The European Chamber of Commerce of the Philippines (ECCP) is pushing for more players in the telecommunications industry, believing that it will improve services being provided to the public.
During the recent Competition Law Forum in Makati City, ECCP Senior Advocacy Adviser Henry Schumacher said on the side the country’s telecommunication industry should be opened up more.
“Sixty-forty remains a restriction but I think again from our point of view, it is basically saying that the Filipino deserve competition,” Schumacher said.
Even as Schumacher admitted that the ownership restriction is a factor, the issue remains to be that competition is necessary whether it is through local or foreign companies.
Schumacher said there is urgency to create competition in the country’s telecommunication industry, because the use of data and Internet is now a necessity both at work and among students.
“We have Viber and Whatsapp. Long-distance calls are basically no longer done by the telcos. The reason why I was arguing also that the PCC should come up with a fair verdict is because data is the future, along with data sites. We need a third or fourth player to have competition,” Schumacher said.
He added: “I do not care whether it is foreign or local. We have to understand that data is the future. Every Filipino has to work with their mobile phones. Every Filipino has to have access to the Internet, which is also not there. If you have that access, you have access to education, to be part of the future.”
Outside of the telecommunications industry, Schumacher is also looking at a more liberalized retail industry in the country.
According to Schumacher, a paid-up capital of $2.50 million for a foreign entity to wholly own a store is a restrictive condition since foreign investors want to be “the masters of their own destiny” not simply put their money passively in a venture.
Echoing Schumacher’s stance, Quisumbing Torres Corporate and Commercial Practice Group and member of the Competition Focus Group Senior Associate Atty. Charles Veloso said the country would be having difficulties attracting foreign businesses if amendments in the Constitution regarding ownership will not be made.
“It is a long and difficult process. It is very political. So unless the constitution is amended, it might be difficult for the President to open up those industries. It would be difficult because the foreign players can only hold up to 40 percent. That is a minority. If you are a foreign investor, investing more capital, you would want to control your own investment,” Veloso said.
Veloso added that, with the creation of the Philippine Competition Commission (PCC), it will be easier to track down abusive dominant players in the market.
However, Veloso said the commission is still only reactive as it waits for complaints to beef up its investigation.
The PCC is a quasijudicial body that has the power to pose administrative fines to parties found guilty of anticompetitive activities. It also has primary jurisdiction to determine whether there is basis for a case to be taken up to court.
Veloso said under the law, the commission has the capacity to impose penalties up to P100 million.
“At this stage, they are reactive. They are waiting for complaints or comments from the public to investigate. Once they have hired enough manpower and they have built their own capabilities, they will probably start investigating on their own,” Veloso said.
He added: “So they look at the market, do a study within the market, and see the sources of these restrictions, whether this is because of abuse or due to the fact of the nature of the market that is highly concentrated.”
Veloso coauthored the Philippine chapter of Beker & McKenzie’s Asia Pacific Competition Law Guide.
Last year former President Benigno S. Aquino III signed the Philippine Competition Act, a landmark legislation which sets the national policy on competition and prohibits anticompetitive mergers and acquisition, price-fixing, bid-rigging and agreements with competitors to control production and investments.
During the forum organized by Thomson Reuters, it has been mentioned that challenges to a successful implementation of any competition law will be due to several factors, including large capital and economies of scale requirements that only foreign capital can possibly provide and inadequate industrial support structure that only decentralization can address.
Other factors include continuing domination of the same political and economic elites; timely, effective and efficient implementation; and the need for proactive and inclusive governance.
It has also been noted that East Asia’s miracle economies attained rapid growth and convergence without competition policy and that antitrust laws were largely ignored in pursuit of other goals, including capacity-building, competitiveness and growth.