6/F DAP Building, San Miguel Avenue, Ortigascenter, Pasig City 1600

Republic of the Philippines

Philippine Competition Commission

6/F DAP Building, San Miguel Avenue, OrtigasCenter, Pasig City 1600

Tel./Fax: (632) 6312129 • Email: • Website:

Conference Keynote Address

By Chairman Arsenio M. Balisacan

Inaugural Philippine Competition Forum

(The Future of Competition in the Philippines:

Opportunities and Challenges)

DusitThani Manila

Makati City, 15 November 2016, 9:05 AM

Good morning!

It is my honor to give the keynote speech for today’s inaugural Philippine Competition Forum,hosted by Asian Legal Business. My thanks go to the organizers of this Forum, who have wisely chosen to highlight the recentgame-changing events in the Philippine competition environment.

It has been over a year since the enactment of the Philippine Competition Act, and just over nine months since the establishment of the Philippine Competition Commission. Modesty aside, we at the Commission have done quite a lot in this short span of time. And yet we realize that a vital part of our duties, especially in these early days, is to introduce ourselves and the nature of our work not only to stakeholders and fellow regulators, but also to the general public, including the legal profession. That is why today’s event, driven by ALB’s commitment to promote awareness and discourse on the top regulatory issues of the day, could not have come at a better time.

I’m here today to talk mainly about the future of competition in the Philippines, especially about the opportunities and challenges that we face. But first let me give you a bit of context about the competition environment before the enactment of the Philippine Competition Act, and why we think the law is a veritable game-changer.

Most experts on Philippine development concur that, prior to the Philippine Competition Act, an active promotion of competition had been lacking in the country’s development story. For several decades, policies favouring local production over imports (such as quantitative restrictions, high tariffs, and limitson the inflow of foreign investments) have shieldeddomestic industries from the tides of globalization, competition, and innovation. This led to the slow growth of local industries, such asmanufacturing and agribusiness. Domestic policies have also been overly conducive to the establishment and maintenance of monopolies and oligopolies in areas as diverse as manufacturing, utilities, telecommunications, construction, and transport—all at the expense of the Filipino consumers who have had to suffer a triplewhammy of high prices, poor quality, and less diversityofthe goods and services available to them.

To be sure, there was a rare period in the 1990s where some industries were opened up for competition, notably air transport, power, telecommunications, and banking. It led to lower prices and improved affordability for goods such asair travel, telecommunication services, and banking services.Unfortunately, this wave of liberalizationwas not sustained and failed to expand into other sectors of the economy. Today market power continues to proliferate, and old anticompetitive habits seem to be creeping back in. Dismantling remaining concentrations of market power in key industries will help spur not just aggregate growth but also the welfare of the individual Filipino consumer.

The Philippine Competition Act thus marks the realization of a decades-long legislative struggle for comprehensive competition reform. It was enacted to provide a holistic competition policy by which the government coulddevelop an environment that fosters a level playing field for businesses of all shapes and sizes. This will be done primarily by regulating business practices that unreasonably restrain competition. With this pathbreaking piece of legislation,we can finally redress the restrictive economic policies and anti-competitive business practices that have proven too costly for the Philippines and contributed to the highly unequal distribution of opportunities in the country.

To perform its mandate of promoting market competition, the PCC is tasked to prohibit anti-competitive agreements and acts. These include, but are not limited to, restrictions to competition regarding prices or other terms of trade; price fixing in auctions and similar practices of bid manipulation; and dividing or sharing market power whether by volume, territory, or types of goods or services.The PCC is also tasked to prohibit mergers and acquisitions that lessen, restrict, or prevent competition. Certain large firms enjoying dominant market positions are also prohibited from abusing their market power to limit competition, as when they conduct predatory pricing, barriers to entry, unfair exercise of monopsony (single buyer) power, etc.Although the Commission has original and primary jurisdiction over competition-related issues in all commercial activities, it shall also have jurisdiction over other issues as long as specific sector regulators are consulted and allowed the opportunity to submit their own opinions and recommendations before the Commission makes a decision.

