Philippines: Department of Justice

2015 initiatives

Reports and studies

The Office for Competition (OFC) of the the Department of Justice (DOJ) has taken a sectoral approach to implementing competition policy and effecting regulatory reforms in the Philippines, identifying the following key sectors of focus: energy, telecommunications, transportation and commodities. These priorities are based on the nature and level of importance of the industries and their huge impact on citizens.

In the commodities sector, the OFC released its Report on the Onion Industry¹ in January this year, where it found that price increase of this commodity was due to a cartel that cornered import permits, manipulating onion supply. A similar modus operandi was used in the garlic industry, as reported by the OFC in 2014.²

The OFC recommended a high-level policy review of the suggested retail price (SRP) mechanism currently in place, noting that its practice removes incentives to compete on price. The SRP study rests on the contention that as a form of price control, SRP may distort competition and hinder the market from determining the optimum prices of goods. Hence, while its intent to protect consumers is laudable, the SRP may actually prevent free competition and improvement in the quality of products that ultimately redound to consumer benefit and public welfare.³

In the transport sector, the OFC conducted a study on the liberalisation and increased competition in the harbour pilots and tug assistance services to enhance the country’s port competitiveness.⁴

In the airline industry, the OFC issued a report that called on air carriers to be more transparent in their procedures for rebooking and cancellation and to ensure that their policies are more customer-centric. The OFC Report on Airlines’ Cancellation and Refund Policy,⁵ is a follow-on study after the issuance of Advisory Opinion No. 1 on Airline Ticket Sales in February 2013. In the said report, the OFC emphasised that air carriers should be obliged to inform consumers, in a clear and concise manner, which service charges or fees may be refunded in case of rebooking or cancellation. It recommended that the existing Airline Passenger Bill of Rights (APBR) be amended to enhance protection for consumers and to make air carriers more accountable to their customers.

Programmes and seminars

In collaboration with its development partners, the OFC also hosted several capacity-building activities for its various stakeholders. In 2015 it conducted, among others, the following:

• a bid-rigging workshop⁶ in April;
• basic and advanced training on competition policy and law for judges in January and June, respectively;⁷
• a regulatory impact assessment and competition assessment workshop in July;⁸
• a trade-related technical assistance seminar on Telco Mapping in August;⁹
• forums on transport regulation in May and September;¹⁰
• business compliance seminar series in October and November;¹¹ and
• a workshop on regional cooperation frameworks in November.¹²

These activities enhance the technical competence of the participants and strengthen the OFC’s ties with its regional and international partners.

Partnerships and advocacies

As a timely contribution to the Philippine hosting of the Asia-Pacific Economic Cooperation (APEC) meetings, the OFC¹³ hosted and convened the APEC Competition Policy and Law Group (CPLG) meeting in February. This firmly embeds the place of the OFC in the multilateral economic arena and strengthens its commitment to the advancement of economic justice through the APEC process. The OFC has also represented the Philippines in various competition policy meetings and fora, such as the OECD Global Forum on Competition, the UN Conference on Trade and Development (UNCTAD), the ASEAN Experts Group on Competition, the East Asia Top Level Officials Meeting (EATOP) and the ASEAN Competition Conference.

Legislative reform: the Philippine Competition Act

Four years after the OFC endorsed an updated and consolidated version for legislative enactment, Republic Act 10667, or the Philippine Competition Act (PCA), was signed by President Benigno S Aquino III on 21 July 2015.¹⁴

The PCA penalises anticompetitive agreements, abuse of dominance and anticompetitive mergers that restrict, prevent or limit competition in markets. It is enforceable against any person or entity engaged in trade or business in the Philippines and applies to international trade that has direct and substantial effects in the country. It also establishes the Philippine Competition Commission (PCC), an independent quasi-judicial body attached to the Office of the President.

The PCA further strengthened the OFC’s role in competition enforcement by giving it a more focused mandate – to investigate and prosecute all acts considered criminal offences under the PCA and other competition-related laws.

The PCA also mandated the government to undertake an advocacy programme within a two-year period to inform the general public of the provisions of the PCA.

Broader context of governance and reforms

The globalisation of businesses and markets has catapulted the competition policy agenda to the forefront of national and international governance and reform agenda. An effective competition policy and sound economic regulation leads to efficiency and the promotion of societal welfare. They form part of a country’s development plan based on good governance and rule of law.

The OFC continues to develop its institutional capabilities in pursuit of economic justice and, as a specialised unit of the DOJ, its mandate as the government’s principal law agency committed to effective, efficient and equitable administration of justice.

Notes

1. DOJ: Cartelised onions reason for price increases (9 January 2015). Retrieved from www.doj.gov.ph/news.html?title=DOJ:%20Cartelized%20onions%20reason%20for%20price%20increases&newsid=336.
2. DOJ: High garlic prices caused by collusion, cartel (3 September 2014). Retrieved from www.doj.gov.ph/news.html?title=DOJ:%20High%20garlic%20prices%20caused%20by%20collusion,%20cartel&newsid=306.
3. DOJ: Government must review SRP policy (13 July 2015). Retrieved from www.doj.gov.ph/news.html?title=DOJ:%20Government%20must%20review%20SRP%20policy&newsid=389.
4. DOJ issues report on tugboat industry. (6 July 2015). Retrieved from www.doj.gov.ph/news.html?title=DOJ%20issues%20Report%20on%20Tugboat%20Industry&newsid=385.
5. DOJ-OFC: Airlines should be more customer-centric (13 October 2015). Retrieved from www.doj.gov.ph/news.html?title=DOJ-OFC:%20Airlines%20should%20be%20more%20customer%20centric%20%20&newsid=434.
6. In partnership with the Organization for Economic Cooperation and Development (OECD)/Korea Policy Center.
7. In partnership with the Japan International Cooperation Agency (JICA).
8. An OFC project (EC 01 2013A) under the Asia-Pacific Economic Cooperation Forum (APEC) Support Fund.
9. Under the European Union Trade-related Technical Assistance (TRTA) Project.
10. In partnership with the CUTS Center for Competition, Investment and Economic Regulation (CUTS).
11. Under the Competition Law Implementation Project (CLIP) of the ASEAN-Australia-New Zealand Free Trade Area (AANZFTA) Competition Committee.
12. Ibid.
13. Assistant Secretary Geronimo L Sy, Philippine Department of Justice, is the 2015 APEC Competition Policy and Law Group (CPLG) Convenor.
14. A copy of the Philippine Competition Act may be accessed via www.gov.ph/2015/07/21/republic-act-no-10667.