Bam’s Response during the Fair Competition Forum (Excerpts)

Press Release
April 22, 2015

Good afternoon everyone. I’m not going to go into detail of the bill. We have our experts here. I’d rather talk about political context of this bill.

One, I’m quite optimistic that if we get this passed, we’re hoping it can be one of the main SONA pronouncement come 2015.

Hopefully some good news for this last SONA of the President.

If not, we still have another year to get it done. I am hoping though that we can get this done before the end of July.

Now, if you look at the bill itself, there are some groups who were trying to package the bill as anti-business. We’ve heard already some groups mobilizing, trying to paint this as anti-business.

If you look at my track record in the Senate, you’ll see that I’m the most pro-business of all of the senators, being the chairman of the Trade, Commerce and Entrepreneurship.

Where does the balance lie in trying to push for this bill, and at the same trying to promote our industries for the Philippines to really get to that level where we will be a middle income economy?

If you look at original versions of this bill, you’ll find one very sticky provision, which I wouldn’t have passed and that provision said that once you reach a certain market share, the government can step in and break you up.

In a lot of old competition policies in other parts of the world, there is that provision where government can make a determination based on your market share, that they can break you up.

That’s the first thing I said to them that I want to make sure it is not a part of this bill.

In fact, this version came from the Philippine Chamber of Commerce and Industry. In some ways, this version actually came from the business community itself.

What does the bill basically penalize? It doesn’t penalize size. It doesn’t penalize status. It penalizes abuse of dominant position and anti-competitive agreements.

We just want to be very clear about that. This is not a bill against being big. In fact, if you’re large and you’re huge and you got there because you’re fair and because you gave the best to the consumers, then the best of luck to you and we hope you grow even more.

But what it does outlaw is basically a dominant player using their position to block out the rest of the market.

I think even the large dominant players would appreciate that because you may be large in one industry but the second or the third in another industry.

Definitely, a player who is big enough but is feeling that anti-competitive system would appreciate a bill like this.

Second, it also prohibits anti-competitive agreements. And we’re very clear to lay down what these anti-competitive agreements are. And again, going back to what most Prof. Joy’s lecture earlier was that term rule of reason.

We really push this so that we will have that leeway to be able to decide on what activities, what actions really lessen competition in the market, as opposed to coming out with prohibitions and start meting out penalties to different corporations and individuals.

That rule of reason is very important because admittedly, this is the first time we’re having a competition policy.

Most developed countries had theirs in the 1930s or after the World War II. Japan, for example, had a very bold competition law passed after World War II and that was a perfect time for them because they were basically in ruins so they had the opportunity to actually lay down the law for how they want to proceed.

Other countries in Europe, for example, had theirs in the 1920s. We’re actually very late in the game.

If you look where we are as a country, we’re leaving the developing country status, entering a middle-income economy.

For me and for a lot of other people, this seems to be one of those seeming requirement to get to that next level where we can compete with the rest of the world, where countries will look at us and don’t look at us as a banana republic but as a country where rules are in place, where regulations are and where we use these regulations to move forward.

This law, probably, the most difficult one we’ve tackled, or at least our Office has tackled. The interpellations for this bill lasted three to four hours on many occasions.

In the Senate, most of the time, out of courtesy, people would just let you do your own thing.

I mean, if your advocacy, in my case, small and medium enterprise, we passed the Go Negosyo Law without much debate and all sides voted for it.

For this bill, we actually went through a lot of interpellations. Three to four hours at a time. Both minority and majority interpellating us.

In the end, I’d like to think that were able to come up with a version that sticks to the spirit of the bill and still allows for certain exemptions. Of course, all these exemptions are within the rule of reason.

I think that’s really why our consultants and experts eventually allowed these exemptions to come into this version the bill. At the end of the day, nothing is carved out for a particular sector.

Everything still has to go through a rule of reason through the commission. I think that’s really crucial and really important. Of course, Congress version will be different but I’m hoping that if when we get to the bicameral session, that we will be able to prevail upon colleagues in Congress and push for a bill which really has the parameter set but within a rule of reason.

