Bill seeking stiff penalty on unfair trade practices filed

MANILA, Philippines - Senate President Juan Ponce Enrile has filed a bill that would penalize unfair trade and anti-competitive business practices with very stiff penalties including fines and imprisonment.

Senate Bill 1 or the “Competition Act of 2010” is anchored on the constitutional mandate that “the State shall regulate or prohibit monopolies when the public interest so requires and that no combinations in restraint of trade or unfair competition shall be allowed.”

“We need a level playing field in Philippine business,” Enrile said.

“The Competition Act of 2010 will benefit the entire economy because it will encourage fair play among market players. Creating a competitive playing field among industry players will promote an efficient over-all business environment that will encourage new investments and promote economic growth. This will ultimately redound to the benefit of the consuming public in the form of good quality, lower-priced, and wide array of goods,” Enrile said.

The Enrile bill defines and prohibits four general categories of anti-competitive practices, namely cartelization, monopolization, abuse of monopoly power, and other unfair trade practices.

Under the section on cartelization, restrictive agreements resulting from behavior of cartel-like firms are deemed illegal such as, but not limited to, contracts to fix selling price of goods; to limit supply or output; to divide the market by any means; and to exclude or limit dealings with particular suppliers or sellers.

Monopolization, on the other hand, prohibits a firm from “willfully or knowingly acquiring and maintaining its market power by excluding competitors from any part of trade, industry or commerce as distinguished from natural growth or development of a firm as a consequence of a superior product, business acumen or historic accident.”

The bill penalizes abuse of monopoly power or dominant position of one or more firms within relevant markets that engage in unfair methods of competition, or in unfair or deceptive trade practices through price fixing, bid rigging, limitation and control of markets, market allocation, arrangements to share markets or sources of supply, and price discrimination, among others.

Other unfair trade practices include the distribution of false or misleading information capable of harming the business interests of another firm; distribution of false or misleading information to consumers including the sharing of information lacking a reasonable basis related to price, character, method or place of production, properties, suitability for use, or of quality goods; and the unauthorized receipt, use, or dissemination of confidential scientific, technical, production, business or trade information.

The Enrile bill imposes stiff penalties for individuals and firms who will violate the law. Each violation shall be punishable by a fine of not less than P10 million but not exceeding P50 million if a natural person; and by a fine of not less than P250 million but not exceeding P750 million if a firm, and by imprisonment not exceeding 10 years, or both, at the discretion of the court.

Implementation of the Act will work within the existing institutional structure of government. Enforcement of the law will be the primary responsibility of the Department of Justice, in coordination with the Department of Trade and Industry and other regulatory and/or appropriate government agencies.

“With the evolving business landscape, there is an immediate need to put in place a competition or anti-trust law in the country. Existing competition laws in the country have remained inadequate and ineffective as not one corporation has ever been prosecuted for anti-trust acts,” Enrile added.