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

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

First of two parts

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Proposed antitrust law to level the playing field

"Level playing field"

The Business Mirror Editorial

Published 24 May 2011 in the Business Mirror

(Original article available online here)

"Up for deliberations by the Senate this week is a proposed antitrust law that its chief proponent, Senate President Juan Ponce Enrile, has promised “will bite; it has fangs.”

The need for such a law was emphasized by Enrile himself just a few weeks ago when he responded to a query if the recent megadeal between the leading telco firm and the third largest in the industry violated any law: “We have an anti-trust law in the Revised Penal Code, but it is a dead law. Without a law, there’s no crime committed.”

The Competition Act of 2011, of course, is anchored on solid ground, namely, the Constitution: “The State shall regulate or prohibit monopolies when the public interest so requires and that no combinations in restraint of trade or unfair competition shall be allowed.”

The Enrile bill enumerates three categories of unfair trade practices: cartelization; monopolization; and abuse of monopoly power, which includes predatory behavior toward competitors; price fixing, bid rigging, limitation and control of markets, market allocation, arrangements to share markets or sources of supply and price
discrimination.

Other unfair trade practices under the Enrile bill are the distribution of false or misleading information capable of harming the business interests of another firm, and the unauthorized receipt, use, or dissemination of confidential scientific, technical, production, business or trade information.

Perhaps, what Enrile meant by his bill definitely having “fangs” and not likely to be ignored is the provision on penalties for violations.

The proposed antitrust law, in fact, goes for the jugular, or rather, where it hurts most—the pockets—as it seeks to impose very stiff penalties on violators. Each and every violation shall be punishable by a fine of not less than P10 million but not exceeding P50 million, if a natural person; a fine of not less than P250 million but not exceeding P750 million if a firm; imprisonment not exceeding 10 years, or both, at the discretion of the court.

Businessmen would definitely think twice about losing at the very least P10 million. How much more if the government demands P750 million for unfair trade practices?

Apart from expanding the coverage of unfair trade practices, the Enrile bill also seeks to strengthen the power of regulatory authorities to go after violators, with the Department of Justice (DOJ) and the Department of Trade and Industry (DTI) as its chief enforcers. The DOJ and the DTI can, on their own, initiate preliminary inquiries to enforce the law upon filing of a verified complaint by an interested party.

Enrile is correct in pointing out that “the increased deviousness and complexity of schemes in perpetuating monopolies in the free-market landscape” requires “equally sophisticated legislation” that would protect the public from price manipulation and other unfair trade practices.

By strengthening the government’s hand in dealing with unfair trade practices, the antitrust bill paves the way to a level playing field in Philippine business.

The Senate should, therefore, pass the bill as soon as possible after proper consultations with all stakeholders.

The Competition Act of 2011 will benefit the entire economy because it will encourage fair play. Unfair trade practices, after all, stunt economic growth and discourage new investments.

It should be passed into law because, in the end, Big Business is not necessarily good business."

Senate to deliberate on anti-trust bills

"Senate set to deliberate antitrust bill next week"

by Butch Fernandez

Published 18 May 2011 in Business Mirror

(Original article available online here)

"The Senate moved to speed up floor deliberations on a new Anti-Trust Law that its chief proponent, Senate President Juan Ponce Enrile, said would add more “fangs” to existing regulations, penalizing unfair trade and uncompetitive practices, including cartels, monopolies, abuse of dominant position, predatory pricing, bid-rigging and price-fixing.

“This [new Anti-Trust Law] will bite; it has fangs,” Enrile told editors and reporters of the BusinessMirror, the Philippines Graphic and dwIZ in a breakfast press conferences on Wednesday.

Enrile explained that the proposed Competition Act of 2011, embodied in Senate Bill (SB) 1 that he and Senators Ralph Recto and Antonio Trillanes IV co-authored, was meant to plug gaps in the existing Anti-Trust law, which, Enrile noted, was “not as sharp.”

According to Enrile, a consolidated bill, incorporating related proposals filed by other senators, is due to be reported by Sen. Manuel Villar, chairman of the Committee on Trade and Commerce, for floor deliberations next week.

Apart from penalizing unfair trade and anti-competitive practices in restraint of trade, unfair competition and abuse of dominant power, SB 1 also seeks to strengthen the powers of regulatory authorities to go after violators, with the Department of Justice (DOJ) and the Department of Trade and Industry (DTI) as its chief enforcers.

