and other “combinations in restraint of trade”.

The order also formed an Office for Competition under the Justice secretary’s office to carry out the Competition Authority’s functions.

Ms. de Lima said the guidelines, which are being deliberated by an internal panel composed of herself, Justice undersecretaries and assistant secretaries, among others, will adhere to the provisions of Mr. Aquino’s directive.

“We also had to keep in mind that for this year, the budget [for the competition office] will come from the DoJ (Department of Justice) budget and it will only be next year that a full allocation will be made for the office,” she added.

Ms. de Lima has said that the competition office , likely to be staffed by current state lawyers, would also engage the services of technical consultants and advisers from the private sector."

Previous related BusinessWorld post here.

Nestle execs in Manila

"Spiced, not iced tea?"

by Willie Baun

Published 28 June 2011 in STREETLIGHTS, People's Journal

(Original article available online here)

"ALRIGHT, intractable six-cup Nescafe Joe warns, just as long as you don’t dunk bad news in my coffee mug; I say consider the caveat seconded.

With the hot and humid spell of summer blown off by the typhoon season, expect a drought of sorts in the market for soft drinks, juices, halo-halo and, oh yeah, iced tea. 

However, Nestle Philippines, Inc. executives John Miller, Shahab Bachani, and Nandu Nandkishore may well pick up the downer, as it were, while having to drink gallons of iced Nestea to cool off. 

The NPI triumvirate company and personal legal problems that, for sure, somehow dampened the recent celebration of the global Swiss firm’s 100 years in the Philippines. 

Perjury charges have been filed against them in the Makati and Quezon regional trial courts. Complainant in the case is no smalltime outfit that NPI can ignore, let alone mess with.

The plaintiff is Banco de Oro, which just happens to be owned by Forbes Magazine’s top Filipino billionaire – mall magnate Henry Sy, owner of the ubiquitous SM malls.

BdO’s issue with NPI is its alleged failure to divulge prior knowledge of the financial woes of an NPI-favored distributor, who kept getting bank loans on the strength of the endorsements by aforementioned NPI execs. 

Some NPI distributors have also complained to the Department of Trade and Industry and taken legal action against the firm’s bully tactics – alleged instances of predatory pricing that sacrificed their profitability to the goal of booting rival brands out of contention. 

Shouldn’t pouring when it rains be bad enough for NPI? I’m inclined to agree if only for the Nescafe aroma that delights me as I write. But then again there’s simply more! 

This refers to the long-festering labor dispute in the NPI plant in Cabuyao, Laguna where more than 600 employees had gone on strike nine years ago to compel management to the bargaining table and discuss wages and benefits. 

The company purportedly simply turned a deaf ear to the worker’s plaints, allegedly to this date, has all but disregarded the Supreme Court’s decision in 2006, ordering NPI to reinstate the strikers and initiate formal negotiations. 

In the meantime, some of the strikers have reportedly been killed mysteriously, notably union leader Melito Roxas and his successor Diosdado Fortuna. 

Perhaps Mssrs. Miller, Bachani, and Nandkishore would care to share their iced tea with those who feel they’ve been mistreated by their company for the longest time. Or should it be spiced tea to ensure the complainants just grin and bear it?"

Paul Bulcke and Frits Van Dijk visit Nestle Philippines

"Bank chief charged by employees, officers"

by Emil Jurado

Published 22 June 2011, TO THE POINT, Manila Standard Today

(Original article available online here)

"***

One hundred years of operations here in the Philippines is truly a milestone for Nestlé Philippines Inc., the subsidiary of the Swiss-based world fs largest food and nutrition conglomerate.

In a month-long run-up to its anniversary, NPI ran several heartwarming institutional and product commercials on television and radio, all aimed at reminding the public of the value and significance of its long presence in the Philippines. High-profile corporate social responsibility projects were also set into motion.

Unfortunately for NPI and its special guests for the anniversary celebrations who have come to the Philippines from Nestlé fs head office in Switzerland \chief executive Paul Buicke and executive vice president Frits Van Dijk \some serious and long pending issues may serve as party poopers.

These issues, for sure, won ft be on the program fare, but will or should come out during business discussions between the local and foreign Nestlé executives.

To start off, there is the labor issue in NPI fs Cabuyao, Laguna plant that has been festering for almost 10 years and has been blamed for the deaths of a number of strikers. Despite a Supreme Court ruling handed down in 2006 that ordered NPI to hire back the strikers and start negotiations, the company has stood firm, in defiance of the order.

There, too, are the cases filed against NPI by some of its distributors, who cited Nestlé fs policies and practices that have severely affected their operations, to the point that a number of them have closed shop.

