Anti-trust bills gain momentum

Excerpt from ANGEL THOUGHTS column by DeeDee M. Siytangco, Manila Bulletin, 11 April 2011.
(Original and full article hit the stands on 10 April 2011, and is available online here).

"Given this, in light of recent headlines, anti-trust supporters have been handed the perfect opportunity to promote their cause. As a concept, anti-trust has been discussed and debated in the Philippines for years, going back to the Marcos era when monopolies were rampant.

In 2008, Senate President Juan Ponce Enrile already proposed Senate Bill 123, otherwise known as the anti-trust act, but to date, nothing concrete has come out of it. We don’t have an anti-trust law that will prevent “pacman-type tycoons” gobbling up business in all sectors – telecoms, infrastructure, medical centers, media, among others. In Asia, we are only one of two countries without this law!

It’s only now that we are beginning to realize how this anti-trust thing can actually affect our livelihoods, job securities, income opportunities, and even our ability to make text messages and calls on our cellphones free of charge!

Lately, a number of giant corporations have been under the anti-trust spotlight, and the discussions have finally been brought to a level that the man-on-the-street can relate to."

Nestle Antitrust cases - Soprole

Chile Soprole, Nestle To Step Away From Planned Joint Venture

First Published Tuesday, 5 April 2011 05:41 pm - © 2011 Dow Jones

Available online in Automated Trader here.

ANTIAGO -(Dow Jones)- Following opposition from Chile's antitrust office, Swiss food and beverage giant Nestle SA (NESN.VX, NSRGY) and local dairy products maker Soprole SA will step away from their planned joint venture, the companies said Tuesday.

The Chilean antitrust office, known locally as the FNE, said in March that it opposed the planned joint venture, which would have included the manufacture, retail and distribution of various dairy products under the DPA Chile moniker.

"The conditions needed to proceed with the merger process are missing," the companies said in a joint statement, adding that they won't be pursuing the matter further with Chilean authorities.

Chile's antitrust court was set to rule on the venture later this year.

Last month, the FNE rejected the joint venture in spite of measures established by the companies to offset any negative market effects.

The FNE said the operation will restrict free competition among dairy producers and increase consumer prices. Additionally, the FNE found the proposed mitigation measures inefficient and difficult to implement.

Nestle and Soprole announced the venture in November.

Fonterra Dairy Co-operative Group Ltd. has a 99.8% stake in Soprole, Chile's leading consumer dairy business, with around one-third of the total market.

-By Anthony Esposito, Dow Jones Newswires; 56-2-715-8929;anthony.esposito@dowjones.com

Elsewhere in the globe - Nestle anti-trust cases - Soprole

Chile's Antitrust Office Opposes Nestle, Soprole Joint Venture

First Published Wednesday, 9 March 2011 01:07 pm - © 2011 Dow Jones

Article available online in Automated Trader here.

ANTIAGO -(Dow Jones)- Following opposition from Chile's antitrust office, Swiss food and beverage giant Nestle SA (NESN.VX, NSRGY) and local dairy products maker Soprole SA will step away from their planned joint venture, the companies said Tuesday.

The Chilean antitrust office, known locally as the FNE, said in March that it opposed the planned joint venture, which would have included the manufacture, retail and distribution of various dairy products under the DPA Chile moniker.

"The conditions needed to proceed with the merger process are missing," the companies said in a joint statement, adding that they won't be pursuing the matter further with Chilean authorities.

Chile's antitrust court was set to rule on the venture later this year.

Last month, the FNE rejected the joint venture in spite of measures established by the companies to offset any negative market effects.

The FNE said the operation will restrict free competition among dairy producers and increase consumer prices. Additionally, the FNE found the proposed mitigation measures inefficient and difficult to implement.

Nestle and Soprole announced the venture in November.

Fonterra Dairy Co-operative Group Ltd. has a 99.8% stake in Soprole, Chile's leading consumer dairy business, with around one-third of the total market.