We’ve experienced a lot of lobbying for this bill. In fact, practically every day there was a different set of individuals and lawyers at our office. People ask me about that a lot also, how was the lobbying? The lobbying was tremendous but the good thing is, 95 percent of what lobbyists are lobbying for are okay.

One, they did help us clarify the exemptions.

Two, they also raised the flag, and I guess what you might raise also, which is what if the competition commission is a corrupt commission. I think that’s basically the main concern for a lot of companies and even myself, still a large concern.

So the 95 percent that they were lobbying for were really safeguards and really ways to create these exemptions still within the rule of reason to make sure that legitimate companies will not be harassed by a corrupt competition commission.

In the same way, if you talk about a corrupt competition commission, it’s the same if it’s a corrupt executive department or a corrupt legislative department.

Those who want to squeeze money from the private sector, will find a way to do it, whether it’s a competition commission, a senator, a congressman or a national agency.

Creating this, I think, you will put the safeguards in and at the same time, be realistic about it, make sure that the people appointed to the competition commission should be people who can be trusted and won’t be selling their decisions left and right.

So I think that’s the caveat probably that I would like to put out there. I have experienced most of the concerns aren’t really on specific words in the provision although the legislators and the academics and the professors will worry about the commas, the terms where we lifted it from the EU, from the US.

I think one of the concerns is really what if a.) they appoint people who are corrupt and b.) or its within a framework where the president or the executive agencies are against business.

But that’s something that we need to face as a people and not just for this particular bill. That being said, we did put in a number of safeguards to make sure that no one will be, can be harassed and individuals who might be harassed will have enough legal basis to fight for these exemptions.

That being said, the best way forward is after this bill is passed, is to make enough noise about it and make sure that we appoint reputable, honorable and good people on the commission – unbiased, neutral and very independent people to the commission because they will outlive the president.

The president is out by next year, the commissioner is either five or seven years, depending on the version that we’re talking about. So we’re talking about five to seven years with the commission and we have to make sure that people appointed to these posts are all honorable and decent people and who know the policy to be able to make decisions properly.

The intention of the bill is not to fine corporations or to fine people. In fact the Congress version has a two-year reprieve on any penalty.

You may be wondering why? Of course people will say, they don’t want to decide on anything. But there is some wisdom to that. This is a new policy.

We are creating a totally new paradigm and the commission in those two years can start creating the awareness and start talking to different industries to try and manage their current setup to be able to convert to what more competitive and in tuned with the law.

We do two years where corporations do have that space to be able to fix themselves. As politicians, we do understand that it’s not easy that on day one, everybody has to change. There is that time set.

Hopefully in that two years, the corporations will listen to the commission. Again, we’re assuming that it is a reputable and honest commission. After two years, if there are still aberrations, then the fines and penalties will be imposed and court cases can be filed properly.

One thing that wasn’t mentioned is that majority of cases filed by the competition commission will be administrative in nature. It won’t be criminal in nature. The criminal part is left to abuse of dominant position and anti-competitive agreements done among competitors.

That one is blatantly illegal already. In any regime, whether the US, Japan or the EU. But if this done by a single entity in a market, largely its fines. And even the fines themselves have a wide range, could be x-million or could be one peso.

So again, the idea of having a commission there is really less about penalties and more about trying to police or trying to create a paradigm or regime where our corporations and our people interact with each other in a better way.

What’s my fearless forecast? My fearless forecast is we’ll be able to pass Congress by June 3. The session goes from May 3 to June 3.

Hopefully, we’ll be able to pass that in Congress by June 3. We’ll go over the bicam in July and hopefully have this signed before the SONA. By the way, a competition policy is also a requirement for entering trade agreements with other countries.

The ASEAN integration, joining the PPP, having bilateral with different countries. It can hopefully open our markets even more.

Source: http://www.senate.gov.ph/press_release/2015/0422_aquino1.asp