PNoy’s other legacy

Much has been said and written about the decency and integrity of recently departed President Noynoy Aquino. The results of his six years of clean governance were mostly reflected in the story of the country’s economic growth during his term. The numbers and achievements are recited elsewhere. As with all legacies, a full reckoning of his performance will only come in the future.

There is another dimension to the narrative of his term. He entered office with the slogan “Kung walang corrupt, walang mahirap.” He rode high on the change agenda. Very early on, the reformist streak was straight and simple. One major policy action was made on June 9, 2011, when he issued Executive Order No. 45 that created for the first time an Office for Competition for the country, lodged with the Department of Justice.

It was tasked to “investigate all cases involving violations of competition laws and prosecute violators to prevent, restrain, and punish monopolization, cartels and combinations in restraint of trade” and to “enforce competition policies and laws to protect consumers from abusive, fraudulent, or harmful corrupt business practices.”

The Philippines has the first laws against unfair competition in the Asia Pacific region, courtesy of the transposition of American anti-trust legislation that found its way into our Constitution (Article XII, Sections 13 and 19) and our laws (Revised Penal Code of 1932 and Republic Act No. 4152 of 1964). Except that, without a clear and dedicated agency, it was a question of who would enforce the laws. The economic and social development of the country up to the 1960s was not yet ready for a competition regime.

In the meantime, a wave of privatizations of state-owned companies took place in the 1980s and 1990s without the framework of regulation. Monopolies in key sectors were the order of the day. Recall the original PLDT with no dial tones and party lines, Philippine Airlines as the only airline, Napocor and Nawasa with their inefficiencies, among others. Consumers and users were at the mercy of entities that existed to serve them. The government was beholden to large corporations and vested interests.

The Office for Competition was designed to try to remedy this situation. Among its big cases was the breaking up of the “garlic cartel” composed of agricultural cooperatives that cornered import permits in cahoots with some officials of the Department of Agriculture. The cartel controlled the supply and hence the price of garlic, which rose more than 300 percent from P80-100 per kilo to P300 per kilo. This resulted in charges before the Sandiganbayan, which in 2020 found sufficient evidence to convict.

This was followed by findings on the “onion cartel,” using the same modus operandi, and the “rice cartel,” which remains a recurring problem.

The Office for Competition issued advisories on several fronts. In the retail sector, establishments were told that gift checks and cash equivalent vouchers should not have expiry dates. This was crystallized into law in 2017 as the Gift Check Act. Another guidance was on the concept and effect of “suggested retail price” or SRP, which was made mandatory for price control. Banks were also advised to review their unilateral and coordinated increase in ATM fees in 2014; the banks deferred the increase until this pandemic year, 2021.

In telecommunications, the Office for Competition called for transparency in pricing, for non-expiry of loads, and for number portability. Some of these measures have been translated into National Telecommunications Commission issuances. Number portability, for instance, is now a reality with the Mobile Number Portability Act of 2019.

In the 2012 to 2017 World Economic Forum Global Competitiveness Reports, the Philippines steadily climbed in rank from 65th in 2012, to 59th in 2013 and 52nd in 2014, to peak at 47th in 2015, or a gain of 18 spots in five years. There were similar improvements in other indices, like the World Justice Project Rule of Law Index.

Finally, after pending in Congress for many years, the new Philippine Competition Act was passed into law in the last full year of P-Noy’s term, to update, expand, and marshal resources for a 21st century competition policy framework and its enforcement in the country. National development was now to be anchored on free and fair competition, with regulations on monopolies and prohibitions on combinations in restraint of trade and industry.

Geronimo L. Sy is a former assistant secretary of the Department of Justice. He set up the department’s Office of Cybercrime and Office for Competition.