As proposed by Enrile, persons found violating the law face fines ranging from P10 million to P50 million, while erring companies would be fined from P250 million to P750 million, plus 10-year imprisonment.

The proposed legislation also gives regulatory agencies the power to impose fines ranging from a minimum of P100, 000 to P5 million (for a person) and from P5 million to P50 million (for a company) for each violation.

Under the bill, the DOJ and the DTI shall, on their own, initiate preliminary inquiries to enforce the law upon filing of a verified complaint by an interested party.

The bill, however, also sought to protect confidentiality of information submitted in connection with the enforcement of the law, by providing that any document submitted or marked confidential by the DOJ, relevant to an investigation, shall not be disclosed, published, copied or disseminated. It also includes immunity from suit to any firm or person who will cooperate with authorities and give information to the DOJ.

“Our people have been victims to big business. It behooves the Senate to provide protection to our people against price manipulators,” Enrile said in his explanatory note to the bill. “In a volatile economic situation, such as that which we are experiencing now, it is not very difficult to imagine how artificial prices in one or two commodities is able to directly or indirectly raise the prices of related goods and services.”

Enrile cited Article XII, Section 19, of the Constitution, which 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.”

“As proof of the importance of this Constitutional mandate, Section 22 of the same article encourages the promulgation of legislation that would impose civil and criminal sanctions against those who circumvent or negate this principle,” the senator said. “Hence, Section 22 of the Constitution provides: “Acts which circumvent or negate any of the provisions of this article shall be considered inimical to the national interest and subject to criminal and civil sanctions, as may be provided by law.”

While previous legislations have been passed pursuant to this Constitutional mandate, Enrile noted “the increased deviousness and complexity of schemes in perpetuating monopolies in the free-market landscape necessitates an equally sophisticated legislation that would effectively address this concern.”

“Generally, this bill penalizes combinations or conspiracies in restraint of trade and all forms of artificial machinations that will injure, destroy or prevent free-market competition,” Enrile added."

Supermarket association attends Senate anti-trust public forum

"PAGASA at Senate Committee on Trade & Commerce"
By Wave Technologies, Inc., originally published 10 February 2011, at the Philippine Amalgamated Supermarket Association Incorporated website here.


Atty. Lorna Kapunan at the podium (Image from PAGASA site here)

"PAGASA [Philippine Amalgamated Supermarket Association Incorporated] was invited as an observer at the Senate Committee on Trade & Commerce, Committee on Economic Affairs and Special Oversight Committee on Eco. Affairs’ Lecture Forum: “Understanding Antitrust.” At the podium is Atty. Lorna P. Kapunan with her critique on existing and fragmented legislations on antitrust. Other presenters were DTI Usec. Zenaida C. Maglaya and Ateneo’s Atty. Anthony Abad. The forum was headed by Senate Pres. Juan Ponce Enrile and Senator Manuel Villar."

Highlights of proposed anti-trust bills

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

*Original article also available online here.

Proposed competition measures seeks to protect small enterprises

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

"6. Proposed competition measure seeks to protect small enterprises

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

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

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

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

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

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

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

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

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

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

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

Enrile backs anti-trust forum

"Enrile backs anti-trust forum"
Original article published in Malaya, 02 March 2011, NATIONAL & METRO NEWS, p. B3

Click on image to enlarge and view full article.

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.

Anti-trust public forum press releases

Some press releases from the recently concluded "Understanding Anti-Trust" Public Forum held at the Philippine Senate last 10 February 2011:

• From the official website of the Philippine Senate: "Villar holds series of forum on Antitrust law"
  
• From the website of the Philippine Amalgamated Supermarkets Association Incorporated (PAGASA): "PAGASA at Senate Committee on Trade & Commerce"
  

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???

Scratch Villar Off the List!

I really haven't decided who to vote for. I'm still in the process of weighing the pros and cons of each candidate. I won't post about each and everyone's strengths and weaknesses. There's too much going around already. I would just like to focus on one particular candidate whom, prior to this video, was one of frontrunners. I know better now. If he can do this as a senator, what more if he is the top dog.

He is BIG, he got away with it for awhile, but the truth is catching up. No way Manny Villar, no fucking way! Obviously, he has led for no one but himself.

The youtube video: