The Philippine Online Chronicles

With Filipinos perpetually reeling from one price hike to the other and small to medium enterprises (SMEs) struggling to gain even the smallest foothold in a market ruled by big names, big companies, and big investments, the Competition Bill of 2010 may seem like the government finally beginning to focus on actually addressing the needs of the people.

Nothing new

But though the Competition Bill of 2010 may seem to have come out of the blue, there is nothing new about the bill. As author Juan Ponce Enrile noted, the bill is only a further clarification to Section 19 of the Constitution where it is stated that "the State shall regulate or prohibit monopolies when the public interest so requires. No combinations in restraint of trade or unfair competition shall be allowed." Constitutional commentator Isagani Cruz notes that the constitution is well aware of the divisive and destructive nature of social injustice brought about by the glaring divide between rich and poor, which is why even from a governmental perspective the competition bill is old news. There are a number of other antitrust bills in both senate and congress such as the Fair Trade Act of 2010 and the Philippine Fair Competition Act of 2011.

The objectives of the bill are to ‘regulate or prohibit monopolies,’ ‘promote and enhance economic efficiency,’ ‘prevent the concentration of economic power,’ and ‘penalize all forms of unfair trade, anti-competitive conduct and combinations in restraint of trade.’

The Competition Bill and Oil Cartels

Oil has always been one of the key factors in determining the prices of basic goods and commodities, which is why any bill against monopolies and cartels should necessarily address the issue of oil cartels in the country. Is the Competition Bill up to the challenge? According to the bill, the DOJ with the help of the DTI can act and investigate on verified complaints, and dole out fines and penalties of not less than Php 10M for natural persons and up to Php 750M for firms. These fines may seem like a formidable fine, but for the giant oil companies whose taxes alone reach several billions, several hundred millions of pesos worth of fine does not even begin to tickle their giant purses.

What agreement?

The theoretical impact of the competition bill, however, pales in comparison to the actual effect that such a bill will actually make. Legalese is a language that the corporate world is only too familiar with. Indeed, things like contractualization which places employees at a great disadvantage and in constant fear of being dropped off the payroll, the oil deregulation which has given oil companies practically unlimited powers to dictate oil prices, and education budget cuts are all legal actions under the law. Ethical and legal, after all, are two different things. Prohibited acts under cartelization includes agreements to ‘fix selling price of goods,’ ‘limit supply or output,’ ‘divide the market,’ make ‘transactions in particular goods dependent upon other conditions which have no connection with the subject of the transaction.’ Prohibited acts under monopolization includes agreements with regards to ‘predatory behavior towards competitors,’ price fixing, bid rigging, limitation and control of markets, market allocation, and ‘arrangements to share markets or sources of supply.’ The controlling phrase here, however, is what an agreement actually means. According to the bill, ‘agreements shall refer to any type or form of arrangement, understanding, undertaking or concerted action, whether formal or informal, written or oral’. The bill is essentially structured around preventing agreements that allow cartelization and monopolization. The idea of pinning down oil cartels because of formal agreements is near impossible. A department of lawyers tends to have that effect. And the idea of including informal agreements is plainly ridiculous: how exactly will you prosecute or investigate informal agreements, and what exactly does informal agreements cover? Do years of price hikes that come in almost perfect sync count? And if not, what does?

Doomed beginnings

In the end, the Competition Bill of 2010 will fail when it comes to removing oil cartels because oil cartels leave no paper trail and the bill itself does not dare to extrapolate and infer from the even the most obvious. This apart from the fact that the deregulated status of oil essentially removes any actual possibility of the government controlling the pernicious effects of constant price hikes. No matter what the constitution says or what Enrile writes on the explanatory note, such as that ‘our people have been victims to big business,’ the bills are essentially farces of what a real competition law should be. To actually create a valid competition law requires first of all the ability of the government to regulate oil, apart from other industries. Without this, big businesses always have the excuses of simply doing what it does best: make money, at any and all costs.

Can the bill decentralize economic power for SMEs?

The root premise of the Competition Bill is that a thing like the free market, and its corollary concept of competition, does actually exist. In a world where a real free market with real competition exists, a competition bill can and will help SMEs grow and flourish. But because the idea of a free market is a capitalist fiction, the Competition Bill’s goal of preventing the concentration of economic power and, hopefully, giving a share of the pie to SMEs, is a nothing but fantasy. Free markets are fictional not because, as ultra right-wingers believe, of excessive state intervention but because a free market is the biggest threat the very businesses who claim to flourish from the free market. In reality, big businesses grow by eliminating competition, not by enriching it. It is never about being ahead of the pack, but being the last wolf standing in the pack. Indeed, state intervention cannot possibly be what damages free markets and competition, because the rise of privatization has basically reduced governments including the United States to pawns played by big businesses themselves.

As a general rule, things that are too good to be true usually are. The Competition Bill of 2010 is no exception.

Santiago blogs at moreadventure.wordpress.com. He lives in Manila.

Photos from POC. Some rights reserved.