THE Philippine Competition Commission (PCC) started an investigation into the cement industry this year, with a full report on alleged anti-competitive behavior due by 2019.
“We started a full investigation in February… We consider two years to be a useful period for the study,” PCC Commissioner Stella Luz A. Quimbo told reporters after an open forum on the Philippine Competition Act (PCA) in Manila on Wednesday.
The competition regulator is acting on a complaint of former trade undersecretary for consumer production Victorio Mario A. Dimagiba, which alleges that the Cement Manufacturers Association of the Philippines (CeMAP) President Ernesto M. Ordoñez, LaFarge Holcim Philippines, Inc., and Republic Cement and Building Materials, Inc. of engaging in anti-competitive agreements, effectively violating Sections 14 and 15 of the PCA.
Anti-competitive agreements are prohibited under Section 14 of the PCA, otherwise known as Republic Act 10667, specifying that agreements between competitors are prohibited if they restrict “competition as to price or components thereof or other terms of trade; fix price at an auction in any form of bidding including cover bidding, bid suppression, bid rotation, and market allocation,” among others.
Meanwhile, Section 15 regulates the abuse of dominant market positions, prohibiting “one or more entities to abuse their dominant position by engaging in conduct that would substantially prevent, restrict, or lessen competition.”
The industry’s anti-competitive activities allegedly include the filing of unsubstantiated and frivolous cases against non-CeMAP imported brands claiming their products are substandard, issuing misleading information on supply conditions, leaving independent importers vulnerable to predatory pricing lawsuits, and other actions that sought to protect the interests of CeMAP.
Asked if they will limit the investigation to the parties indicated in the complaint, Ms. Quimbo explained that they would also be looking at other players involved to get a bigger picture of how the industry works.
“When we do the investigation, it doesn’t preclude us from looking beyond the parties or alleged committed certain violations… We really need to understand how the industry works,” Ms. Quimbo said.
Parties found violating the PCA can be fined as much as P100 million for a first offense and P250 million for a second offense, depending on the extent of the damage to the economy.
The PCC reminded businesses that it will start imposing penalties for violations of the PCA after Aug. 8, after which the transitory period for the act will have passed. The PCA was signed into law on Aug. 8, 2015 after almost two decades in the legislative system.
The PCC has lodged 111 cases since its formation in 2016. The commission is tasked to conduct a preliminary inquiry of up to 90 days after a verified complaint or referral. The body will then decide whether to approve the case or to move to a full-scale investigation.
The cement industry study is one of three cases filed with the PCC that have progressed to full-scale investigations. The others are the power sector and another industry that the PCC has declined to identify. — Arra B. Francia
