An anti-trust bill within a closed economy is being presented as a way of improving competition in the Philippine economy. The house proposes a Fair Trade Commission to oversee and prevent anti-competitive prices. That’s on top of the other government agencies which already regulate the various industries.
When you remove the rhetoric – it boils down to the government wanting to increase regulation of the market under the guise of “promoting competition”.
Such s policy does not present any benefit to consumers and imposes more harm. More regulations and more agencies will not improve competition in the protected Philippine economy. It has not worked for decades – it’s not about to work now.
Unregulated Markets Create Monopolies, Really?
The myth peddled to the common tao is that unregulated markets lead to the creation of monopolies. Therefore government has to step in to ensure that companies will not have a coercive market monopoly.
The reality is that coercive monopolies cannot exist without government protection, special regulations, exemptions, and subsidies.
Let’s take it closer to home – your wallet. The only reason that PLDT and Globe are able to dominate the market is because of the state’s protection - as a matter of state policy. PLDT and Globe are able to get away with high subscription rates for snail-paced broadband and wireless, dropped calls, dead spots – take it or leave it. How will the Free Trade Commission deal with that – or the NTC or DOTC for that matter?
Another instance would be the media industry which bans Filipino citizens from having foreign partners. Thus ABS-CBN and GMA 7 continue to rack awards for being the #1 and #2 media network in the country – and monopolizing the broadcast of foreign movies!
Meanwhile, the gov’t run IBC is still in the auction block – a white elephant subsidized by taxpayers.
Come to think about it – I’d say the government is the biggest cartel – they dictate the prices so as not to displease the political base. 
Pricing Wars- A Key Flashpoint?
Pricing issues will be a primary source of anti-trust litigation. Expect terms like “predatory pricing”. The theory goes that predatory pricing is
the practice of selling a product or service at a very low price, intending to drive competitors out of the market, or create barriers to entry for potential new competitors. If competitors or potential competitors cannot sustain equal or lower prices without losing money, they go out of business or choose not to enter the business. The predatory merchant then has fewer competitors or is even a de facto monopoly.
In many countries predatory pricing is considered anti-competitive and is illegal under “competition” laws.
This assumption can only take place if and only 1) the predator has deep financial resources; and 2) – if there are very high barriers to entry – such as special regulations, exemptions, subsidies, and protections by the state. Reminds you of a lot familiar Philippine brands.
Hmmm. In case Pinoys have not noticed – the government has been dictating the ceiling prices of goods – rice, sugar, livestock, poultry – at consumers and taxpayers expense.
Another notion is that regulators believe there is an optimal minimum value at which prices even out – all things being equal (process, inputs, taxes, etc) for all competitors. The reality is that not all things are equal. There are different consumer preferences. There are also different ways to deliver value at a price that people are willing to pay for. And to trust Pinoy regulators to know the most efficient way of running a business which delivers value to consumers - is economic suicide.
In a free market, if the economic predator lowers the price – it reduces their revenue. Rival firms can come in any time since there are no barriers to entry. The rival firms can re-engineer their processes, re-imagine the value chain, redesign their supply chain to have the same revenue margins at lower prices – and the economic predator takes a loss.
In a free economy monopolies are not invulnerable because there will always be a rival company that can develop alternatives. Revenue is a reward for excellent work, for service above and beyond, of walking the extra mile to fulfill a promise and a commitment to serve your external and internal customers to the best of your abilities and nothing less.
In a protected economy, monopolies own the food you eat, the store where you shop, the movies that you watch, the phone that you use, the roads you take to work and home, the electricity in your house, the water in your toilet – for the fundamental reason that they are owned by Filipinos.
Competition – In A Market Of 3?
If special regulations (nationality requirements, equity restrictions, predatory fees) prevent the entry of a company with such capabilities then – where’s the competition – shopping with Carmen San Diego?
Does “competition” mean more competition between the 3? Or does the state prefer a limited number of players competing on who can give a bigger payoff to government?
After all when the state is choosing between PLDT or Globe for telecom – it will be easier to strike up “negotiated bids”. When the state is choosing between ABS-CBN or GMA7 for infommercial placements for RH purposes – it’s easier to strike up “negotiated bids”.
The lesser people to talk to – the more efficient the decision-making but there has to be a semblance of competition for purposes of “good government”. What’s the Fair Trade Commission gonna do about that?
