Competition bill is counterproductive

As a concerned individual, I’m writing in reaction to the Inquirer’s June 30 editorial titled “Fair Competition,” which lauds the impending enactment into law of the Philippine Competition bill.

I am apprehensive that the bill, if passed in its present substantive form, would actually threaten, rather than promote, fair competition. Such a law, with provisions that directly run counter to its primary purpose which is to promote open and fair competition, would make Filipino consumers vulnerable to acts of grave injustice.

To illustrate my point, Section 15 of the bill prohibits predatory pricing, but ironically it carries a proviso which reads: “Selling goods or services below cost with the object of driving competition out of the relevant market; Provided, That in the Commission’s evaluation of this fact, it shall consider whether the entity or entities have no such object and the price established was in good faith to meet or compete with the lower price of a competitor in the same market selling the same or comparable product or service of like quality.”

It may sound harmless but the proviso makes a complete mockery of the entire competition law itself. There is no logic or reason for a law that ostensibly prohibits predatory pricing, which is per se anticompetitive, yet allows dominant market players to circumvent the prohibition by a mere claim of good faith.

What else could be the primary reason for a dominant market player to sell below cost? Isn’t it to drive out competition?

Considering other factors equal, only a dominant market player can afford to sell below cost. There is good reason why the prohibition may not apply to minor market players; that is so, in order that they may reasonably adjust their prices if only to increase their share of market. But the proposed law, as it is, effectively removes this equalizer and fails to level the playing field.

I have worked and lived in Singapore and Hong Kong for almost two decades, and I know of no such anticompetitive laws existing in those two progressive island nations. Similarly, antitrust laws in Indonesia and Thailand do not offer any type of exoneration for predatory pricing. In fact, both countries prohibit predatory pricing regardless of good faith or reasonableness consistent with their policy objective of promoting fair competition. Clearly, to them any move by the dominant party to sell below cost indicates predatory intentions.

Even the Department of Justice has criticized this provision in a June 1, 2015 letter to the chair of the bicameral conference committee which, unfortunately, doesn’t see the flaw and turns a deaf ear to this concern.

Unless this error is corrected in the bill, the Philippines will miss the opportunity to offer fair and equal environment for new and small business players in all industries. It is not too late to correct this situation. Instead of passing this hastily prepared bill, Congress should consider it for total revision.

—HECTOR ZABALA, [email protected]