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PH should adopt competition policy to facilitate economic recovery and growth – experts

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Experts pointed out that the key element of government strategic policy should be based on competition policy for the Philippines to facilitate recovery and growth in the economy and spur more business and investment opportunities (Business District in Manila from THEPHILBIZNEWS)

By THEPHILBIZNEWS STAFF

Since the time the world was disrupted by the coronavirus pandemic, a lot of concerns in the business and economic growth surfaced as everyone was caught by surprise. The pandemic did not just cause anxiety, but also health and safety concerns coupled with economic and income uncertainties weighed down to the people both workers and business owners.

The health crisis remains, and nobody knows how long we have to deal with the pandemic. Much as it tries, the government is still struggling to enforce policies that strike the perfect balance between lives and livelihood. Having said this, an expert pointed out how the government can deal with the crisis even in the midst of the opening of the economy.

With the economic reform bills such as Retail Trade Liberalization Act (RTLA), Foreign Investment Act (FIA), pending and Public Service Act, there will be inevitable competition in the business, and how the Philippine Competition Commission handles this, will determine very well the overall perception of the investors and business community especially in protecting consumers’ well-being and ensures efficient market competition by encouraging free and open markets and while maintaining an environment where businesses compete based on service or product quality.

Having said this, experts claimed that well thought and well-crafted competition policies should not be a luxury but a key element of government strategic policy during and after a crisis, as it helps facilitate growth and recovery, and protects both consumers and MSMEs.

Ori Schwartz, head of competition at the Organisation for Economic Cooperation and Development (OECD), said the notion of competition policy being a form of luxury—like nice clothes you wear in sunny weather but put away when a storm strikes—is misguided.

On the contrary, competition policy and advocacy should have a bigger role particularly in a crisis, such as the ongoing COVID-19 pandemic, and after it, said Schwartz in his presentation at a recent Philippine Competition Commission (PCC) webinar.

“For competition authorities, the first and perhaps essential part of shaping crisis and recovery policy is to have a seat at the table, to be heard, to remind policymakers of the importance of competition during the crisis and during recovery,” Schwartz said.

Ruben Maximiano, senior competition expert at the OECD, said competition policy and advocacy during and post-crisis is needed to control excessive market powers, foster innovation among companies, and drive productivity.

It is also important in fostering the resilience of supply chains, which are currently undermined by logjams and congestions, he said.

“If you have different alternative supply chains that you can turn to in times of crisis and supply bottlenecks, then it will be less likely that there will be supply chain issues,” Maximiano said.

Both executives advise the government to study past crises so as not to repeat the same mistakes, adding that crises also present opportunities for pro-competitive reforms.

Alain Charles Veloso, a partner at Quisumbing Torres’ Corporate & Commercial/M&A Practice Group, said competition policy during a crisis is important because the extraordinary situation can give rise to opportunities for anti-competitive and exploitative conduct, to the detriment of consumers.

“The long-term effects of any anti-competitive behavior far outlive the crisis and may be difficult to reverse,” he said.

Thus, competition agencies’ role is to ensure that companies’ coping strategies to resist the severe shocks in supply and demand do not degenerate into strategies to exploit consumers.

But he added that competition authorities must also aim for balance and recognize that competitors may sometimes need to work together to achieve sustainability goals. Hence, they must also make sure competition or antitrust laws do not deter sustainability efforts.

Veloso pointed out that sustainability has become more relevant now because studies show that companies with a culture of compliance are more innovative, resilient, and efficient. They also have better engagement with their stakeholders, customers, suppliers, employees and even regulators.

To ensure joint action among companies results in sustainability and does not violate competition laws, he said competition authorities must implement clear compliance safeguards for information exchange and monitor and protect against “scope creep.” This term is defined as the subtle deviation of the project from the original scope through adding of new features or functions that are not authorized.

Moreover, competition authorities should look for ways to support recovery efforts through various means.

One is by redirecting enforcement resources towards strategic markets and industries that are essential to the recovery process, including healthcare, supply chains, digital platforms, labor markets, and public utilities.

Another way is by making sure markets are functioning well and by regulating cartels during crisis. “Cooperation should not spill over into hardcore restrictions such as price-fixing and cartels,” he said.

Meanwhile, Commissioner Chandra Setiawan of the Indonesia Competition Commission, said Indonesia’s advocacy activities on merger control and competition policy include conducting public education on the benefits and objectives of merger control. This aligns with Indonesia’s strategic plan to highlight the importance of internalizing a fair competition culture in society.

Internalization is also initiated through urging companies to apply the competition checklist, promoting competition compliance programs to companies, and convening the annual KPPU Award, which shows appreciation to government officials in the field of business competition and implementation of MSME partnerships.

Moreover, Chandra said advocacy activities are carried out systematically and continuously, not only in times of crisis but also throughout the economic cycle.

For his part, Socioeconomic Planning Secretary Karl Kendrick Chua assured that the Philippine government continues to pursue competition reforms, which form part of the country’s economic recovery program.

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