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COMPETITION POLICY AND LAW (CPL)

I.       Overview

What is Competition Law?
What is Competition Policy?
What are the goals of Competition Policy?
Basic Market Structures in which the Degree of Competition Affects Prices, Output and Profits
What is Market Failure?
What are the Sources of Market Failure?
What are the Competitive Conduct Rules?
What are Anti-Competitive Agreements?
What are Regulatory Restrictions?
Forms of Regulations that Impact on Competition
What is Essential Facility?
What is Natural Monopoly?
What are the Main Areas/Concerns which Competition Law/Policy Should Address?

II.      Philippine Experience

Where is the Philippines now in terms of CPL development?
Major Philippine Competition Laws
The Office for Competition (OFC)

III.      Legislative Initiatives

Competition Bills pending in the House of Representatives and in the Senate

IV.     Philippine Participation in International Fora

What is the ASEAN? Who are its Member Countries?
What is the ASEAN Community?
What is the ASEAN Economic Community Blueprint?
The ASEAN Experts Group on Competition (AEGC)?
What are the different competition authorities in the ASEAN?
What are the AEGC publications developed so far?
What are the various Philippine participation in Free Trade Agreements involving competition policy?
PJEPA
AANZFTA
AJCEPA
What is the participation of the TC in the WTO-TPR with respect to competition policy?
ICN
OECD
EAC AND EATOP
APEC - IAP
COMPENDIUM POLICY CHAPTER OF THE COMPENDIUM ON INVESTMENT MEASURES AND POLICIES IN ASEAN

V.      TC COMPETITION ADVOCACY

EO 143
Competition Activities
TC: Co-chair in Advocacy and Partnerships
PROCLAMATION NO. 384 - DECLARING 5 DECEMBER OF EVERY YEAR AS “NATIONAL COMPETITION DAY"

 

I.         OVERVIEW 

    What is Competition Law? 

Competition law refers to the framework of rules and regulations designed to foster the competitive environment in a national economy.  It consists of measures intended to promote a more competitive environment as well as enactments designed to prevent a reduction in competition. 

    What is Competition Policy? 

Competition policy broadly refers to all laws, government policies and regulations aimed at establishing competition and maintaining the same.  It includes measures intended to promote, advance and ensure competitive market conditions by the removal of control, as well as to redress anti-competitive results of public and private restrictive practices. 

    What are the goals of Competition Policy? 

·    To promote economic efficiency, which comprises three (3) components:

o        Productive efficiency – firms use the least cost production techniques to produce maximum possible goods and services from given inputs.

o        Allocative efficiency – resources are channeled to those sectors where they are best utilized in order to produce goods and services that are valued most highly by consumers.

o        Dynamic efficiency – firms strive to maintain their competitiveness by investing in research and development, innovation, marketing and management to keep abreast of the changes in technology, preferences and products.

·    To correct market failure

·    To enhance consumer welfare

·    To achieve higher economic growth

·    To promote competitiveness in both domestic and foreign market 

    What are the basic market structures in which the degree of competition affects prices, output and profits?   

·      Perfect Competition - an ideal or extreme form of competition. It occurs when a market consists of many firms selling an identical product to many buyers. Any firm that wishes to do so can enter or leave the market. 

·      Monopoly - a market with a sole supplier of a good, service or resource for which there is no close substitute. In addition, there are barriers to entry of new firms. 

·      Natural Monopoly - arises from natural barriers to entry (such as a unique source of supply) or situation in which one firm can supply the entire market at a lower price than two or more firms could offer. 

·      Monopolistic Competition - similar to perfect competition, but rather than firms producing identical products, these are many firms competing against each other by producing similar but slightly different products. 

·      Oligopoly - is characterized by a small number of firms where quantity sold by any one firm is influenced by its choice in respect of strategic variables (such as prices, product design, research and development, advertising, and sales locations) and these choices are strongly influenced by other firms in the industry. 

    What is market failure? 

Market failure occurs when the market is unable to achieve an efficient and equitable allocation of resources. 

    What are the sources of market failure? 

·       Public Goods – which if provided to one consumer, is freely available to all consumers. 

·       Income Distribution – the market will not necessarily ensure equitable distribution of incomes.  This may motivate government to introduce policies to redistribute wealth through measures, i.e., income taxes and social security benefits. 

·       Monopoly – the operations of monopoly or natural monopoly often result in misuse of market power and inefficient allocation of resources, which reduce community welfare. For this reason, governments generally regulate monopoly and enforce laws preventing cartels. This type of market scenario is a major rationale for a comprehensive competition policy. 

·       Externalities – arise when an activity confers a benefit (like the benefit of education or immunization) or imposes a cost (pollution) on a third party, without the cost or benefit being included in the market price of that activity. 

·       Information Asymmetries in theory, buyers and sellers in a competitive market have complete knowledge about a product or service characteristics and quality. Information asymmetries between producers and consumers can lead to market failure and reduce community welfare. 

    What are the competitive conduct rules?  

Competitive Conduct - describes the decision-making processes of firms in a competitive market, where price, quantity and profit choices are dictated by overall market conditions and these are not unduly influenced by the actions of one or more large firms. In essence, competitive conduct describes firm behavior under conditions of perfect competition.

 

Competitive Conduct Rules - are government's response to the absence of perfect competition in a market. Their primary objective should be to protect or enhance the competitive process in markets where it is only partially operating.

 

·     Competitive conduct rules codify acceptable behavior in an economy. Typically, such rules prohibit arrangements that can be construed as anti-competitive, in that they either: 

o  Increase the power of firms within a market to the extent that this inhibits competitive conduct; or 

o  Prohibit existing competitors or potential market entrants from effectively competing.

 

Competitive Process - competitive conduct that reduces costs and prices, which is driven by impersonal and diffuse market forces and the threat of entry of additional suppliers. It results in efficient resource allocation and pricing, which can be attained in open, dynamic markets resembling perfect competition. 

    What are anti-competitive agreements?  

Ø  Anti-Competitive Outcomes or Agreements-– the Hilmer Report (Hilmer 1993) identifies several market outcomes or agreements which can be viewed as anti-competitive.  These are:

   

      ·     Horizontal Agreements --– exist between firms (suppliers or consumers) at the same level of production chain. This is often referred to as collusion. Collusion usually takes  the form of an agreement on price, such a combination of firms provides them with a degree of pricing power, or in other words, the ability to at least influence the price of a good.

