Dr. Arsi Balisacan talks about competition and the PCA (but not that case that you badly want to hear about)

Last June 29, Wednesday, I was lucky enough to be invited to another meeting of the Foundation for Economic Freedom (FEF). This time, their guest was Chair Arsenio Balisacan of the Philippine Competition Commission.

I was looking forward to the meeting, hoping that Dr. Balisacan would talk a bit about the pending PLDT/Globe — SMC deal. Fat chance! Haha. Soon as Dr. Balisacan took to the podium, he declares that he will not (cannot!) talk about cases pending before the PCC. Oh well.

Dr. Balisacan’s presentation was essentially an introduction of the PCC and what the Philippine Competition Act (PCA) empowers it to do. Dr. Balisacan also talked at length about the PCC’s next steps as it builds the organization and basically figures out how to implement its mandate under the law. [The PCC is in dire need of experts to fill up the vacancies in its plantilla. The Commission is looking to beef up expertise in various fields and, aside from (of course! hehe) lawyers, they would need economists, engineers, industry experts, business planners, etc.] So update your CV and send it to the PCC quick!

My key takeaway from the talk is how interesting the relationship of the PCC will be vis-a-vis the sector regulators. Dr. Balisacan noted that regulators and the PCC may, at times, have divergent, if not opposing, goals: Regulators may take steps to foster growth in an industry but if this comes at the expense of competition, the PCC will enter the picture.

[An aside: This brings to mind the co-use arrangement between Globe and PLDT with respect to the 700Mhz frequencies held by BellTel. It appears that NTC’s approval of the co-use may not be enough to dissuade the PCC in case it does decide to look into that transaction.]

Below are other items I noted from Dr. Balisacan’s talk and Q&A:

  • The Implementing Rules and Regulations of the PCA took effect on June 18, 2016.
  • The PCA contains a provision for a transitory period, during which time entities found to be non-compliant with the PCA have the opportunity to comply. The transitory period ends in August 2017.
  • The PCA is an attached agency of the Office of the President. Dr. Balisacan says that this is mainly for budgetary purposes.
  • With the issuance of the PCA IRR, next on the PCC’s plate, aside from resolving complaints and approving applications for M&As, is the National Competition Policy Review.
  • Dr. Balisacan noted that the PCA makes the PCC quite a powerful body. The PCC goes beyond anti-trust and includes merger control. Under the PCA, the PCC can investigate markets. The National Competition Policy Review falls under this.

During the talk, former NEDA Secretary Romulo Neri raised the issue of efficiency gains. Note that under the PCA, even a transaction that may have anti-competitive effect may be allowed if it can be shown that there are efficiency gains. Mr. Neri was concerned that “efficiency gains” may be used as a scapegoat for anti-competitive behavior. Dr. Balisacan clarified that “efficiency gains” must clearly be shown and that these should pertain to the Philippine economy and not just to a corporation’s operations. He assured the audience that economists have ample tools in making this determination.