Fair competition
DEMAND AND SUPPLY - Boo Chanco (The Philippine Star) - October 17, 2018 - 12:00am

Dr. Arsenio Balisacan, chairman of the Philippine Competition Commission posted this tweet last week:

“As I introduced myself to a government official from another agency housed in the same building: Me: I am with the Philippine Competition Commission. Government official: Oh, so what sports are you promoting?”

The tweet was hilarious, but sad at the same time. It seems that even within the bureaucracy, little is known about this agency of government that is probably one of the most important today. The PCC was founded in early 2016 by operation of Republic Act 10667 to ensure fair competition in the market for the benefit of consumers and businesses.

A properly working competitive business environment, otherwise known as a level playing field, is important to investors and inevitably to the national economy. As PCC itself noted, “It helps markets work better, fosters innovation, and protects investors and consumers. It will help to encourage wider domestic and foreign direct investments.”

For us, ordinary consumers, fair competition leads to more choices, lower prices, and higher quality of goods. For those in my generation, Exhibit “A” of why the absence of competition sucks is the case of the old Cojuangco-era PLDT.

Today’s generations may complain about the quality of services of the telco duopoly and they should. But it was far worse for us before FVR deregulated the industry. It was extremely difficult to get a phone line. When you got one, you had to share the service with a “party line.” And before you can get a line, you have to buy PLDT preferred shares to cover the cost. Ginigisa sa sariling mantika.

Now, we have a government agency to run to. The PCC has primary responsibility in enforcing the policy prohibiting anti-competitive practices in the marketplace. It is PCC’s duty to promote and protect the efficiency of the market, not necessarily that of individual firms.

The PCC relies on market forces to achieve its goal of efficiency. But it has rules to address circumstances that may, if market forces are left alone, lead to economically inefficient or sub-optimal outcomes—the so-called market failures.

The abuse of dominant position was common in the bad old days. Today, entities (whether companies or individuals) are prohibited from abusing their dominant position through conduct that would substantially prevent, restrict, or lessen competition.

In prioritizing the use of their limited resources, the PCC focuses on the application of competition policy well-suited for markets having artificial monopolies (i.e., monopolies created, enhanced, or protected by laws, regulatory issuances or other structural barriers) and those having a few, dominant players.

In this regard, I am in full support of President Duterte’s plan to have a third player that will hopefully make the existing duopoly provide better services and more reasonable rates.

But the telco players, existing and new, should not be hobbled by a newly created government mandated duopoly in the telco tower sector. It will be easy for such a protected duopoly to indulge in prohibited acts like predatory pricing.

To give the PCC clout, the law creating the commission gave it original and primary jurisdiction over all competition-related issues. That’s why LTFRB was wrong to protest when PCC took jurisdiction over the Grab-Uber merger.

The LTFRB didn’t particularly appreciate that move which was interpreted as an incursion into their turf. But if the PCC didn’t act, our government would have looked limp compared to the competition commission of Singapore.

I guess the Davao lawyers at LTFRB were just not updated about the PCC. Still, I reiterate my suggestion last week for the PCC to conduct a seminar for LTFRB officials so the two government agencies can work harmoniously and not worry about turf issues.

The great thing about the PCC is that it has a brand new staff of young, highly competent and honestly public interest-oriented professionals. In other words, they can be trusted to do the right thing.

And they are also proactive. Their eagerness to engage got them into trouble with the telco duopoly very early in the game. But that’s alright because the business sector is just getting used to something like the PCC. The success of PCC will also be good for business in general.

Monopolies/duopolies are bad. This is why I have always taken a tough stand against them, specially if the monopolistic situation is made possible by government action.

Indeed, in the light of new technology, even those previously considered as “natural” monopolies can no longer use this justification. There are many examples of this happening in the power industry.

Understandably, I expressed a strong objection to a proposal of a highly placed government official to create a duopoly in telco tower companies. Such a duopoly will cause phone subscribers to pay more as telcos pass on higher costs imposed by the duopoly. More companies competing will keep costs down.

In time the PCC will likely step into the duopoly creating proposal in the telco towers sector. There can be no justification for limiting competition when there are already at least five entities expressing interest.

I understand the government official who made the duopoly proposal had been calling me names on a radio-tv station he owns. The ranting and raving reflects badly on that spoiled brat who is used to getting his way, coming from a once elite family.

While his malicious utterances provide me enough reasons to file a libel suit, I am for now letting him stew in his madness. It is easy to spew lies in this era of fake news, but we will take the high road and stick to issues.

As far as I am concerned, I am just doing my duty to denounce every attempt to restrict local markets. We have to end the happy days of rent-seeking elites and we now have the PCC to help us do it.

Boo Chanco’s e-mail address is bchanco@gmail.com. Follow him on Twitter @boochanco

NATIONAL ECONOMY PHILIPPINE COMPETITION COMMISSION
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