The Irony of the Philippine Competition Law (Republic Act No. 10667)

"Orientation" / "Workshop" on Competition Reform

When I arrived at the venue, I was excited to meet and talk to like-minded individuals who believed in pro-market reforms. It's about time, I thought, that significant people, from both the private sector and government, have a discussion on how to streamline bureaucracy to ensure a healthy competitive market and relinquish the monetary/political influence of the cartel-esque consortia among the oligarchy. Don't get me wrong, I learned many things about certain industries and economic policies I wasn't aware of before the event. It's just that it t wasn't even a forum or orientation or workshop. It was an FYI cascade and glorification of the recently passed Philippine Competition Law.

Redundancy, Not Reform

Bus transportation, rice, energy, shipping, and telecommunications: we must admit, these are probably some of the most notorious of industries that are controlled almost entirely by a select few. The keynote speakers that presented for each industry had a lot of contradictory statements that question the relevance of the law in question. 

Atty. Tony Abad himself discussed the tedious history of this law. It took 25 years and 8 congresses, with him working on the latter 6 years until it was passed. I must admit, I've never seen the earlier drafts before this was passed. Regardless, as much as I admire the effort and time put in this and all the good intentions of providing consumers a competitive market, I do not see how more government, more regulations, and more bureaucracy could possibly promote a competitive market.

Throughout the forum, it was mentioned over and over again that red tapes and unnecessary requirements, policies, and permits are the biggest barrier to a competitive market. During the talk on competition reforms in the maritime sector, it was even mentioned that certain provisions in the 1987 Philippine constitution itself became a burden to a competitive market in the shipping industry. 

And the proposed solution is yet another law? A law that mandates for the creation of yet another commission that brings the promise of benevolence and immunity from regulatory capture. 

Whose Role Is It Anyway?

Representatives from DTI, DOJ, ERC, NTC, and many others were present at the event. A lady who works for the ERC directed a question at Atty. Abad, asking how this new law will affect their mandate. He mentioned he will have to check the provisions again. He speculated, it seemed, that the existing regulatory agencies such as ERC or NTC, for example, will have "to work in conjuncture" with the commission that will be appointed by the president in lieu of this law. 

He differentiated that the existing regulatory bodies will focus on ensuring that "high standards" of products and services are felt by consumers whereas the competition commission will focus on matters of ensuring certain parameters are met to allow for a competitive market. It's just so redundant since a competitive market is a prerequisite to an environment where these same "high standards" flourish. It is apparent that creating yet another law, another bureaucracy, just lead to overlapping mandates, roles, and a confusion on accountability and oversight.  

He himself asked "Who regulates the regulators?" and alleged that are regulators who are in collusion with the regulated. How will this new law and bureaucracy be so different, then? What assumption of benevolence and courage will this body have if the existing regulatory bodies were doomed to be trapped in a regulatory capture? 

Was there no discussion on the overlaps in roles and mandate for the 25 years that it was still a bill on congress? 

The Seen Benefits and the Unseen Collusion and Regulatory Capture

You see, competition comes from a liberated market that allows individuals or groups to engage in free enterprise and voluntary trade. Consumers democratically vote with currency and this profit incentive, when acquired fairly, keep firms and suppliers at their feet to make sure they innovate and provide better services/products than their competitors. 

Many times during the forum, it was mentioned that laws and policies are dated, some even going back to the 1930's and could no longer apply. Was there ever a time since then when there was no collusion between regulators and regulated? Was there any policy or mandate that was never susceptible to regulatory capture? 

A big chunk of the working Filipino's income go to these bureaucracies that, implied by passing this Competition Law, have not been working. Perhaps we could try, instead of creating new laws and bureaucracies, let's cut these spending, lessen red  tapes and redundant requirements that become barrier to entry, lower taxes or create tax havens where investors could enter the market to compete -- lessen government instead of adding more. 

The Oligarchs Are Above the Law

Could there be any law that could stop these few companies that control most sectors and industries? Will fining them 200 million put a stop to collusion or advantages gained from regulatory capture? It's as if there's a giant elephant in the room that no one wants to talk about: regulatory agencies are not working and, in fact, are working against the consumers' interests.

Stop making new laws. Laws and State interventions do not necessarily equate to a competitive market and at most times have unintended consequences of creating barriers to entry for new players thus impeding competition even more. 

As mentioned, there were many specific industries that were studied and discussed such as transport, rice, energy, shipping, and telco. I felt it's proper to argue the position of less government intervention first to provide insight when I delve into the specific industries which I will be writing about soon. 

I'm thinking of discussing rice and the failure of protectionism and government monopoly on imports as discussed in the forum. Follow me on Twitter: @harryinitiative for updates on my next blog posts.

Cheers.