We are happy to report that, as of last month, the Commission has received a total of 71 notifications for mergers and acquisitions, and 5 referrals for possible anticompetitive behavior in the telecommunications, cement, power, rice, and insurance industries. The Commission has also issued a total of 4 procedural guidelines as of October.The Commission is proud to report zero backlog on all its merger reviews, following the PCA’s mandate of completing reviews within 90 days from notification of parties.

Moving forward, the Commission sees many avenues and opportunities by which it can gain a stronger footing as the country’s leadcompetition authority on all business and commercial activities.

First, the Commission is moving quickly to expand its human resources and capabilities. From only a handful of seconded staff in February 2016, the Commission has grown into an 82-strong agency as of October, comprising high-caliber lawyers, economists, and other specialists. The Commission envisions to grow further and complete its initial staffing requirements of 200 by the secondquarter of 2017. In addition, the Commission also has access to consultants and experts from both bilateral and multilateral development agencies.

Admittedly, the Commission can increase the scope of its oversight with the direct engagement and help of stakeholders themselves. For example, the public can directly engage in promoting competition by submitting verified complaints to the Commission about possible anticompetitive practices. The Commission is also seeking to deepen its relations with key sector regulators in government through memoranda of agreement by whichwe can coordinate and share information.

The Commission is also currently undertaking its National Competition Policy Review, which will help us identify anticompetitive practices across major sectors of the economy, including those rooted in various government rules, policies, and measures. Once finished, the Review will also serve as the Commission’s compass in priority-setting and advocacy in relation to work with other government agencies. Finally, the Review will serve as the basis for the drafting of the planned competition chapter in the next Philippine Development Plan.

Moreover, the Commission is also actively building links with colleagues in counterpart competition agencies abroad, in order to gain insights from their rich experiences and keep abreast with latest developments in competition law and economics. In this regard, we recently arranged an inaugural seminar series where we invited competition experts from the world over to serve as resource speakers and share insights and experiences in the crafting, implementation, and enforcement of competition policy. This was not only for the benefit of PCC’s own capacity-building efforts, but also for sector regulators and otherpartner agencies in all branches of government (especially in the Judiciary) who wish to learn about competition policy and best practices adopted abroad. We envision a number of similar events in the future to further promote interest and awareness incompetition law and policy among the Filipino people.

But as the PCC takes its initial steps toward a more competitive and level playing field in the Philippine economy, one of the most important challenges we face is establishing broad support and trust most importantlyfrom the general public itself, who will be the ultimate beneficiaries of greater competition in the country. In particular, we are very keen to be seen by the general public not as a hindrance, an additional layer of bureaucracy, or an added burden onbusinesses. Instead, we would rather be viewed as an exponent of the welfare of both producers (especially small and medium enterprises) and especially ordinary Filipino consumers. Our commitment to advance consumer welfare is attested by the Commission’s completion of the Philippine Competition Act’s Implementing Rules and Regulations, which wasbased on numerous public consultations and surveys nationwide, and completed in record time.

The Philippines’ competition reform story is just only unfolding, and we at the Commission cannot do everything alone. We will require the collective effort of policymakers, advocates, and academics not only in the Philippines but also colleagues and friends from abroad. This is why I believe that today’s inaugural Philippine Competition Forum offers atimelyavenue by which we can spread information about the Philippine Competition Act, discuss its details, and locate theintegral role of the Commission in the vast network of competition stakeholders.This is especially relevant sincethe Philippines’ robust economic growth and deepening integration with the ASEAN region are likely to pave the way for more mergers and acquisitions in the future.At the same time, however, we should balance this with the country’s new competition regime, to make sure that such mergers, acquisitions, and other similar activities do not lessen or prevent competition.

Today’s Forumseems well-suited to address this broad agenda, as many of these and other issues will be tackled, such as the PCA’s Implementing Rules, developments in merger controls, enforcement, regional competitiveness, and the general role of competition in promoting inclusive growth. I have no doubt that, by this initiative of the Asian Legal Business, we can foster knowledge exchanges and build strong linkages that will serve to not only promote a smooth implementation of the Philippine Competition Act’s provisions, but, more importantly, to promote a deeper understanding and appreciation of the country’s new and exciting competition environment.

Thank you very much, and mabuhay!