PCC goes after onion traders for alleged ‘cartel’ practices

CEBU, Philippines — The Philippine Competition Commission (PCC) Enforcement Office has charged a group of vegetable traders for entering into anti-competitive agreements or ‘cartel practices’ for the supply of imported onions to the Philippines.

In a Statement of Objections (SO) filed with the Commission on July 9, 2024, the Enforcement Office charged Philippine Vieva Group of Companies, Inc. (Phil. Vieva Group); Tian Long Corp. (Tian Long); La Reina Fresh Vegetables & Young Indoor Plants, Inc. (La Reina); Yom Trading Corporation (Yom Trading); Vegetable Importers, Exporters & Vendors Association of the Philippines (VIEVA Phils.); and Golden Shine International Freight Forwarders Corp. (Golden Shine) for allocating the supply of imported onions by assigning among themselves Sanitary and Phytosanitary Import Clearances (SPSICs) issued by the Department of Agriculture-Bureau of Plant Industry (DA-BPI) and dividing among themselves the volume of onion allowed to be imported; and colluding to lessen competition by exchanging sensitive business information such as price, suppliers, customers, volume, shipping, distribution, and storage.

These actions, according to the complaint, violated Sections 14(b)(2) and Section 14(c) of Republic Act No. 10667, also known as the Philippine Competition Act (PCA).

According to PCC, individual respondents named in the complaint are Lilia M. Cruz, vice president of Phil. Vieva Group, chairperson and president of Golden Shine, and chairperson of VIEVA Phils.; Eric Pabilona, board member of Phil. Vieva Group, corporate executive officer of Golden Shine, and corporate secretary of Tian Long; Renato V. Francisco, Jr., board member of Phil. Vieva Group, president of La Reina, and chairman and president of Yom Trading; and Letty T. Baculando, board member of Phil. Vieva Group and incorporator of Golden Shine. Likewise impleaded were Mark Castro Ocampo, sole proprietor of Vegefru Producing Store (Vegefru); and Nancy Callanta Rosal, sole proprietor of Rosal Fruit and Vegetable Trading (Rosal).

As the PCC’s investigative and prosecutorial arm, the Enforcement Office claimed that these vegetable traders, despite being competitors, conspired to manipulate the onion market in the Philippines from 2019 to 2023.

The traders, who imported onions from China, the Netherlands, and India, allegedly worked together to control prices and limit competition.

Tian Long, Yom Trading, La Reina, Phil. Vieva Group, Rosal and Vegefru are involved in onion trading, while VIEVA Phils. distributes vegetables. Golden Shine provides freight forwarding services.

The Enforcement Office asserted that these actions substantially reduced competition, leading to distorted supply and artificial price increases, thereby harming consumers.

To gather evidence for this case, the Enforcement Office conducted a dawn raid, also called an administrative search and inspection, of the involved entities in September 2023. This was the first dawn raid conducted under the Rules on Administrative Search and Inspection (RASI), which the Supreme Court issued in 2019.

The RASI outlines the procedures for conducting such inspections to investigate potential violations of the PCA.

During the dawn raid, the PCC collected voluminous documents, records, and electronic data related to the companies’ trading activities.

Upon receipt of the SO filed by the Enforcement Office, the Commission will hear the case in the exercise of its power as a quasi-judicial agency.

Under the PCA, entities found to have engaged in anti-competitive agreements may be fined at least P110 million. However, if the violation involves a basic necessity or prime commodity, such as onions, the fine may be tripled according to Section 41 of the PCA and Section 6.5 of the PCC’s Rules of Procedure. In this case, given the duration of the collusive agreement and the involvement of a basic commodity, the Enforcement Office recommended approximately P2.4 billion in total fine. — (FREEMAN)