SC rules on inspections boost PCC probe on cartels

MANILA, Philippines — The Philippine Competition Commission (PCC) said its initiatives in investigating cartels would be boosted by the Supreme Court’s issuance of rules governing the conduct of searches and inspections.

“Cartels operate on clandestine arrangements or so-called gentleman’s agreements that ultimately affect prices and hurt consumer welfare,” PCC chairman Arsenio Balisacan said in a statement.

“With the rules on dawn raids now in place, this will intensify PCC’s case-building, uncover anti-competitive behavior, and pin down such white-collar crimes covered by the Philippine Competition Act,” he added.

Earlier this month, the SC approved the Rule on Administrative Search and Inspection under the Philippine Competition Act (PCA) or Republic Act 10667 to help in the investigation and prosecution of competition law offenses. This will take effect on Nov. 16.

The rules govern the application, issuance and enforcement of inspection orders for administrative investigations of alleged violations of the PCA.

“Inspection orders will allow the PCC and its deputized agents to enter, search and inspect business premises, offices, land and vehicles to examine, copy, photograph, record or print information in order to prevent their removal, concealment, tampering with or destruction,” the PCC said.

It added that dawn raids or unannounced on-site inspections are widely used by competition authorities around the world to uncover evidence in aid of investigation and prosecution of anticompetitive agreements and conduct such as cartels and abuses of dominance.

Information subject to inspection include books, tax records, documents, papers, accounts, letters, photographs, as well as databases, means of accessing information contained in such databases, and electronically stored information.

Under the rule, inspection orders applied at special commercial courts in Quezon City, Manila, Makati, Pasig, Cebu City, Iloilo City, Davao City, and Cagayan de Oro City shall be enforceable nationwide. Other special commercial courts shall have concurrent jurisdiction within their respective territorial jurisdictions.

Any person or entity who fails or refuses to comply with an inspection order may be cited for contempt of court that may result in fine, imprisonment or both.

“The PCC extends its profound thanks to the Supreme Court for strengthening our armory of investigative tools to detect, investigate and prosecute anticompetitive agreements and conduct. The rules strike a balance between due process and public interest in enforcing the competition law,”Balisacan said.

The PCC earlier said it will focus on investigating the middlemen in the rice industry, particularly millers, traders and wholesalers, as anti-competitive practices such as cartels could be present in this phase of production.

“If there is concentration, if there are players who are in a dominant position in certain markets for this middle phased transactions, then is it worsening the gap between farmgate prices and retail prices,” PCC commissioner Johannes Bernabe told reporters.

“If some of them are in a dominant position or, worse if they are engaged in cartelistic behavior, then they will exacerbate the gap between farmgate prices and retail prices,” he added.

The PCC recently signed a memorandum of agreement with the Department of Agriculture to probe the impact of the Rice Tariffication Law and unfair competition on stakeholders amid the continued drop in prices of palay (unhusked rice).