       

      ·     Vertical Agreements --– may vary where firms at different stages of the production chain collude. In most cases, vertical collusion occurs between suppliers and users of business inputs. This may relate to price or other matters (i.e. quotas, exclusive dealings, etc.).

 

       ·     Misuse of Market Power --– a type of anti-competitive conduct which occurs when a single firm in a dominant position in a market misuses its market power.  Ex: predatory pricing

 

      ·     Mergers and acquisitions --- can constitute inappropriate market behavior where they lead to market outcomes of the type described above. It is unlikely that a move towards increasing market concentration will normally be viewed as favorably affecting competition.

 

Ø  Potential solution to different types of anti-competitive conduct. These include:

 

Per se Prohibition --– the most direct form of anti-competitive measure that an authority can undertake. It refers to those activities which are ambiguously detrimental to regular competitive behavior in a market (e.g., price fixing).

 

Rule of Reason (Competition Test)-- – a wide variety of business practices that while inhibiting competition, may not require total prohibition. The most widely used determinant in such a case is whether or not such activity reduces competition in the market.

 

Authorization --– a mechanism through which the public benefit from ostensibly anti-competitive conduct can be assessed as a counter balancing consideration.  The process involved here is a direct intervention or inquiry by a governing commission. Authorization implies that the commission can “authorize” certain conduct where there is a perceived net benefit to the community from anti-competitive conduct.

 

Notification --– involves the approval of certain types of anti-competitive conduct upon the offender being granted immunity, conditional on the consent of the market regulator. This type of arrangement relies on absolute openness and transparency.

 

Examples of anti-competitive conduct:

 

o   Price-fixing agreement --– competitors agree to fix prices at a particular level, use of less obvious devices such as “recommended prices”, in reality, fix prices by agreement.

 

o   Market sharing agreement --– agreement among competitors to share a market.

 

Ex: a number of producers may choose to restrict their sales to certain geographic areas, thus developing local monopolies.

 

o   Exclusionary provision --– agreement between competitors to limit dealings with a particular supplier or customer or a particular class of customer.

 

Ex: primary boycotts, secondary boycotts. These actions are taken to prevent new firms from entering the market, or to force existing firms out of the market.

 

Primary boycotts or exclusionary provisions occur when a group of people or firms agree not to deal with a particular supplier or customer. This is subject to per se prohibition.

 

Secondary boycotts occur when a group of people who may not otherwise deal with the target organization persuade another uninvolved (supplier) not to deal with the target organization.

 

o   Tie-in arrangements and third line forcing --– when the supply of goods or services to a person is made provisional upon them, also purchasing additional goods and services, either from the same supplier (tie in arrangement) or from another specified supplier (third line forcing).

 

o   Retail price maintenance --– refers to action by suppliers, manufacturers or wholesalers specifying a minimum price below which goods or services may not be resold or advertised for resale.

 

In addition, the following are identified conducts that might restrict the freedom of action of the parties or if it has objects or effect the prevention, distortion or restriction of competition[1]:

 

o   Bid-rigging - includes cover bidding to assist an undertaking in winning the tender. An essential feature of the tender system is that tenderers prepare and submit bids independently.
 

o  Limiting or controlling production or investment involves agreements which limit output or control production, by fixing production levels or setting quotas, or agreements which deal with structural overcapacity or coordinate future investment plans.

 

o   Abuse of a dominant position - occurs where the dominant enterprise, either individually or together with other undertakings, exploits its dominant position in the relevant market or excludes competitors and harms the competition process. It is prudent to consider the actual or potential impact of the conduct on competition, instead of treating certain conducts by dominant enterprises as automatically abusive.

 

o   Exploitative behaviour towards consumers, customers and/or competitors (e.g., excessive or unfair purchase or sales prices or other unfair trading conditions, tying).
 

o   Exclusionary behaviour toward competitors  (e.g., predatory pricing by an undertaking which deliberately incurs losses in the short run by setting prices so low that it forces one or more undertakings out of the market, so as to be able to charge higher prices in the longer run; margin squeeze).

 

o   Discriminatory behaviour (e.g., applying dissimilar pricing or conditions to equivalent transactions and vice-versa).

 

o   Limiting production, markets or technical development to the prejudice of consumers (e.g., restricting output or illegitimate refusal to supply, restricting access to/use of development of a new technology). 

     What are regulatory restrictions?  

Regulatory restrictions are government’s own restrictions on competitive conduct, either through legislated regulation or direct ownership.

 

  These restrictions can detract from overall competitiveness in the economy, in much the same way as market failure, in the sense that they detract from the regular workings of the market.

 
      
Regulatory restrictions may entrench a smaller number of players in a less competitive environment. Consequences of these are higher prices, poorer quality goods and a group of firms that have a diminished response to their market.
 

 

Existing Regulatory Restrictions in the Philippines:

 

·         Regulatory barriers to market entry, including licensing and franchising agreements;

 

·       Government monopolies, including monopolies on public utilities such as electricity generation and supply, telephone services and the shipping industry;

 

·         Rural marketing, especially restrictive marketing boards; and

 

·         Other restrictions on competitive conduct. 

    Forms of regulations that impact on Competition 

            There are two (2) forms of regulations that impact on competition directly:

 

·    Barriers to entry are burdens or limitations forcing any firm not presently operating in a market. They are derive from:

 

o    Economies of scale due to market share achieved by the incumbents;

 

o    Capital requirements (including investment in brand development through advertising and the like);

 

o    Cost savings accruing to existing firms from their experience and familiarity with the particular industry;

 

o    Monopoly access to key infrastructure; and

 

o    Monopoly of key industry knowledge.

 

·    Regulations that restrict competitive behavior:

 

o    Price control; and

 

o    Advertising restrictions

 

Impact of Regulation:

 

o    Higher prices;

 

o    Lower quality goods; and

 

o    Less consumer choice as a result of reduced competition

 

In the case of monopolies, they can prevent any competition in the market. 

    What is essential facility?  