It’s all about Freedom – to choose, to make, to sell, to buy, to give, to share, to own, to enjoy, to innovate, to invent, to improve –
Your Freedom
The belief that fully foreign-owned investment in food, roads, telecom, power, entertainment, water, retail, transportation, agriculture, education, health care, finance, real estate is against the interests of all Filipinos is highly questionable. Our neighbors in Asia have shown that fully foreign-owned or foreign majority-owned investments actually worked for their respective countries – including the Philippines by way of the Filipino OFWs. Even the monopolies can benefit from allowing equal treatment of local and foreign investments.
Beyond the solid economic reasons, it’s also about plain decency.How about allowing foreign investors for the reason that they are not human beings – people of flesh and blood like you and me. People with aspirations of a better future for themselves, their families, their companies, their employees and their communities – is there anything wrong with that to merit the restrictions?
And, what’s wrong with trusting Filipino consumers to make the right economic decisions with their own money – to include buying from, selling to, working for, or doing business with foreigners? They can do no worse than the Philippine government or the protected Filipino businesses for that matter.
How to Have Genuine Competition in the Philippine Economy: My Isang Sentimo’s Worth
If there was anything that Congress can do to increase competition in the economy – here are some next steps to consider:
1 – They can start by not going ahead with the bill.
2 – Follow thru by repealing all the special regulations which provide exemptions, subsidies, and protections to sll private firms.
3 – Dismantle all the regulatory agencies – and reduce the taxes and fees collected – let citizens exercise self-regulation, self-governance of their money. Citizens can be trusted with their own money, more than politicians or faceless bureaucrats. The talent of the laid-off government workers can best be redirected to the private sector.
4 – The herd of elephants in the room of course is the fact that the equity restrictions imposed by the constitution on foreign capital does not increase competition at all. If you wanna go for gold – removing the economic restrictions is the way to go.
What will the Fair Trade Commission do about that? Better yet – what will the Congress do about that? What will you do about that?
Be a Creator of Superior Value, Compete
Filipino businesses should not be afraid of competition. We should embrace competition much like friends in a game of tennis, basketball, golf, muay thai. We should look at competition as an opportunity to amaze ourselves with strengths, talents, and opportunities for improvement which we were previously unaware of. Win and lose with integrity. Play with intensity. And yes, there will be times when you will face adversity and doubt. Do not fear it, embrace it, make it work for you and not against you.
There is no shame in receiving a value for the goods and services you deliver or create. It is not greedy and selfish to provide a roof over your head, food on your table, education and health for your family, and pursue your personal happiness. I’d say it is an act of love, of respect to the people you love and care for and the people you represent – including, whether you like it or not – Filipinos.
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Self-Governance Trumps Government’s “Good Governance”
Isn’t it about time time we had more self-governance, step up and take responsibility for our choices – than the P2.14 trillion “good governance” of the Aquino administration?
The ability to earn for yourself, to spend for yourself and for the pursuit of personal happiness (which includes volunteering to serve others with your personal time and money) and to decide your yourself independently of government is not selfishness, it’s called being a personally responsible adult and citizen.
Things which we can do for and should do for ourselves – are best done by us. Personal freedom for all of us comes with a price, it’s called personal responsibility. Liberty is not a cross to bear, it is an opportunity to make our piece of the world better, cleaner, healthier, smarter, kinder – starting with ourselves.
Epilogue
Don’t settle for being a CCT subsidy recipient. To be competitive – be an independent, self-governing, law-abiding, wealth-creating, value-creating, peace-loving person – for a start.
Four years ago, the Philippines made a choice. The outcome of the choice will continue to be felt. Two more years of wider joblessness, hunger, increasing poverty. Being in the bottom barrel does not mean things are bound to go up. At times, a hole is punched in the bottom of the barrel – and it is free fall all the way, followed by a loud thud. Or, the height of the barrel gets longer and the view from the bottom gets narrower. Giving away your power of choice – is still a choice. When others make the choices for you, it might not be what you wanted.
Choice drives life and shapes reality. Exercise your power of informed choice - practice makes perfect.
An Anti-Trust Bill is not the answer to have a more competitive economy. Competition means Filipino consumers must be able to exercise their full range of choices to equally reward businesses for excellence and value regardless of nationality – not another BS government regulation and agency.
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