THE consultative committee (Con-com) is eyeing the creation of a constitutionally mandated federal competition authority with broad powers and clothed with “independence” to insulate it from political pressure and influence.
Con-com member Arthur N. Aguilar, chairman of the Subcommittee on Economic Reforms, said in a briefing that constitutionalizing the competition authority will strengthen the mandate of the country’s antitrust agency, the Philippine Competition Commission (PCC). The PCC is an attached agency of the Office of the President.
Established in February 2016, the PCC aims to prevent businesses from entering into anticompetitive agreements, abuse market dominance or enter into anticompetitive mergers and acquisitions.
In an interview with the BusinessMirror, Aguilar said the subcommittee on constitutional bodies has yet to decide on whether the federal competition agency would be a full-fledged constitutional body like the Commission on Audit or the Office of the Ombudsman or somewhere between the two.
“What I know is that the constitutional bodies have fiscal independence. None of the three branches of the government may intervene with them. They are independent. They can only be removed by impeachment so whether these three will also be in this competition authority, they still need to talk about it,” Aguilar said.
“What’s important for me is to strengthen the functions and powers of the PCC if and when we liberalize the economy. Two, make sure that it is an exclusive federal function,” he added.
The Con-com have also previously asked the PCC to submit its position paper and proposals on how the provision can be enhanced and what will be the commission’s role under a federal setup.
Aguilar also said in the briefing the subcommittee has also agreed on Monday that the competition commission shall also be vested with powers to go after monopolies, oligopolies, cartels and practices that restrain trade and commerce, deny competition, upset free-market structures, impose market domination or perpetrate rent-seeking behavior.
There shall also be only one competition policy and competition authority at the federal level, which shall exercise mandate, powers and functions that are national in scope.
“This means that the federated region cannot formulate their own competition policy or create their own competition authority,” Aguilar said, adding that having the competition authority at the federal level will also enable the federal government to check and prevent economic domination in any of the proposed federated regions.
The subcommittee on constitutional bodies will be fleshing out the wording of these provisions on the competition authority as a constitutional office for en banc decision. This includes determining the institutional design, defining the powers and functions, membership and extent of authority, among others.
PCC Chairman Arsenio M. Ba-lisacan, in a separate interview, also told the BusinessMirror that they welcome the proposals, adding that putting the PCC in the Constitution will make the commission more effective in enforcing the competition policy.
On Con-com’s plan to give an independent constitutional status to the PCC, Balisacan said this will also make the competition authority “less pressured from the political front and front influence.” Asked if there are too many monopolies, oligopolies, cartels and other
anticompetitive behaviors in the market today, Balisacan said: “We would not be here if there are no problems in terms of anticompetitive practices.”
Also, the Con-com found the need to strengthen the one-section provision in the 1987 Constitution on monopolies and competition, since the committee believes that it is prerequisite to economic liberalization.
Section 19, Article XIII on National Economy and Patrimony states that: “The State shall
regulate or prohibit monopolies when the public interest so requires. No combination in restraint of trade or unfair competition shall be allowed.”
The Con-com technical working group is yet to formulate the exact wordings of the provisions for submission to en banc next week. Aguilar and the technical working group is set to meet with the PCC on May 8 to work on the provisions.
But the proposed coverage of provisions on competition include mandating the State to regulate markets lacking in sufficient competition and prohibit inefficient market structure to promote economic welfare, to ensure free and fair competition and enhance efficient resource allocation, to establish “equal” legal conditions under which all business entities and enterprises shall operate, to prohibit anticompetition agreements (including anticompetitive mergers and acquisitions, rent-seeking behavior) and abuse of dominant position, and to prohibit undue advantage for any enterprise.
The committee is also envisioning to create a federal competition body that will formulate and execute policies and laws and regulations on fair competition that will cut across all federated regions with a status of a constitutional office.
The Con-com is set to submit its final draft to the President on July 19, less than a week before the Chief Executive’s State of the Nation Address on July 23.