            Within the framework of competition policy, an essential facility is a major infrastructure which exhibits two characteristics: 

·         The facility is essential to the effective operation of an economic organization; and

 

·         The facility exhibits natural monopoly characteristics. Ex: electricity grids, rail infrastructure, roads, port facilities, pipelines and telecom network. 

    What is natural monopoly?  

            Distinguishing feature: one facility can supply the entire market demand more clearly than two or more smaller facilities. 

 Typically, natural monopolies have the following features:

 

·         Large development and start-up costs

 

·         Economies of scale: as the organization increases its output, the average cost per unit output declines

 

     Natural monopoly is an outcome of the size of the market and the type of technology available to meet its demand. It is not a market structure, it is a cost minimizing method of production. There are two major implications:

 

·         An industry may consist of more than one firm even though the existing technology would suggest that monopoly is more economically efficient.

 

·         The existence of natural monopoly conditions in an industry may vary as demand varies and as the prevailing technology changes. 

    What are the main areas/concerns which competition policy/law should address?

Competition laws and policies are meant to address concerns that include:

 

a)         preventing enterprises from entering into agreements which do not have any beneficial features and which will restrict competition, either amongst themselves or between them and third parties;

 

b)         controlling attempts by monopolists or dominant firms from abusing their market position and preventing new firms from entering the market;

 

c)         ensuring that workable competition is maintained in oligopolistic industries; and

 

d)         Monitoring mergers between independent enterprises, where the effect of the merger may result in market concentration and reduction in competition. 

II.      PHILIPPINE EXPERIENCE  

   Where is the Philippines now in terms of Competition Policy Law (CPL) development? 

Philippine government priority measure-President Benigno Simeon C. Aquino III directive in his State of the Nation address in July 2010: 

What we intend to achieve is simple; an economy where growth is powered by private enterprise, but for the benefit of the greatest number of citizens; a nation where free enterprise is harnessed for growth, in an environment that promotes transparency, equal competition, and accountable governance.           

xxxx               xxxx                xxxx                xxxx                xxxx    xxxx 

    '… it is the government's duty to ensure that the market is fair for all. No monopolies, no cartels that kill competition. We need an ANTITRUST LAW that will give life to these principles.” 

   Major Philippine Competition Laws 

          There are more or less 30 plus competition/antitrust related laws of the Philippines.  

          The following are some of the leading examples of such laws:  

Ø  1987 Constitution - Prohibits monopolization and combination in restraint of trade (on a rule of reason basis), but has no imposable sanctions for violation. 

Ø  Revised Penal Code of the Philippines (Article 186) - Describes monopolization and combinations in restraint of trade as acts punishable and describes penalties, including imprisonment and fines of between P200,000.00 and P600,000.00. It is similar in nature to Sect. 2 of the US Sherman Act. 

Ø   Republic Act 3247- This is known as the Act to Prohibit Monopolies and Combinations in Restraint of Trade and provides for treble damages for civil liabilities arising from anti competitive behaviour.  

Ø  Republic Act 165 and 166 - These are the Patent Law and Trademark Law respectively and describe the appropriate civil actions which can be resorted to and penalties imposable for breaches.  (Intellectual Property Office website is www.ipophil.gov.ph). 

Ø   Presidential Decree 49 - This is the Copyright Law and penalizes copyright infringement. (Intellectual Property Office website is www.ipophil.gov.ph). 

Ø   Republic Act 386 - This is the Civil Code of the Philippines and stipulates the collection of damages arising from unfair competition. 

Ø  Republic Act 7581 - The Price Act which protects consumers by stipulating price manipulation (hoarding, profiteering and cartels) as illegal for certain commodities in cases of      emergency. (www.dti.gov.ph).  Download PDF File RA 7851.pdf 

Ø  Republic Act 7394- The Consumer Act of the Philippines imposes penalties for behavior such as deceptive, unfair and unconscionable sales practices in both goods and credit transactions. (www.dti.gov.ph). Download PDF File RA 7394.pdf 

Ø  Philippine Corporation Code - Provides for rules and proceedings for approving mergers, consolidations and combinations for the Securities and Exchange Commission (www.sec.gov.ph). 

Ø   Executive Order No. 45, series of 2011- Designating the Department of Justice as the Competition Authority. (DOJ website at www.doj.gov.ph). 

   What is the Office for Competition (OFC)? 

The Office for Competition (OFC) is the country’s central body on competition created pursuant to Executive Order No. 45 (Designating the Department of Justice as the Competition Authority) signed on June 9, 2011.   It is under the Office of the Secretary of Justice.  The OFC is manned by staff including legal and technical experts, consultants and resource persons to effectively and efficiently pursue its mandate.  The designated head of the office is Assistant Secretary Geronimo L. Sy.  

    What are its duties and responsibilities? 

            The OFC is tasked to carry out the following duties and responsibilities:  

a.   Investigate all cases involving violations of competition laws and prosecute violators to prevent, restrain and punish monopolization, cartels and combinations in restraint of trade; 

b.   Enforce competition policies and laws to protect consumers from abusive, fraudulent, or harmful corrupt business practices; 

c.   Supervise competition in markets by ensuring that prohibitions and requirements of competition laws are adhered to, and to this end, call on other government agencies and/or entities for submission of reports and provision for assistance; 

d.    Monitor and implement measures to promote transparency and accountability in markets;  

e.    Prepare, publish and disseminate studies and reports on competition to inform and guide the industry and consumers; and  

f.     Promote international cooperation and strengthen Philippine trade relations with other countries, economies, and institutions in trade agreements. 

    PROCLAMATION NO. 384           

By virtue of Proclamation No. 384, series of 2012, President Aquino signed on 18 May 2012, declaring December 5 of every year as “National Competition Day.”  

On its first observance, the Commission provided assistance in planning certain activities to mark the event.   A full page newspaper advertisement of the celebration was   published on 5 December 2012. Download Proclamation 384 PDF file    

                 Aligned to the functions of OFC, what are the organizational units and working groups created? 

a.   Advocacy and Partnerships
Tariff Commission (TC)
WG Co-chair 

b.   Business and Economics
Securities and Exchange Commission (SEC)
WG Co-chair 

c.   Enforcement and Legal
Bureau of Internal Revenue (BIR)
WG Co-chair

d.   Consumer Protection and Welfare
Department of Trade and Industry (DTI)
WG Co-chair 

e.   Policy and Planning
Philippine Institute for Development Studies (PIDS)
WG Co-chair 

f.    Administration

III.     LEGISLATIVE INITIATIVES  

  What are the Competition bills pending in the House of Representatives and in the Senate?  

