Lax competition policy not a way to recovery

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    Anti-competition or lack of competition should not be used as a weapon in recovery efforts against the economic impact of the new coronavirus disease 2019 (COVID-19).

    “What we have learned from our experience (during) crises in the last 50 years is that relaxing competition is not the way to go,” said Arsenio Balisacan, chair of the Philippine Competition Commission (PCC) in a press conference ahead of yesterday’s FCDC Manila Forum.

    “Don’t set aside competition policy or competitive processes as a way to to get out of the crisis,” Balisacan added.

    Instead, he said, the Philippines should strengthen competition “because if we allow for very weak reasons consolidation that would lead to strengthening of the ability to and the incentive to abuse market power you will forestall the country’s ability to achieve faster and more sustainable growth in the future. “

    In the wake of the pandemic, the PCC has been advocating stronger competition policies.

    “Competition policy is very ,very critical at this point in our recovery, a period of recovery, “ he said.

    Commissioner Johannes Bernabe for his part said protectionism in the context of imposing safeguard measures can go both ways.

    “We should make a distinction between what is allowed under the law under given specific conditions and those which are lobbied for by business participants sometimes simply to protect their market share in the revenue stream. In the first case, this is recognized by both the World Trade Organization by our regional trading arrangements, if the conditions are such that there’s really an increase or a surge in imports, that it is harming domestic industry, and that you can establish a causality between the increase and the injury suffered by domestic industry participants, then we are justified in imposing these types of safeguard measures,” Bernabe said.

    But he said one has to be careful in assessing whether or not the injury is really suffered because of the surge in imports, if there is really causality there.

    “Sometimes the injuries suffered is really born out of inefficiencies inherent in the processes that domestic players have gotten used to. In that sense, those safeguard measures, may rightfully be challenged as impeding competition,” Bernabe said.

    For protectionism in the context of technical barriers to trade such as sanitary ad phytosanitary measures, Bernabe said, these are all in place for legitimate policy objectives.

    He, however, warned when those nontariff measures are used not for legitimate policy objectives but simply to protect market share of existing incumbents, “then that is again something which is contrary to competition principles.”