Bill vs. unfair competition revived

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HOUSE Speaker Feliciano Belmonte Jr. has revived the efforts for the passage of the Philippine Fair Competition Act, which aims to regulate, if not eradicate unfair competition, monopolies and cartels—deemed a priority measure in the last Congress but was swept under the rug.

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Belmonte made the proposal under House Bill (HB) No. 1133 which prohibits firms to engage in anti-competitive acts that prevent, distort, or restrict competition, unless otherwise exempted, such as price fixing and bid rigging.

Also, the House Speaker’s measure deems it unlawful for one or more firms to abuse their dominant position by engaging in unfair methods of competition, or in unfair or deceptive trade practices, or entering into combinations in the form of trust or otherwise, or conspiracy, with the purpose and effect to prevent, restrict or distort competition thru the following: predatory behavior towards competitors; limitation and control of markets; market allocation; arrangements to share markets or sources of supply; price discrimination; exclusivity arrangement; tie-in arrangements and boycott.

“The lack of genuine competition in certain industries impairs public welfare and undermines the country’s credibility to provide a business climate conducive to investment. A level playing field is essential for inclusive growth and development,” Belmonte pointed out.

Also prohibited under HB 1133 are anti-competitive mergers, or prohibiting a firm engaged in commerce or trade to acquire, directly or indirectly, the whole or any part of the stock or other share capital, or the whole or any part of the assets, of one or more firms engaged in any line of commerce or trade to substantially lessen competition, or tend to create a monopoly.

A comprehensive competition policy, Belmonte argued, will further boost the country’s gross domestic product (GDP), improve wages and bring down prices, among others.

“Despite the constitutional guarantees and the existence of laws that affect competition, such laws have proven to be inadequate. This measure will stimulate business activities, protect consumers and promote the balanced development of the national economy,” Belmonte added.

Fair Trade Comission
The House Speaker’s proposal also creates the Philippine Fair Trade Commission (PFTC), which will investigate, gather evidence and initiate prosecution of those engaged in unfair trade practices. Likewise, the PFTC will look into the description of cartels and monopolies, and impose defined sanctions and penalties for violation of the Fair Competition Act.  In addition, HB 1133 mandates that the exercise of regulatory powers by different government agencies, including local government units, over an industry or subsector will be cumulative and will not be construed in any way as derogating from the power and authority of the concerned agency.

This means that while the PFTC will have the primary and sole jurisdiction over competition issues, the regulatory bodies will continue to exercise jurisdiction over all matters with regard to the firms’ operation and exercise.

HB 1133 also institutes a reward system by offering a leniency program to any person or firm that will cooperate or furnish any information, document or data to the PFTC before or during the conduct of the preliminary inquiry that constitutes material evidence, as determined by the commission.

The Fair Competition policy is in accordance to the blueprint of the Association of Southeast Asian Nations Economic Community that was adopted in 2007 and is enshrined in the 1987 Constitution, which provides that the State should regulate or prohibit monopolies when the public interest so requires.

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