Ø  House Bill No. 388 (An Act Penalizing Anti-Competitive Agreements, Abuse of Dominant Position, and Anti-Competitive Mergers, Establishing the Philippine Fair Competition Commission and Appropriating Funds Therefor, and for Other Purposes). Download HB 388 PDF file 

·         Principal Author – Cong. Rufus B. Rodriguez

·         Legislative status – Pending with the Committee on TRADE AND INDUSTRY (07/23/2013) 

Ø  House Bill No. 453 (An Act Penalizing Anti-Competitive Agreements, Abuse of Dominant Position, and Anti-Competitive Mergers, Establishing the Philippine Fair Competition Commission and Appropriating Funds Therefor, and for Other Purposes). Download HB 453 PDF file 

·         Principal Author – Cong. Marcelino R. Teodoro

·         Legislative status - Pending with the Committee on TRADE AND INDUSTRY (07/23/2013) 

Ø  House Bill No. 1133 (An Act Penalizing Anti-Competitive Conduct, Abuse of Dominant Position, and Anti-Competitive Mergers, Establishing the Philippine Fair Competition Commission and Appropriating Funds Therefor, and for Other Purposes). Download HB 1133 PDF file  

·         Principal Author – Cong. Feliciano R. Belmonte, Jr.  

·         Legislative status - Pending with the Committee on TRADE AND INDUSTRY (07/29/2013) 

Ø  House Bill No. 2672 (An Act Penalizing Unfair Trade and Anti-Competitive Practices in Restraint of Trade, Unfair Competition, Abuse of Dominant Power, Strengthening the Powers of Regulatory Authorities and Appropriating Funds Therefor, and for Other Purposes). Download HB 2672 PDF file  

·         Principal Author – Cong. Diosdado Macapagal Arroyo  

·         Legislative status - Pending with the Committee on TRADE AND INDUSTRY (09/04/2013) 

Ø   Senate Bill No. 1027 (An Act Promoting Competition to Protect Consumer Welfare, Advance Domestic and International Trade and Sustained Economic Development by, Among Others, Regulating Monopolies, Anti- Competitive Agreement, Abuse of Dominant Power, and Anticompetitive Mergers, Establishing the Philippine Fair Competition Commission and Appropriating Funds Therefor and for Other Purposes). Download SB 1027 PDF file 

·         Filed by Sen. Paulo Benigno “Bam” Aquino IV on 07/22/2013 

·         Legislative status - Read on First Reading and Referred to the Committee(s) on TRADE AND COMMERCE; ECONOMIC AFFAIRS and FINANCE (08/14/2013)  

Ø  Senate Bill No. 1453 (An Act Penalizing Anti-Competitive Agreements, Abuse of Dominant Position, and Anti-Competitive Mergers, Establishing the Philippine Fair Competition Commission). Download SB 1453 PDF file  

·         Filed by Sen. Miriam Defensor Santiago on 08/29/2013

·        Legislative status - Read on First Reading and Referred to the Committee(s) on TRADE, COMMERCE AND ENTREPRENEURSHIP; ECONOMIC AFFAIRS; and FINANCE (09/09/2013)   

IV.    PHILIPPINE PARTICIPATION IN INTERNATIONAL FORA 

   What is the ASEAN? Who are its Member Countries? 

The Association of Southeast Asian Nations, or ASEAN, was established on 8 August 1967 in Bangkok, Thailand, with the signing of the ASEAN Declaration (Bangkok Declaration) by the Founding Fathers of ASEAN, namely Indonesia, Malaysia, Philippines, Singapore and Thailand. 

Brunei Darussalam then joined on 7 January 1984, Viet Nam on 28 July 1995, Lao PDR and Myanmar on 23 July 1997, and Cambodia on 30 April 1999, making up what is today the ten Member States of ASEAN. 

   What is the ASEAN COMMUNITY? 

The ASEAN Vision 2020, adopted by the ASEAN Leaders on the 30th Anniversary of ASEAN, agreed on a shared vision of ASEAN as a concert of Southeast Asian nations, outward looking, living in peace, stability and prosperity, bonded together in partnership in dynamic development and in a community of caring societies. 

At the 9th ASEAN Summit in 2003, the ASEAN Leaders resolved that an ASEAN Community shall be established. 

At the 12th ASEAN Summit in January 2007, the Leaders affirmed their strong commitment to accelerate the establishment of an ASEAN Community by 2015 and signed the Cebu Declaration on the Acceleration of the Establishment of an ASEAN Community by 2015

The ASEAN Community is comprised of three pillars, namely the ASEAN Political-Security CommunityASEAN Economic Community and ASEAN Socio-Cultural Community. Each pillar has its own Blueprint, and, together with the Initiative for ASEAN Integration (IAI) Strategic Framework and IAI Work Plan Phase II (2009-2015), they form the Roadmap for and ASEAN Community 2009-2015. (Source: ASEAN Official Website:  www.aseansec.org

    What is the ASEAN Economic Community Blueprint? 

In the ASEAN Economic Community Blueprint, ASEAN Member States have endeavoured to introduce nation-wide competition policy by 2015. This is to ensure a level playing field and develop a culture of fair business competition for enhanced regional economic performance in the long run. 

    The ASEAN Experts Group on Competition (AEGC), what is it all about? 

The ASEAN Experts Group on Competition (AEGC) is a formal body composed of representatives from all AMSs nominated by Senior Economic Official Meeting (SEOM) Leaders from respective country.  The body was established by the ASEAN Economic Ministers in August 2007 as a regional forum to discuss and coordinate policies with the goal of promoting a healthy competitive environment in the ASEAN region. It aims to develop competition policy through exchange of information, networking and dialogue.     

    What are the different competition authorities in the ASEAN?

