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‘SC ruling to boost PCC’s fight vs cartels’

The Philippine Competition Commission (PCC) can now do surprise inspections on businesses under investigation for suspected involvement in anticompetitive practices.

The PCC got a boost from the Supreme Court after it issued rules governing the conduct of searches and inspections. The issuance enabled the implementation of Section 12(g) of the competition law, strengthening the PCC’s capacity to carry out dawn raids on entities alleged of breaching antitrust regulations.

Under the Philippine Competition Act, the PCC is permitted to inspect business premises and other offices, land and vehicles used by a firm, and where the agency reasonably suspects that documents relevant to the investigation, such as books and tax records, are kept, in order to prevent these files from getting removed, tampered with or destroyed.

However, as the initial line of Section 12(g) states, the antitrust regulator can only conduct such inspections “upon order of the court.” With the SC issuance, the PCC can carry out dawn raids on suspected businesses starting November 16.

Dawn raids, or surprise inspections, are widely used among competition authorities globally to uncover pieces of evidence in aid of investigation and prosecution of anticompetitive deals and practices, particularly cartels and abuses of dominant position.

PCC Chairman Arsenio M. Balisacan explained the agency can now intensify its case building against competition law violators with the rules on dawn raids in place. Information subject to inspection are books, tax records, documents, papers, accounts, letters, photographs, as well as files stored in computers and gadgets.

Balisacan said surprise inspections are crucial in investigating businesses allegedly involved in anticompetitive practices, such as cartels, which can jack up prices and hurt consumer interests.

“Cartels operate on clandestine agreements or so called gentleman’s agreements that ultimately affect prices and hurt consumer welfare. With the rules on dawn raids now in place, this will intensify PCC’s case building, uncover anticompetitive behavior and pin down such white- collar crimes covered by the Philippine Competition Act,” Balisacan said in a statement last Friday.

Any person or entity who fails to comply with an inspection order may be cited for contempt in court that can result in fine, imprisonment, or both.

Inspection orders applied at special commercial courts in Quezon City, Manila, Makati, Pasig, Cebu, Iloilo, Davao and Cagayan de Oro can be executed across the country. Otherwise, the inspection order can only be enforced within the territorial coverage of the special commercial court that issued it.

Balisacan expressed his gratitude to the high court for issuing the rules on dawn raids, saying it expanded the PCC’s available tools to go after competition law violators.

“The PCC extends its profound thanks to the Supreme Court for strengthening our armory of investigative tools to detect, investigate and prosecute anticompetitive agreements and conduct. The rules strike a balance between due process and public interest in enforcing the competitive law,” the PCC chief said.

Dawn raids can be maximized by the PCC in its investigation of anticompetitive practices in the rice sector, which the agency is watching closely for possible collusion or abuse of dominant position from within its players, particularly middlemen.

Balisacan last week said the competition body is intensifying its probe on rice to identify if the sector is infested by cartels. Competition officials find it irregular that palay prices are declining at a steep rate but retail prices are not.

He said the implementation of the rice trade liberalization law should cheapen the staple to as low as P27 per kilogram, but prices have yet to come near that level nearly eight months after the measure was passed in March.

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