Unfortunately for Nestlé and other multinational companies, the noise created by those cases versus NPI has reached the ears of legislators in both chambers of Congress, who have found extra cause to pursue an Anti-Trust measure that will precisely address the so-called bullying tactics of giant multinationals like NPI.

The two visiting executives of Nestlé probably went sleepless after NPI fs 100th anniversary festivities, and its wouldn ft have been due to downing several cups of their favorite brand of coffee."

Nestle CEO visits Philippines

Nestlé CEO’s Philippine visit may help resolve distributor woes

Published 18 June 2011 in Metrofile, The Daily Tribune

(Original article available online here)

"The visit to the Philippines of Nestlé global CEO Paul Bulcke could help resolve the controversy concerning the alleged anti-trust practices being committed by Nestle Philippines Inc. (NPI) against its local Filipino distributors. Bulcke is arriving in Manila today, June 16, to take part in NPI’s ongoing centennial celebration which is being observed, with the theme “Kasambuhay, Habambuhay (Companion in Life, for Life)”. NPI’s Filipino distributors are hoping that Bulcke’s Manila sojourn could provide the spark for the resolution of the continuing disputes between the two sides that have led to the filing of charges in court against the Swiss-based multinational. 

Bulcke, a Belgian businessman appointed global CEO in 2007, has described Nestlé under his tenure as ‘une force tranquille’ which translates to “calm strength.” In this regard, anti-trust lobbyist and lawyer Lorna Kapunan expressed hopes that this tranquility covers not only the running of the head office in Switzerland, but its operations in the Philippines as well. Kapunan is the legal counsel of two of the local distributors that have filed complaints against NPI in the local courts and in the Department of Trade and Industry.

“Seeing as how disorganized NPI has responded to the cases we have filed against them, one can only hope that Bulcke’s presence will not only resolve the concerns raised by my clients, but will also realign the company to the head office’s standards on fair trade and competition,” Kapunan said. “After all, being the top executive of Nestlé, Mr. Bulcke should know their Code of Business Conduct by heart. Specifically, he should examine whether the Nestlé Philippines complies with Section 7 of this Code, which clearly states that commercial policy and prices will be set independently and will never be agreed, formally or informally, with competitors or other non-related parties, whether directly or indirectly.” 

On the other hand, NPI Chairman and CEO John Miller stated that the company’s ongoing celebrations are meant to affirm the Filipino’s love for family, in that “Nestlé products have become very much a part of the Filipino families’ way of life.” NPI ranks among the top 3 subsidiaries in the region comprising of Asia, Oceania, and Africa, and is ranked number one among the Asean countries. "

Cease and Desist Order against Nestle

CDO on Nestle; PNoy antics sunk

by Willie S. Baun

Published online on 22 June 2011, STREETLIGHTS, Journal Online, People's Journal

(Original article available here)

"xxx

One caveat to heed

“Woe unto hypocrites,” is a warning that a global baby food chain should hopefully won’t ever ignore again. It’s courtesy of this corner’s regular kibitzer Jose from the files of the Advertising Standard Council. 

ASC recently issued a Cease and Desist Order (CDO) to Nestle Philippines for its Nido 3+ ad featuring endorser Presidential sister Kris Aquino and her son Baby James.

In the litigated  Nido 3+ television commercial, a competitor was alluded to on the issue of sugar levels to inform the public that Nestle’s baby formula has more milk and less sugar, while its rival has the opposite, i.e., less milk, more sugar. But the strategy boomeranged. 

It was, however, cited before the ASC that Nestle used a misleading and inaccurate claim to sway consumers that Nido+ has less sugar by trumpeting the equation “less carbohydrates = less sugar.” 

ASC was told that apparently, Nestle means Sucrose when they say sugar, which encompasses glucose, lactose, carbohydrates, moreover, include polyols and poly-saccharides. Obviously, carbohydrates levels do not have one-is-to-one ratio with Sucrose in milk since in the formulation, there are other sources of sugar and carbohydrates. 

Additionally, Nestle purportedly advanced the false claim that Nido+ has the lowest carbohydrates content among 3+ milks, implying by transitivity that it has the lowest sugar level (if less carbohydrates = less sugar, and Nido 3+ has the lowest carbohydrates, therefore, Nido3+ has the lowest sugar.) 

The claim that Nido3+ has the lowest carbo content among 3+ milks actually meant, however, it has lowest sucrose content, not sugar. But if you add total sugars in the formulation, it turns out that Nido+ has 15 percent more sugar than its competitor. 

The Nestle gambit bombed. The ASC for good reason for the CDO issuance and has directed media outfits to stop airing the Nido+ ads. 

As the CDO rings the alarm “Woe unto Hypocrites,” I can’t help thinking how Churchill would have detested using sugar to mean sucrose and vice versa so loosely. The sin he called“terminological inexactidude” has remained unforgiveable."