 

       ASEAN Competition Authorities (CA)/ Designated Competition Bodies

 

Country

Competition Authority

Website

Brunei Darussalam

Department of Economic Planning and Development-Prime Minister’s Office

www.depd.gov.bn

Cambodia

Ministry of Commerce

www.moc.gov.kh

Indonesia

Commission for the Supervision of Business Competition (KPPU)

http://eng.kppu.go.id

LAO People’s Democratic Republic

Ministry of Industry and Commerce

www.moic.gov.la/default.asp

Malaysia

Malaysia Competition Commission (MyCC)

http://www.mycc.gov.my

Myanmar

Ministry of National Planning and Development

 

Philippines

Department of Justice-Office for Competition (DOJ-OFC)

www.doj.gov.ph  

Singapore

Competition Commission Singapore

http://www.ccs.gov.sg

Thailand

Office of Trade Competition Commission

www.dit.go.th

Vietnam

Viet Nam Competition Authority (VCA)Viet Nam Competition Council (VCC)

www.vca.gov.vn

 

   What are the AEGC publications developed so far?

 

AEGC publications include: 

1.    ASEAN Regional Guidelines on Competition Policy (“Regional Guidelines”)

                        What is the Regional Guidelines?   

·     Regional Guidelines serves as a non-binding general framework guide for the AMS as they endeavoured to introduce, implement and develop competition policy in accordance with the specific legal and economic context of each AMS.  

·     It is based on country experiences and international best practices and taking into account the varying development stages of competition policy in AMS, the Regional Guidelines set out different policy and institutional options that serves as a reference guide for AMS in their efforts to create a fair competition environment.  

·     Launched on 24 August 2010 during the 42nd ASEAN Economic Ministers (AEM) Meeting in Da Nang, Vietnam, the Regional Guidelines illustrate the objectives and benefits of competition policy and provide explanations as to the scope of competition policy, the role and institutional structure of competition regulatory bodies, and the competition enforcement framework. It also considers the issues of technical assistance, capacity building and international cooperation.  

·    The AEGC will update the Regional Guidelines within the next five years to reflect any changes and developments in ASEAN and in international best practices.  

What is the role of the Tariff Commission in the drafting, preparation, finalization and launching of the Regional Guidelines? 

·    The Tariff Commission is the lead agency in drafting, preparation, finalization and launching of the Regional Guidelines. Collaborative help was also given by the DTI-BTRCP and the Department of Justice during the drafting, discussion and finalization of the Regional Guidelines.  

·    As Philippine AEGC representative, TC has actively participated in CPL regional to discuss and cooperate with AMSs as they endeavour to introduce, implement and develop CPL in the region by 2015.  Focus was given on developing the Regional Guidelines.

·    A  PDF copy of the ASEAN Regional Guidelines can be downloaded at this link. (Source of information: ASEAN Regional Guidelines and Handbook on Competition Policy and Law in ASEAN for Business Fact Sheet).  

2.    Handbook on Competition Policy and Law in ASEAN for Business (“Handbook”)

       What it is all about? 

·     The Handbook is aimed/for the use of regional and transnational businesses engaged in the ASEAN region and is intended to reflect nationwide CPL provisions and sector specific provisions related to CPL, inform the domestic and transnational business community an investors on current approaches and practices relating to CPL in AMS, as well as raise awareness among this target group and improve compliance on CPL issues where lacking.  It was launched on 24 August 2010 during the 42nd ASEAN Economic Ministers (AEM) Meeting in Da Nang, Vietnam.  

What is the scope and contents of the Handbook?  

·     The Handbook provides a basic explanation of the basic principles of CPL and covers, in relation to each AMS, the key areas of CPL that are of relevance for businesses, such as  provisions concerning: substantive issues, (restrictive agreements, abuse of dominant position, mergers and acquisitions), procedural issues (notification systems, enforcement procedures, decisions) and the organization of competition authorities. It also includes summaries of competition cases in selected AMS.

(Source of information: ASEAN Regional Guidelines and Handbook on Competition Policy and Law in ASEAN for Business Fact Sheet)  

What is the role of the Tariff Commission in the drafting, preparation, finalization and launching of the Handbook? 

·     The Tariff Commission is the lead agency in drafting, preparation, finalization and launching of the Handbook.  

·     As Philippine AEGC representative, TC has actively participated in CPL regional fora to discuss and cooperate with AMSs as they endeavour to introduce, implement and develop CPL in the region by 2015.  Focus was given on developing the Regional Handbook.  

·         A http://www.tariffcommission.gov.ph/images/adobe%20pdf.jpg  PDF copy of the Handbook can be downloaded at this link. 

3.    Regional Core Competencies (RCC) Manual 

What it is all about? 

·     The manual consists of international and regional best practices on competition policy and law which focuses on the areas of: 

Ø  institutional building;

Ø  enforcement; and

Ø  advocacy

 

The RCC development is carried out by the AEGC Working Group on Developing RCC with the support of the ASEAN Secretariat, the law firm FratiniVergano-European Lawyers, and the German Federal Foreign Office - Deutsche Gesellschaft fur Internationale Zusammenarbeit (GIZ).  The RCC is set to be launched in 2013. 

    What is the role of the Tariff Commission in the region wide advocacy socialization workshops? 

·         The Tariff Commission, in cooperation with the ASEAN Secretariat, with funding support of Inwent, successfully launched the AEGC-5th Forum on “Handbook on CPL in ASEAN for Business” in EDSA-Shangrila, Manila on 12 November 2012.  The forum was attended by key government officials, businessmen, academe, and consumer groups.  

       1st ACC Conference 

Please be informed that the public version of the Summary Report of Proceeding, 1st ASEAN Competition Conference has been uploaded on the website
           
https://gc21.giz.de/ibt/var/core/public/pool/125544070407410101/Summary-of-Proceedings-1stACC-benderu
            1330020488245.pdf?pad=ibt:/division/gc21/site/portal/modules/community/ws-FLEXasec/FLEXboard011&pad:time=1330020488245
 

The Presentation Slides and other materials are also available on http://www.kppu.go.id/id/asean_material/

    What are the various Philippine participation in Free Trade Agreements involving competition policy?

A.     Philippine-Japan Economic Partnership Agreement or PJEPA

Ø  What is the PJEPA?