-By Anthony Esposito, Dow Jones Newswires; 56-2-715-8929;anthony.esposito@dowjones.com

Elsewhere in the globe - Nestle anti-trust cases - Garoto

Nestle Approaches Brazil to Settle Garoto Antitrust Court Case

by Arnold Galvao - Oct. 5, 2010

Available online in Bloomberg here.

Nestle SA approached the Brazilian government with a proposal to sell assets and settle a six-year court dispute related to its purchase of Chocolates Garoto SA, which was blocked by antitrust regulators, according to two government officials.

The first meeting took place on Sept. 16 at the attorney general’s office, according to Antonio Henrique Pinheiro Silveira and Mariana Tavares, secretaries of the antitrust arms of the Finance Ministry and Justice Ministry, respectively. Silveira and Tavares were present, along with lawyers for Nestle Brasil Ltda. and the attorney general, Luis Inacio Lucena Adams.

“The discussions are very preliminary,” Tavares said in a Sept. 24 telephone interview from Brasilia. Silveira spoke about the matter in a Sept. 23 interview, also in the capital.

Nestle’s proposed purchase of Garoto in 2002 was the first time Brazil’s antitrust regulator, known as Cade, completely rejected an acquisition. Representatives from the regulator weren’t invited to the meeting, according to the officials. Cade President Arthur Badin said by e-mail he had no knowledge of the talks.

The antitrust ruling can’t be reversed out of court without Cade’s approval, Badin said. Any new proposal from Nestle will have to be processed by Cade’s attorney and judged by the agency’s six-strong plenary, he added.

Robin Tickle, a spokesman for Nestle in Vevey, Switzerland, said the company declined to comment on the matter.

After Cade’s decision in 2004, Nestle offered to sell a line of chocolate coatings that it said corresponded to 46 percent of domestic demand for the product. The company also offered to sell chocolate brands. The proposal was rejected by Cade, and Nestle decided to take the matter to court.

Silveira said a Nestle proposal to sell some brands may not be sufficient. He said all competition conditions in the industry must be evaluated, including distribution.

-- With assistance from Clementine Fletcher in London. Editors: Robin Stringer, Laura Price.

To contact the reporter on this story: Arnaldo Galvao in Brasilia at agalvao1@bloomberg.net

To contact the editor responsible for this story: Francisco Marcelino mdeoliveira@bloomberg.net

EQ: Nestle - "DO YOU PLAY BY THE RULES?"

NESTLE: "Do You Play By The Rules?"

by The EQualizer Post, originally published on 29 March 2011

Original and full article available online here.

"Peter Brabeck:Nestle Chairman

It is scandalous, ludicrous and highly irresponsible for the chairman of a global conglomerate that tripled its profits last year to talk about higher corn prices forcing millions into starvation ... Perhaps if Nestle is so concerned about food prices, its board will consider putting more of their $35.7 billion in 2010 profits back into poor communities. Just their profits alone represent more than half the entire farm value of the 2010 U.S. corn crop.

SOURCE: Delta Farm Press

"As the largest bottled water company in the world, it is hypocritical in the extreme for Nestle to be trying to gain media exposure on World Water Day."

HALIFAX, NOVA SCOTIA--(Marketwire - March 22, 2011) - CUPE Nova Scotia President Danny Cavanagh is joining a chorus of water activists who say Nestlé Waters Canada, a private water company, is exploiting World Water Day for profit.
CUPE says the company issued a press release alerting the media that company executive John Challinor II will be accepting calls from the press on World Water Day (today) to talk about the company's "policies on water management and conservation."
The Inside the Bottle coalition – which CUPE is a part of – is encouraging its supporters to call John Challinor II today and let him know that water is not something that can be bought and sold for profit.
Cavanagh says, "As the largest bottled water company in the world, it is hypocritical in the extreme for Nestle to be trying to gain media exposure on World Water Day."

