The imposition of safeguards and standards against imported commodities must be looked at wholistically to ensure these do not give rise to anti-competitive behavior that would result in high prices.
In the case of cement where a three-year definitive duty has been slapped, Arsenio Balisacan, chairman of the Philippine Competition Commission (PCC), admitted such “protection” would have to be looked at in its review of the planned acquisition by San Miguel Corp. of Holcim Philippines.
“(Safeguard duty) will of course affect the profitability (of cement companies). But the issue is if (the merger) is anti-competitive,” Balisacan told reporters on the sidelines of the APEC Workshop on Competition Assessment in Makati City yesterday.
Two other industries are enjoying provisional safeguard duties, ceramic and wall tiles and float glass, while flour is enjoying a definitive safeguard duty until next year with petitions for extension. These are on top of standards imposed on the imported counterparts.
On cement, Balisacan said: “We are monitoring developments in the sector.”
The PCC is currently investigating allegations of the existence of cartel on cement prices.
“Obviously, it is a concern when you have an ongoing investigation and there are other government actions (imposition of safeguards) that influence the outcome of the investigation… I’m not saying it is an issue,” Balisacan said.
The ideal situation, Balisacan said, is the use of regulatory impact assessment when measures like safeguards and even standards are imposed and even in setting suggested retail prices like in the case of cement.
“(Regulators) need to do an analysis to allow for a comprehensive view on the potential impact on consumers. If they can show indeed there are cartels, monopolies, (that) justify (the) setting (of) prices. But the key to that is understanding where those high prices are coming from. Are they from poorly informed regulatory controls that have prevented entry of players and imports? If you have identified the prices (are high) because of lack of competition, price control may not be the best instrument, but opening up of the market,” he said.
PCC is pushing for the creation of tools that will help government officials/agencies to review the regulations for their competitive impact as these would identify those that potentially restrict competition and developing alternative regulations that have less or no harm to competition.
PCC is also pushing for the issuance of an executive order that would set the National Competition Policy (NCP) which will serve as a framework steering state policies and administrative regulations toward the promotion of robust and fair market competition by correcting anti-competitive laws and regulations.
Once the NCP is enacted, government agencies will be directed to ensure that public policies and interventions do not have negative market outcomes such as on market efficiency and consumer welfare.
“This implies that the State must intervene through regulations affecting the competition landscape only if it is the sole way to fulfill public policy objectives or when benefits to the consumers are shown to exceed costs,” Balisacan said in his speech.