The PJEPA aims to facilitate and promote the free trans-border flow of goods, persons, services and capital between the Philippines and Japan and strengthen the existing economic relations between the two countries. The Agreement was signed by then President Gloria Macapagal- Arroyo and then Japan Prime Minister Junichiro Koizumi in Helsinki, Finland in 9 September 2006.

The Agreement consists of (1) basic agreement with 16 chapters and eight annexes; and (2) implementing agreement, each providing provisions on various areas of trade and related aspects.

Ø   Is there a chapter on competition policy in the PJEPA?

Yes, Chapter 12 of the PJEPA is devoted to Competition Policy. There are 3 Articles included in Chapter 12, Article 135 deals about the promotion of competition by addressing anti-competitive activities, Article 136 is all about Cooperation on Promoting Competition by Addressing Anti-competitive activities, and Article 137 on the non-application of Chapter 15 of the PJEPA.

Ø  What is the role of the Tariff Commission in the PJEPA?

The Tariff Commission, through its Chairman Edgardo B. Abon, is the lead negotiator for the Philippine side on the Chapter on Competition in the PJEPA. Website link for PJEPA: www.dti.gov.phwww.mofa.jp.go

B.     ASEAN-Australia-New Zealand Free Trade Agreement

Ø  What is the ASEAN-Australia-New Zealand Free Trade Agreement?

The Agreement Establishing the ASEAN - Australia - New Zealand Free Trade Area (AANZFTA) liberalizes and facilitates trade in goods, services and investment between New Zealand, Australia and the ASEAN (Association of Southeast Asian Nations) economies. It contains measures to improve business flows and promote cooperation in a broad range of economic areas of mutual interest.

The AANZFTA entered into force on 1 January 2010 for (and between) the following countries: Australia, Brunei, Malaysia, Myanmar, New Zealand, Singapore, the Philippines, and Viet Nam.  It entered into force for Thailand on 12 March 2010; for Laos and Cambodia on 1 and 4 January 2011 respectively; and for Indonesia on 10 January 2012.

Ø  Is there a chapter on competition policy in the AANZFTA?

Yes, Chapter 14 of the AANZFTA is devoted to Competition Policy. There are 4 Articles included in Chapter 14, Article 1 deals about the Basic principles,  Article 2 is all about Cooperation, Article 3 deals about the contact points  and Article 4 on the non-application of Chapter 17 of the AANZFTA ( Consultation and Dispute Settlement).

Ø  What is the role of the Tariff Commission in the AANZFTA?

The Tariff Commission, through its Chairman Edgardo B. Abon, is the lead negotiator for the Philippine side on the Chapter on Competition in the AANZFTA. Website link for AANZFTA: www.dti.gov.phwww.dfat.gov.au www.asean.fta.govt.nz

C.     ASEAN - Japan Comprehensive Economic Partnership Agreement (AJCEPA)

Ø  What is the AJCEPA?

The ASEAN - Japan Comprehensive Economic Partnership Agreement (AJCEPA) provides for the establishment of a Free Trade Area (FTA) between ASEAN and Japan over a period of 10 years, taking into account the achievements of the bilateral Economic Partnership Agreements (EPAs) between certain ASEAN Member States and Japan, and the further progress of the ASEAN integration process. Being a comprehensive economic partnership, the Agreement includes chapters on Trade in Goods, Sanitary and Phytosanitary Measures, Technical Barriers to Trade, Trade in Services, Investment and Cooperation and Trade Facilitation.

The Agreement was signed on an ad-referendum basis, with the Philippines signing the Agreement on 02 April 2008. Subsequently, the AJCEPA entered into force on 01 December 2008 for Japan and Singapore.

The Philippines became a Party to the Agreement, having begun implementation just last 01 July 2010. (Source: DTI website)

Ø  Is there a Chapter on competition policy in the AJCEPA?

Competition policy was cited in Chapter 8, Article 53 (Fields of Economic Cooperation), wherein it was provided that “the Parties, on the basis of mutual benefit, shall explore and undertake economic cooperation activities in the identified fields under Article 53.” Competition Policy is one of the identified activities.

Ø  What is the role of the Tariff Commission in the AJCEPA?

The Tariff Commission, through its Chairman Edgardo B. Abon, is the lead negotiator for the Philippine side on the aspect on Competition in the AJCEPA.

Website link on the AJCEPA: www.dti.gov.ph

   What is the participation of the Tariff Commission in the WTO-TPR with respect to competition policy?

Prior to the issuance of EO No. 45, signed on 09 June 2011, the Tariff Commission is the lead agency assigned to deal in the issues and queries on competition policy as may be propounded by the reviewing WTO officials. The TC has provided inputs and comments for the Philippines with respect to updates on competition policy. The latest WTO-TPR (4th Session) was held in March 2012, with the DOJ-OFC as the lead agency in Competition Policy.   

   INTERNATIONAL COMPETITION NETWORK (ICN)

Ø  What is the International Competition Network (ICN)?

·         ICN is an international network devoted exclusively to competition issues

·         From the time of its inception in the year 2001, it has 16 founding authorities from 14 jurisdictions.

·         As of 2009, ICN has grown to 107 competition authorities from 96 jurisdictions

Ø  What is the system of operation of the ICN? 

a.   ICN is a voluntary organization composed of different competition authorities-members.

b.   ICN has no formally established headquarters, secretariat or even its own financial funding source.

c.   ICN operates through an established working group network. These working groups produce relevant work programmes and products based on a consensus basis, made possible through the holding of various conferences (including an annual ICN conference) and e-mail communications between the ICN members.

d.   The ICN working groups are:

i.              Mergers

ii.            Advocacy

iii.           Capacity-building

iv.           Regulated sectors

v.            Cartels

vi.           Telecom

vii.          Unilateral Conduct

viii.        Agency effectiveness 

e.   There is also an established ICN Support Program wherein ICN members can request from other members for information and help in identifying and familiarizing themselves    with relevant ICN work programs.

Ø  What is the importance of the ICN to competition policy?  

Since competition policy can make a substantial and even a long lasting contribution to a country’s economic development, the relevancy of the ICN can be seen from the help that it will provide to competition authorities, such as providing information on useful experience, expertise and best practices in various competition issues which can be shared amongst the ICN members.  