"Isn’t it strange to talk about not wasting when you gave us a water bottle to waste?"

The Globe and Mail newspaper reports that at the launch of Waste Reduction Week, hundreds of schoolchildren were given souvenir bags containing bottled water from Nestlé.

To their great credit, the students reacted badly to the Nestlé promotion (Nestlé Waters Canada sponsors the Waste Reduction Week). They wrote to both the recycling council, the corporate sponsors and to the two Ontario government ministers attending the event.
As one student noted:

"Isn’t it strange to talk about not wasting when you gave us a water bottle to waste?"

Nestle Philippines gets away with vertical price restraint in the Philippines but NOT in its mother country!!!

It is actually ironic how Nestle Philippines can get away with vertical agreements here in our country when its head office, based in Switzerland, is governed by very stringent anti-trust laws.

In fact, the U.S. even adapts a more liberal approach than Swiss law with respect to vertical price restraint agreements. Vertical agreements are not illegal per se in the U.S., but the court there considers economic effects of such agreements when applying the Rule of Reaosn to determine whether vertical price restraint is anti-competition or not. There is a little more flexibility.

Under Swiss law, vertical agreements are considered threats to competition if those agreements eliminate competition through retail price fixing or minimum retail price imposition. In Switzerland, in applying the Rule of Reason, the Swiss Competition Council has more specific guidelines, and considers both the economic and social impact of vertical price restraint agreements.

Sadly, in the Philippines, we can’t even judge whether our anti-trust law is liberal, like in the U.S., or stringent, like in Switzerland since there is no comprehensive regulation in the Philippines which directly tackles the issue of retail price fixing, minimum retail price imposition, or vertical price restraints. We only know that we are supposed to apply the Rule of Reason as well, but the big question is: How do we apply the Rule of Reason here?

Without a better anti-trust law, companies like Nestle will continue getting away with certain practices here which would otherwise not fly in other countries. Even the hands of our judiciary are tied. Without any guidelines, how will our courts determine what is reasonable or not?

This is why the call for a tougher, stronger, and more comprehensive anti-trust policy in the Philippines is something that should be taken seriously by those people supposedly advocating it. Walk the walk. Otherwise, our country will just continue to be a dumping ground for unfair and illegal practices condoned in other parts of the world.

More threats of vertical price restraints to Filipino consumers

Aside from the fact that local distributors have to scramble to meet sales targets set by multinationals who compel them to sell their products at a minimum price, distributors are also pressured to market these products more aggressively. Remember, with vertical price restraints, multinationals, such as Nestle, set a low price for their products without factoring in the actual distribution costs of their distributors or retailers. Distributors work harder to sell these products to show consumers that, hey, it may be cheap or cheaper, but it’s still good quality. Impressions are everything.

Unfortunately, distributors are usually stretched to the limit since the margin for profit is so minimal when vertical price restraints are imposed. What could potentially happen, and is no doubt happening, is that distributors have to cut down costs at the expense of quality, particularly quality of service. Picture how transportation companies still insist of having old, broken-down buses plying EDSA with drivers racing each other from stop to stop to get more passengers. In the same way, quality is compromised for products distributed, precisely because distributors, in bearing the costs alone, do not have the means to provide anything better or to actually follow through on the consumer impression of the product. In the end, quite obviously, it is the Filipino end users who suffers or is short-changed.

Can you really blame the distributor? Remember, these are usually and typically Filipino SMEs who have to cater to the whims and are practically compelled to follow the pricing schemes set up by companies like Nestle.

In other countries, there are already factors and determinants used by courts to determine whether a vertical agreement is reasonable or not. What we have here is simply the fact that we adhere to the Rule of Reason. But as to how we can determine what is reasonable or not – Philippine law is almost entirely silent. This is why the recent call to pass tougher and more comprehensive anti-trust regulations must be prioritized by our legislators. Only the government now can step up to protect SMEs and consumers from certain practices that companies like Nestle have been getting away with for years.