Competition law: what it is not

As the Fair Competition Act gains ground in the 16th Congress, forces that have traditionally been resisting this game-changing economic measure for well over two decades appear to be training their guns on it again, in and out of Congress. Arguments being raised against it

appear to be either based on a flawed grasp of what the proposed law seeks to do or deliberately meant to muddle the issue. Meanwhile, within Congress, quiet efforts are being made to undermine the efficacy of the law should it get enacted. And chances are it will, if one is to go by recent public statements coming from Congress leaders.

Senate President Franklin Drilon, in a forum of the Management Association of the Philippines last week, declared that the Senate will be passing this bill on third reading when they come back on Oct. 20. The bill is just awaiting final amendments following sponsor Sen. Bam Aquino’s successful defense of it at the Senate plenary floor. At the House of Representatives, Speaker Sonny Belmonte is equally intent on having the competition bill finally get enacted. Lawmakers also know that we face the potentially embarrassing prospect of being the only original Asean-5 country without an overarching competition law when the Asean Economic Community comes into full effect next year.

Certain critics of the measure would now have us believe that the proposed law is a devious scheme to allow foreign competition to break up large Filipino businesses and pave the way for foreign giants to lord it over our economy. It sounds to me like a shallow but devious ploy to exploit an appealing emotional theme with the xenophobic nationalists among us, an argument with a seeming Quezon-esque undertone. (Remember the quote “I would rather have our country ruled like hell by Filipinos than one ruled like heaven by foreigners”?) Yet nowhere in the proposed competition law is there any intent to break up existing large dominant businesses. Indeed it recognizes that bigness or dominance

cannot be considered bad in itself; rather, it is the abuse of dominance to “unreasonably and substantially prevent or restrict competition” that the law prohibits. One couldn’t fault a firm that has grown and achieved dominance within a fair arena through years of effective and efficient management, and legitimate business acumen.

Besides, nothing in the proposed law particularly refers to foreign business, much less favors them. If those critics were thinking of certain constitutional restrictions on foreign business ownership, then that’s a completely different matter altogether. Under the competition law in question, the same rules on fairness would apply to all firms, foreign or domestic alike.

Another argument being advanced by some is the needlessly paranoid notion that the competition commission the law will create could be used by a whimsical government to harass unsupportive businesses. We’ve seen enough instances in the past of such harassment by our government on specific business interests to know that an ill-motivated government doesn’t need a competition commission to do it. The proposed law in fact provides for an independent commission with fixed terms for the commissioners, who are required by the law to be professionals—all meant to help preclude its being used in this way by misguided politicians.

Yet another dubious argument appears based on a misplaced notion that the competition law will be a way for government to impose social equality, thereby killing initiative and innovation in the economy. It’s quite the opposite. It is fair competition in a level playing field that in fact encourages initiative, innovation and a constant drive for higher productivity. (Isn’t it commonly argued nowadays that the reason the Philippines is reputed to have among the slowest Internet speeds in the region is the lack of fair competition in the telecoms sector?) What the law aims to promote is equal opportunity in business, certainly not equality in its outcomes. And if under such healthy competition, some manage to excel over others, then let their success impel the others to greater effort without being hampered by unfair tactics; otherwise let them fall by the wayside. This is what fair competition is all about.

Some of those who would rather not have a competition law altogether still cling to the feeble argument that our economy and market are too small to have several firms competing in key businesses. Monopoly is good, the reasoning goes, because our “small” market would best be served by one firm exploiting economies of scale. Never mind that we are the 12th most populous country in the world, with an average income that now puts us among the middle-income countries—certainly not a small market by global standards. Besides, we’ve already shown for at least three decades that we have ample room for competition even in sectors often considered “natural monopolies,” such as telecoms and electric power.

If we’re so afraid of foreign domination of our economy, then I would wonder why some of our more progressive business giants are in fact among the most vocal in calling for eased entry rules for foreign investors. These are the same Filipino giants who are taking the proactive stance of spreading their wings to the wider market of the AEC, rather than cowering in fear of more competition in our internal market. Those who welcome fair competition are those well-equipped to face it. And it is such kinds of business that I wouldn’t mind being big and even dominant in our midst, as they clearly have no problem sharing their turf with others, big or small.

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E-mail: cielito.habito@gmail.com