Ø  Why is there a need to establish the ICN?

a)  There is an ongoing trend that tends to establish a growing number of competition authorities, hence, the need for a more cooperative effort needed between and amongst such competition authorities for synergy of action. 

b)  Emergence of rapid advancement of economic globalization and integration-This can be seen from the increased number of investigations conducted by the established competition authorities, which often transgress/extend beyond their territorial boundaries.    

Ø  What are the perceived goals of the ICN?

To achieve better competition enforcement and advocacy through:

a)   enhanced convergence and harmonization of competition laws and policies which are at par to global standards, with the aim of producing and promoting an economic development through enhanced productivity and efficiency 

b)   To strengthen the cooperation between competition agencies, in particular, the preferential giving of support to newly established competition authorities.  

       ICN website is at www.internationalcompetitionnetwork.org

 

  THE ORGANIZATION FOR ECONOMIC COOPERATION AND DEVELOPMENT (OECD)  

The OECD is an influential organization with 30 Member States, comprised mostly of the rich countries in the world. It has a Standing Committee on Competition Policy and Law, which has its regular 30 Member countries as Members, and 5 observers, namely: Argentina, Brazil, Israel, Lithuania and Russia.

 The OECD has been regularly cooperating with a variety of Non-OECD countries to provide capacity building. With the advent of the OECD’s Global Forum on Competition, OECD’s cooperation activities with non-OECD members extends beyond capacity building to include high-level policy dialogue that will build mutual understanding, identify “best practices” and provide informal advice and feedback on the entire range of competition issues. The Global Forum on Competition meets annually and serves a flat form for the exchange of views and experience.  

   EAST ASIA TOP LEVEL OFFICIAL’S MEETING ON COMPETITION POLICY

 This meeting was organized for purposes of strengthening the cooperative relationship amongst competition authorities in East Asia. The holding of an annual high level conference enabled the officials of competition authorities to hold face to face discussions and frank exchange of views towards the development of a common understanding on the importance of competition law and policy in East Asia.

   An annual meeting called “East Asia Conference on Competition Law and Policy” was held since its inception in the year 2004 until to date. TC has actively participated in all such meetings and conferences. The following are the inclusive list of top-level meetings held from 2004 until to date:

Date

Venue

Meeting Sequence

Conference

March 2004

Kuala Lumpur, Malaysia

-

1st Conference

May 2005

Bogor, Indonesia

1st Meeting

2nd Conference

June 2006

Bangkok, Thailand

2nd Meeting

3rd Conference

May 2007

Hanoi, Viet Nam

3rd Meeting

4th Conference

April 2008

Kyoto, Japan

4th Meeting

-

June 2009

Ulaanbaatar, Mongolia

5th Meeting

5th Conference

September 2010

Seoul, Korea

6th Meeting

-

September 2011

Singapore

7th Meeting

6th Conference

May 2012

Kuala Lumpur, Malaysia
(7th EAC Presentation Materials- www.mycc.gov.my)

8th Meeting

7th Conference

August 2013

Manila, Philippines

9th Meeting

8th Conference

 

 

   APEC INDIVIDUAL ACTION PLAN (IAP) REVIEW 

Ø  What is the APEC IAP Review?

All APEC Member Economies strive to achieve a “free and open trade and investment in the Asia-Pacific”, commonly referred to as the Bogor Goals, which was signed in Indonesia in 1994.  Ultimately, the Bogor Goals should be fully realized, no later than 2010 for industrialized economies and 2020 for developing economies.

Each APEC Member Economy has offered its own Individual Action Plan (IAP) to be externally reviewed. According to approved terms of reference, the review considers specific issue areas affecting an economy’s IAP, citing progress made, best practices and challenges to achieving goals within the cited timeframe.

Ø  What is the participation of the Tariff Commission in the APEC IAP with respect to competition policy?

TC has been involved in all APEC IAP Reviews on the subject of competition policy. TC has provided inputs and current information/updates on the developments of competition policy in the Philippines and the approaches being made by the Philippine government to enact a comprehensive national competition law. TC likewise provides answers to queries made by the reviewing APEC officials regarding this information on competition policy.

   COMPENDIUM POLICY CHAPTER OF THE COMPENDIUM ON INVESTMENT MEASURES AND POLICIES IN ASEAN (Investing in ASEAN Guidebook: 2009 Update) or “Compendium”  

Ø  What is Compendium all about?

The Compendium on Investment Measures and Policies in ASEAN is an ASEAN Initiative which aims to codify policies and measures being implemented by the AMS with respect to investments. Competition policy measures in place as well as the presence of an enacted national competition law and or efforts being made to the enactment of a competition law are discussed therein.

Ø  What is the role of the Tariff Commission regarding the Compendium?

TC provided inputs on the chapter on competition policy (for the Philippines Chapter) in the Compendium.

V.       TC COMPETITION ADVOCACY

  EXECUTIVE ORDER NO. 143

Ø  What is the mandate of the Tariff Commission on competition policy?

             The Tariff Commission (TC) was streamlined/reorganized pursuant to EO No. 143 (signed on 21 August 1999) entitled “Instituting Effective Operational Mechanism and Strategies in the Tariff Commission”.  The Commission, as an     agency responsible for undertaking a thorough study of the Philippine trade and     tariff system, was mandated to                 adopt operational strategies and activities to make it more effective in encouraging the development and growth of efficient,   self-reliant, innovative, progressive and globally competitive Philippine industries.

                Pursuant to Section 1 thereof, the functions of the Commission were  emphasized, to wit: 

                Section 1.  Roles of the Commission.  In the light of a freer and more liberal trading environment, the following functions of the Commission shall be strengthened and emphasized: 

    1.1  Institutionalization and acceleration of economic reforms to raise levels of competition, encourage economic efficiency, and improve consumer welfare;

                                  xxx 

    1.5   Reinforcement of research activities regarding competition policy and the contestability of trade practices and activities of all other countries, economies and institutions      in the international community; and  

     1.6  Conduct of a continuing program of advocacy to promote new developments in international trade and tariff policy.

COMPETITION ACTIVITIES

What competition activities have TC undertaken following its mandate? 

