Consumers help watchdog crush monopolies, break social divide

Joel Guinto, ABS-CBN News

Posted at Apr 10 2019 04:17 PM

The view from Philippine Competition Commission Chairman Arsenio Balisacan's Quezon City office shows the social divide between rich and poor. Jonathan Cellona, ABS-CBN News

MANILA -- Every working day, Arsenio Balisacan gazes at a row of slums from the glass windows of his 25th floor office and is reminded of his crusade against inequality that now puts him at the forefront of the fight against monopolies and corporate abuse.

Three years since it was formed, the country's anti-competition body, Philippine Competition Commission (PCC), has scrutinized billion-peso mergers spanning telecommunications and transport. Now, consumers are in on the fight with a steady stream of complaints to Balisacan's office.

After tenants complained that they were limited to one internet provider with slow and expensive service, an "abuse of dominance" case against before the PCC Urban Deca Homes Manila Condominium Corp and 8990 Holdings Inc in late March. The developer said it would answer the charge.

"When I see the social divide everyday, prosperity and poverty co-existing... This is why competition policy is so crucial. It can't be like this," said Balisacan, a former socioeconomic planning secretary who also teaches development economics at the University of the Philippines.

"An economy that is rapidly growing, but with growth that is exclusive, it's not likely to last long," Balisacan said, adding it could give rise to "social instability, disenchantment and populist" sentiments.

Those living in depressed areas, for example, could be paying more for water than those living in posh subdivisions simply because their access to water distributors is limited, Balisacan said.

When food cartels cause prices to spike, the poor also get hit harder, with roughly a third of their budget going to food. The rich, he said, are not as vulnerable to such shocks.

Balisacan said some of his friends could afford to go to Bangkok to stock up on maintenance medicine, where savings for a year's supply is enough to pay for airfare. The poor, unable to travel, have no choice but to buy local.

POWER TO CONSUMERS

Philippine Competition Commission Chairman Arsenio Balisacan fixes his eyeglasses during an interview with ABS-CBN News on April 10, 2019. Jonathan Cellona, ABS-CBN News

Consumers can go personally to the PCC's Quezon City to lodge their complaints or can send them via physical or electronic mail on the agency's website.

The PCC can also act on cases referred to by regulators and other government agencies. It can also start an investigation on its own when it sees fit.

"We are always open," Balisacan told ABS-CBN News. "They can always e-mail us, make appointments with the commission if they have concerns."

Balisacan refused to divulge the companies involved in the complaints so as not to give them advance notice until a formal notice is served, but there's one common grievance: high prices.

 

"The success of any competition regime in any country is really the participation of the public," he said. "When the public sees that there are cartels, they know where to go to find complaints, then it will be easier for us to proceed with the case."

Consumer participation is also growing with awareness of the PCC. From half of one percent in 2017, the PCC has 4 percent awareness in 2018, based on a survey that the watchdog commissioned.

Philippine Competition Commission roadshow in Cebu. Courtesy of PCC Facebook

Movie theaters also recently started showing PCC info spots alongside anti-piracy ads, he said.

CLASH WITH TITANS

The PCC's work, especially in the mergers and acquisitions or M&A sphere, is "quite busy" but the agency ensures that there are no backlogs, he said.

Of the 179 cases with notifications since 2016, 165 were approved, with only the "very problematic" ones pending. Such will require more steps from the company under investigation, he said.

Balisacan, a marathon runner, makes sure cases are resolved or decided within the 30-day and 90-day periods required by the Philippine Competition Act.

Mergers and acquisitions in the Asia Pacific, targeting companies in the same region, are valued at $86.4 million year to date as of April 10, based on Bloomberg data. Philippine companies are among the most acquisitive, opening them to the PCC's scrutiny.

The PCC's first fight involved the P70-billion acquisition of San Miguel Corp's telecommunication assets by PLDT Inc and Globe Telecom in May 2016. At that time, it stalled the entry of a third telco, a slot that eventually went to China Telecom-backed Mislatel.

Globe and PLDT resisted scrutiny by the PCC, saying the watchdog was informed of the acquisition. The case is pending before the courts.

The PCC also investigated the planned acquisition of Trans-Asia Shipping Lines by tycoon Dennis Uy's Chelsea Logistics and Goldilocks by the SM Group, which eventually fell through.

BEWARE THE COMPETITION MONITOR

A meeting between the PCC and the Land Transportation Franchising and Regulatory Board on fair competition in the transport sector. Courtesy of PCC Facebook page

Grab's acquisition of Uber's assets was peculiar since the PCC proceeded even if the transaction size failed to meet the threshold amount to start an investigation.

"The value of their data, that has not emerged. But they know, they are focused on how important, how valuable that data is for their business," Balisacan said.

Grab eventually committed to addressing the PCC's concerns even before a review of the transaction was finished. A third-party monitor was also tapped to monitor its compliance.

Last January, the PCC also fined Grab for failure to provide price data. It earlier investigated Grab's acquisition of Uber's ride-hailing business.

ENCOURAGING 'BIGNESS'

At the time the PCC was formed, Balisacan acknowledged that there was concern among companies that it would add another layer to bureaucratic red tape.

The P70-billion deal between PLDT and Globe was announced one day before the implementing rules of the Competition Act were released. The two dominant carriers resisted investigation by the PCC and the legal battle has reached the Supreme Court.

"Bigness in the law is not illegal. In fact, bigness is encouraged if that bigness leads to better efficiency, lower prices for goods and services. That's the reality in the marketplace," Balisacan said.

While the PCC was formed under landmark legislation, the World Bank said implementation of competition reforms has been slow, especially in the power sector, where rates remain high.

A "highly concentrated" economy also gives rise to monopolies and oligopolies, according to the Washington-based lender.

"The Philippines has adopted key reforms to foster competition but slow implementation continues to hinder the potential benefits of these reforms to consumers, keeping prices high and choices limited," World Bank senior economist Graciela Murciego said on March 9. 

At the PCC's high-rise office, a court room is set up to hear cases, the most recent of which involved Grab, according to Balisacan's office.

Though soft-spoken, Balisacan is known to insist on compliance with the Competition Act during hearings.

"They have to be aware that our office is always watching and always monitoring the operation of the market," he said.