If ever there was an institution to which the expression “It has its work cut out for it” was perfectly applicable, it is the Philippine Competition Commission.
Truly, PCC’s work has been cut out for it. That work, generally, is to ensure the existence of competitive conditions at every level and in every aspect of this country’s economic life. More to the point, PCC’s work is to prevent the rise of business conditions that impair or obstruct competition or, where such negative conditions already exist, to dismantle them. Instances of imperfect competition and monopoly-type business behavior had long abounded in the Philippine economy, from the highest reaches of the marketplace to the lowest; not until the PCC had become a functioning entity was there a specially mandated institution to which disadvantaged businesses could go for redress of their operational grievances and enforcement of the Constitutional proscription of monopoly.
Like most commerce-related concepts, competition partakes of two aspects—the legal and the economic. The economic aspect of competition is arguably more important than the legal, which is concerned mainly with fulfillment of administrative and jurisdictional requirements of doing business. The economic aspect has broader and more nuanced implications: it looks not merely at the apparent but also the real impact of the operations of a market player on the other players. In the eyes of an economist, competitive conditions that are imperfect are proper objects of regulation by a PCC-type institution.
As with other business-related government positions, the PCC chairmanship can be filled by a lawyer and former President Benigno Aquino III could have appointed a lawyer as PCC chairman. I’m very glad that he didn’t because the question of whether perfect competition exists or does not exist in a particular business situation is best decided by an individual with an economist’s training. Dr. Arsenio Balisacan was an excellent choice as PCC chairman, in my view.
PCC hit the ground running when it began functioning in 2016. It wasted no time tackling the first major item on its plate, which was the joint acquisition, by this country’s two telecommunications industry players, of the megahertz assets of San Miguel Corporation-owned Liberty Telecoms Inc. PCC recognized the competition-related reality of the situation, to wit, the virtual confirmation that PCC approval of the acquisition would bestow on the duopolistic control of the Philippine telecommunications industry by Smart Telecommunications and Globe Telecom Inc.
The issue is still being adjudicated.
Another item that of late has landed on the PCC’s plate has been the acquisition by one of the two players in the ride-sharing industry, Singapore-based Grab, of the Philippine business of the other player, US-based Uber. PCC clearly saw, as every Filipino did, that the acquisition, which was undertaken without prior PCC approval, would convert a duopolistic industry situation into a monopolistic one. What incensed PCC about the Grab-Uber transaction was the fact that, notwithstanding its enormous impact on the Philippine ride-sharing industry structure, the two companies did not seek the Commission’s approval for the deal. The deal was presented to the nation as fait accompli. Like the Smart-Globe transaction, Grab’s acquisition of Uber’s Philippine business is still undergoing PCC review and decision-making.
Decision-making by an agency like the PCC will hardly ever be a speedy process, given to impact on the level and quality of economic activity. I’m reasonably satisfied with the pace being observed by the Commission in its handling of the major transactions that have come before it. Deliberation is never speedy.
The only adverse comment that I will make about the PCC’s functioning thus far relates to its initial attitude toward the Grab-Uber transaction. When asked what the PCC’s reaction was to the news about Grab’s acquisition of Uber’s Philippine business, a high PCC official’s reply was “We are waiting for Grab’s application for approval of the acquisition.”
The position taken by the PCC official was, in my view, wrong. Grab’s announced acquisition of Uber’s business —and its becoming a monopoly thereby—posed a clear and present danger to the competitive situation in the ride-sharing industry and should have been called out by the Commission as soon as announced. The legislative mandate of the PCC was, and remains, the prohibition of acts or transactions that impairs competition and the Grab-Uber deal was one such transaction. There was no need for PCC to wait for a request from Grab for official permission to undertake the buy-out. The Commission should have proceeded forthwith to review the situation and call upon Grab and Uber to provide justification for their competition-reducing action.
Other than this observation, PCC has, in my view, been functioning commendably thus far.