Regulation of competition

THE PHILIPPINE Commission on Competition (PCC) is off to a good start with the appointment of former Neda Director General Arsenio Balisacan as its chair and four other equally competent members.

PCC was created by the Philippine Competition Act (Republic Act No. 10667) to implement the national policy of prohibiting anti-competitive agreements, abuse of dominant position and anti-competitive mergers and acquisitions.

Its task is to see to it that market forces are efficient, and all commercial and economic activities of business entities in the country operate on a level playing field.

The law requires PCC members to have distinguished themselves professionally in public, civic or academic service in the fields of economics, law, finance, commerce or engineering.

At least one member should be a lawyer with 10 years of experience in the practice of law and at least one should be an economist.

Aside from Balisacan, the other commissioners are Dr. Stella Quimbo of the U.P. School of Economics, and lawyers Johannes Bernabe, El Cid Butuyan and Menardo Guevarra.

The commissioners shall serve for seven years without reappointment. For the first set of appointees, the chair and two commissioners shall hold office for seven years, while the other two shall have a term of five years.

With PCC’s leadership structure now in place, the commissioners should focus on two of the most important aspects of its organization, i.e., the recruitment of its staff and the preparation of the implementing rules and regulations.

These tasks are critical because PCC has been conferred a virtual “superbody” status over other government offices that regulate trade and commerce in the country.

It has “original and primary jurisdiction in the enforcement and regulation of all competition-related issues.” That authority remains in place if the issue involves both competition and noncompetition matters.

In the latter case, if a sector regulator is involved, PCC is obliged to consult it and give it a reasonable opportunity to submit its opinion and recommendation on the matter before PCC renders any decision.

This means that if, for example, a complaint for unfair trade practices (a competition issue) is filed against an insurance company under the regulatory supervision of the Insurance Commission, PCC can step into the picture even if the former has taken cognizance of the case.

Thus, PCC can exercise “concurrent jurisdiction” with, say, the Securities and Exchange Commission and Bangko Sentral ng Pilipinas in the regulation of companies under their wings if the matter under consideration has something to do with competition.

On top of the broad grant of authority, PCC also enjoys a level of primacy over lower courts that other regulatory agencies do not have.

Except for the Court of Appeals and the Supreme Court, no other court can or is authorized to “issue any temporary restraining order, preliminary injunction or preliminary mandatory injunction against the Commission in the exercise of its duties and responsibilities.”

This prohibition applies to all cases, disputes or controversies initiated by a private party, including those filed by entities or those claiming to have rights through such entities.

The lower courts may restrain PCC’s actions only when a constitutional issue of extreme urgency is involved and such order is necessary to prevent grave injustice and irreparable injury to the public.

But there is a caveat to the exercise of this discretion. The party asking for relief must put up a bond that shall not exceed 20 percent of the fines to be imposed. In case the court later decides that it is not entitled to the relief, the bond shall be forfeited in PCC’s favor.

To ensure strict compliance with this restriction, the law states that any restraining order issued is void and of no effect. Also, the judge concerned shall be penalized with at least one year suspension without pay on top of administrative, civil and criminal penalties.

In the light of PCC’s broad regulatory powers and the bar on lower courts from interfering in its operations, it is essential that PCC recruit, to the best extent possible within its budgetary parameters, competent and trustworthy technical staff and support personnel.

To President Aquino’s credit, the PCC commissioners he appointed have excellent academic and professional track records and are known in their circles for their competence and integrity.

But they cannot perform the duties and responsibilities reposed on them by themselves. There are limits to human capabilities no matter how intelligent and hardworking a person may be.

They will need the assistance and support of experts in the financial and commercial fields to do their job. There is no room for misfits or political protégés in a regulatory agency that, as envisioned, shall lead in making a 180-degree turn in the way the country has been doing business through all these years.

Of equal importance are the rules and regulations that will implement the law and flesh out the procedures to be observed to meet its objectives.

Here is where theory and experience would have to find an acceptable mix. The rules and regulations should take into account the realities on the ground (or how things are done in the real world) without losing sight of the structural changes that need to be put in place.

PCC is being looked at as a game changer. Hopefully, it will not go the way of government offices that, on creation, were long on words but later proved to be short on substance.

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