Cartel-like behavior feared in private sector’s role in SRP setting

Consumer advocacy group Laban Konsyumer Inc. (LKI) opposed the government’s plan to give the private sector a free hand in setting suggested retail prices (SRP), calling it a “self-serving” move that would allow companies to get away with profiteering and cartel behavior.

Former Trade Undersecretary and now LKI president Victorio Mario Dimagiba told reporters the government should maintain the status quo, with the Department of Trade and Industry (DTI) approving the prices for prime and basic goods.

“Otherwise, it would be self-serving. Any manufacturer who sets its SRP can claim reasonable prices. The law prohibits profiteering and cartel. The law worked well since 1992,” he said in a text message, referring to the Price Act.

He said Congress dropped plans to repeal the law, noting the poor’s benefit was paramount.

The law’s implementing rules and regulations provided that the “implementing agency may, whenever necessary, issue suggested retail prices.”

The SRP is supposedly a guide for consumers and manufacturers of prime and basic goods. However, through the years, the SRP has become more of an imposition rather than a recommendation.

Trade Secretary Ramon M. Lopez, who suggested allowing the private sector to dictate prices, earlier said competition would keep prices down.

In a text message to reporters also on Monday, Lopez tried to appease consumer concerns, clarifying that “consumers need not worry” since the government would still monitor prices per industry.

“We all know that prices are very competitive and kept low by market forces in fast-moving consumer categories with many brands and players and the presence even of generic products, which are available in public markets. This has always been true for many decades. They keep the prices competitive as each brand would always like to gain more market shares,” he explained.

Lopez said they were still reviewing how exactly they would introduce changes to the process of SRP setting.

Amid clashing concerns, the Philippine Competition Commission has also joined in the fray.

PCC Chair Arsenio Balisacan said last week that the current practice of having DTI approve the SRP is a “potential competition concern” that merits further study.

Balisacan said it was “too early to say” if the PCC would support the imposition of DTI’s proposal on all kinds of basic and prime goods, explaining that the nature of each industry should be considered.

“When there are a few players, there is a likelihood for them for tacit collusion even if they don’t talk. It doesn’t have to be explicit,” he said.