Ø    CPL Seminars/Workshops 

TC has been actively involved in the forefront of competition policy activities.  Among others, following are competition policy advocacy programs undertaken in cooperation         with international sponsors: 

o   AEGC - 5th Forum on “Handbook on CPL in ASEAN for Business” in Edsa-Shangrila, Manila (12 November 2012) 

o   ASEAN Experts Group on Competition (AEGC) 2nd Regional Guidelines Workshop on Competition Policy and Law at Intercontinental Hotel, Makati City (29-30 September 2009) 

o   Seminar on “Improving Trade Policy in the Philippines:  An Assessment of the Economy wide Impact of the Tariff Change in the Early 2000s” at Mandarin Oriental Hotel, Makati City (24 August 2006) 

o   1st APEC Training Course on Competition Policy for APEC Member Economies at Mandarin Oriental, Manila (2-4 August 2005) 

o   TC-Japan Fair Trade Commission Seminar/Workshop on Competition Policy at TC Conference Room (17 November 2003) 

o   Seminar/Workshop on the “Study on a Comprehensive and Integrated Draft Legislation on Competition Policy and Law” held in Discovery   Suites, Pasig City (13-14 August 2001) 

o   Seminars/Roundtable discussions by the Curtin Consultancy Services on “A Policy Framework for Competition Policy in the Philippines” in Manila (20-23 April 1999) 

Ø    CPL Studies/Publications 

TC has published / collaborated with other research institutions in the conduct of certain competition policy studies/briefing materials, as follows: 

o   An Assessment of the Economy Wide Impact of Philippine Tariff Changes in the Early 2000s (March 2006) - a study undertaken with the Philippine Tariff Commission funded by AusAid under the Public Sector Linkages Program 2004-05 Round 1 Improving Trade Policy in the Philippines:  An Assessment of the Economy wide Impact of the Tariff Reforms and Implementation of Safeguard Measures under the WTO'   

by:         U-Primo E. Rodriguez
              Department of Economics
              University of the Philippines
              Los Banos, Laguna  

                                            Helen Cabalu
                                            John Curtin Institute of Public Policy
                                            Curtin University of Technology
                                            Perth, Western Australia 

o   Issues in the Implementation of Competition Policy in the Philippines  (August 2001) -  a study undertaken for the Philippine Tariff Commission, funded by the Australian Agency for International Development (AUSAID) through the Philippines-Australia Governance Facility, managed by GRM International.  

by:        Helen Cabalu, Noelle Doss, Peter Kenyon, Paul Koshy,  Vicar Valencia, Nick Wills-Johnson 
            (The Institute for Research into International  Competitiveness [IRIC])         

Stephanie Fryer-Smith (School of Business Law)
                                          Curtin Business School, Curtin University of Technology
                                          Perth, Western Australia

Mr. Emmanuel A. Cruz 
                                          Philippine Tariff Commission
 

o   TARFCOM: A CGE Model of the Philippines -  Quantifying the Impact of Competition Policy on the Philippine Economy (August 2001) - a study undertaken for the Philippine Tariff Commission, funded by the Australian Agency for International Development (AUSAID) under the Philippines-Australia Governance Facility.  

by:             Mark Horridge 
                 Centre of Policy Studies, Monash University,
                 Melbourne, Australia  
                 James Giesecke
                 Centre for Regional Economic Analysis, University of Tasmania, Hobart, Tasmania 

                                                Helen Cabalu
Institute for Research into International Competitiveness
[IRIC], Curtin Business School, Curtin University of
Technology, Perth, Western Australia  

                                                            Marilou Mendoza
Philippine Tariff Commission  

                                                U-Primo Rodriguez
University of the Philippines, Los Banos, Philippines 

o   A User’s Guide to the TARFCOM Model (October 2005) - shows how to conduct experiments in the TARFCOM model.  Designed primarily for the staff of the Philippine Tariff Commission, this user’s guide has a strong bias for tariff experiments.  It shows how to properly specify a change in tariff rates and its implementation in TARFCOM.  It also illustrates how tariff changes can be used to achieve selected policy targets.  

by:            U-Primo E. Rodriguez
                Department of Economics
                University of the Philippines, Los Banos, Laguna
                                      
                Helen Cabalu
                John Curtin Institute of Public Policy
                Curtin University of Technology
                Perth, Western Australia
 

o   Improving Trade Policy in the Philippines:  An Assessment of the Economy-wide Impact of the Tariff Tariff Reform Program and the Implementation of the WTO Safeguard Measures" -  a research study  jointly undertaken by TC and John Curtin Institute of Public Policy (JCIPP) of the Curtin University of Technology, Western Australia under the auspices of the Australian Agency for International Development (AusAID). 

o   A Policy Framework for Competition Policy in the Philippines (March 1999) - a study undertaken for the Philippine Tariff Commission, funded by the United Nations Office for Project Services (UNOPS) and organized through Curtin Consultancy Services.  

by:             Helen Cabalu, Noelle Doss, Ian Firns, Therese Jefferson, 
                 Peter Kenyon, Paul Koshy, Lee Kian Lim
                 The Institute for Research into International
                 Competitiveness [IRIC] Kevin Brown
                 School of Business Law
                 Curtin Business School, Curtin University of Technology
                 Perth, Western Australia 

o    A Primer on New Developments in Trade and Tariff Policy (August 2010) - the chapter on competition policy offers, among others, discussions on the primary objectives of a sound competition policy and law which are to attain economic efficiency and ensure consumer protection and welfare.  

o    Competition Policy for the Philippines - a pamphlet  prepared jointly by the Philippine Tariff Commission,  and the Institute for Research into International Competitiveness (IRIC), Curtin University of Technology, Perth, Western Australia. The project was funded by the Australian Agency for International Development (AUSAID) through the Philippines-Australia Governance Facility. 

  TC: Co-chair in Advocacy and Partnership  

Ø  What is the current role of TC on competition policy? 

                        As competition advocate, the TC accepted the invitation from DOJ-OFC to co-chair the OFC Working Group on Advocacy and Partnerships.  Along this line, a dedicated competition policy page is being constructed at the TC website for the benefit of all CPL stakeholders, government/private sector, business  community, academe, media, and in                 general, the consuming public.

_________________________
1 ASEAN Regional Guidelines

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