Senate Passes Fair Competition Act

Senate Passes Fair 

Competition Act

The Senate on December 15 passed on third and final reading a measure which aims to shield small business owners and consumers from companies engaged in unfair business practices which lead to increase in prices of basic goods and services.

Senate Bill No. 2282, otherwise known as the Fair Competition Act of 2014, was introduced by Sen. Paolo Benigno “Bam” Aquino IV, chair of the Senate Committee on Trade, Commerce and Entrepreneurship.

“A fair competition policy will level the playing field for Filipino businesses and allow more Filipinos to exercise their entrepreneurial spirit,” Aquino said.

The measure works hand-in-hand with the recently enacted Go Negosyo Act (Republic Act 10644) which he also authored. He said SBN 2282 will allow more Filipinos to make a living “out of their own businesses,” which, in turn, will generate more employment and strengthen the purchasing power of more Filipinos, Aquino pointed out.

“The bill puts in place measures that will protect the welfare of businesses and protect honest, hard-working entrepreneurs against abuse of dominance and position, and other unfair practices that put both Filipino businesses and their consumers at risk,” Aquino added.

According to Senate President Franklin M. Drilon, “having a competition law will lead to lower prices, higher quality of products and services, and more choices for consumers, as fostering a competitive economic environment spurs market efficiency and innovation.” 

“The Fair Competition Act contributes to Congress’ goal of passing a package of priority economic measures to improve the Philippine business climate, boost investment and ensure macroeconomic and fiscal sustainability to prepare the country for the ASEAN Economic Community (AEC) in 2015,” Drilon added. 

He noted that “the Philippines remains the only member of the ASEAN-5 countries (which includes Indonesia, Malaysia, Singapore, and Thailand) where a competition law is not in place.”

Acts considered as unfair competition include, among others, any competitive agreement between competitors; setting, limiting, or controlling the production of goods and services to the detriment of consumers; the application of contradictory conditions to equivalent transactions with other parties, and price fixing. 

To accomplish its goals, the bill mandates the establishment of a Fair Competition Commission which will ensure that industrial concentration would not limit economic power to a few. 

Tasked to promote competition, ensure consumer welfare, and penalize abuses of market power, the Commission is also mandated to prohibit anti-competitive agreements and abuses of dominant position that distort, manipulate, or constrict the operation of markets in the Philippines through constant monitoring of business practices being implemented by market leaders.

The proposed measure states that those found engaged in unfair competition will face a fine ranging from P50 million to P200 million. 

Any competitive agreement between competitors shall be penalized by imprisonment from two to five years, or fined an amount not less than P100 million but not more than P200 million or both, with “the  penalty of imprisonment being imposed upon the officers and directors of the entity.”  

“We believe that the Fair Competition Act is all at once pro-poor, pro-people, and pro-business. It safeguards the welfare of businesses, large and small, and protects honest, hardworking entrepreneurs,” Aquino said.

The measure was approved on third reading after the inclusion of an amendment by Acting Minority Leader Vicente “Tito” Sotto, which further empowers the proposed Commission to consider whether market entities selling their products below cost “are doing so in good faith to meet or compete with the lower price of a competitor.” 

Senators Serge Osmeña III, Teofisto “TG” Guingona III, Miriam Defensor-Santiago, Jinggoy Ejercito Estrada and Antonio Trillanes IV are co-authors of SBNN 2282. /MP