THE Philippine Competition Commission (PCC) said it will factor in the recent imposition of a safeguard duty on imported cement into its ongoing investigation into the cement industry.
“There are many possible consequences of the safeguard duty. Will it affect (competition in the industry)? It’s a possibility,” Johannes R. Bernabe, a commissioner of the anti-trust body told reporters last week in Quezon City.
“So the question is with the safeguard duty will the volume of imports be reduced. If the volume of imports is reduced, does that mean that the local producers will have more space to market their output, will they be more competitive compared to imported cement? Presumably, because the price of imported cement will now have increased. That’s something that we will have to consider,” he added.
He said the PCC has yet to analyze the data on the safeguard duty’s impact on supply, among other considerations.
The Department of Trade and Industry’s (DTI) provisional safeguard duty, to be imposed for 200 days starting next month, is set at a specific rate of 4% per 40-kilogram bag of cement.
The DTI decided to impose the temporary tariff increase due to the injury that cement imports have caused to domestic industry.
Cement imports surged to more than 3 million metric tons in 2017 from only 3,558 metric tons in 2013.
Imports accounted for 15% of the total national supply in 2017 from only 0.02% four years prior.
Cement importers have warned that the measure may trigger a shortage with the government pursuing a massive infrastructure program.
The Philippine Cement Importers Association had said that domestic cement demand can only be met by a top-up of imports; domestic plants, the group said, are producing some 26 to 28 million metric tons (MT) per year, and unable to cope with demand of 31 to 32 million MT.
However, the DTI has different estimates of the supply situation, saying domestic capacity totals 35 million MT a year, amid demand of 25 million MT.
The PCC said it will have to look into these data.
The regulator launched its cement investigation in 2017, as a response to a complaint lodged by former trade undersecretary for consumer production Victorio Mario A. Dimagiba, who alleged that members of the industry entered into anti-competitive agreements.
Such are prohibited under the Philippine Competition Act (PCA) of 2015 or Republic Act 10667. Anti-competitive agreements 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.
Also, the abuse of dominant market positions by engaging in activities that will bring about a substantial lessening of competition is also prohibited.
The PCC has said that the report on the findings on the cement investigation will be released this year.
To date, the competition regulator has received 162 inquiries and informal complaints on possible anti-competitive agreements and conduct.
It has launched 12 preliminary inquiries — four based on verified complaints and eight initiated motu proprio.
At present, eight full administrative investigations, including that on cement, are underway.
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. — Janina C. Lim