The Philippine Competition Commission (PCC) reiterated Monday the crucial role of competition review in business deals even as it welcomed the issuance of an administrative order (AO) that mandates government agencies to adopt and implement the National Competition Policy (NCP).
PCC chairman Arsenio Balisacan said in a statement the NCP will ensure responses and interventions of government agencies follow competition principles and thus will prevent policies which may exacerbate market failures and distortions.
In a separate statement, Balisacan said the review of the sale of Malampaya stake safeguards the market “from possible anti-competitive deals.”
The PCC’s statement comes after anti-graft and corruption charges were filed against Energy Secretary Alfonso Cusi, Davao-based businessman Dennis Uy, Chevron Philippines officials, and Shell Philippines Exploration (SPEX) last week over alleged conspiracy to favor Uy’s Udenna and unit UC Malampaya in the sale of Chevron’s 45 -percent shares in Malampaya project.
Currently, Udenna owns 90 percent of the Malampaya gas-to-power project after it also acquired this year SPEX’s 45- percent in the project.
“In important market movements like this, PCC reiterates the importance of merger reviews to safeguard the market from possible anti-competitive deals. However, it defers to sector regulators the other aspects of accrediting or approving the transaction for standards outside of competition,” Balisacan said.
The Chevron sale passed through a review process prior to being approved that included the anti-competition rules enforced by the PCC.
Balisacan said the PCC’s review “only looks at the competition aspect of transactions.”
He said in terms of the firm’s viability to operate the project, it defers to sector regulators.
“In the first transaction by Udenna acquiring minority company interest from Chevron Malampaya in 2020, PCC found no competition issue then because Udenna was not engaged in the natural gas business,” Balisacan said.
“In Udenna’s transaction to take over controlling stake in Malampaya from Shell this year, this was not notified to PCC due to the increase in notification threshold to P50 billion under the Bayanihan 2,” he added.
On Monday, the deal received flak anew from Senate Energy Committee chairman Sherwin Gatchalian, tagging the Chevron sale as “lutong makaw” to stress its alleged rigged nature, noting that the DOE made it appear that Udenna is qualified to operate the Malampaya project.
Gatchalian whose committee held three Senate hearings on the issue, in a TV interview, said the transaction violated a number of regulations that include rules on energy exploration (PD87) and the guidelines and procedures for the transfer of rights and obligations in petroleum service contracts, citing documents the DOE itself has submitted to the Senate as requested.
Gatchalian said the graft case were also based on the from the documents.
“The approval is invalid, the process is defective therefore what they approved is invalid,” said Gatchalian.
Gatchalian said the ownership structure of Malampaya has put at risk the country’s energy security.
“The point of government in approving this is to assure energy security. Malampaya is no ordinary asset it powers 4 million homes, 30 percent of energy mix. If that falls under an unqualified operator we have a big problem, our economy will be sacrificed. That is why after three hearings we concluded that it is an invalid approval,” he said.
Meanwhile, Balisacan said the AO issued by President Duterte last week is expectedly a “game-changer” for robust implementation of the national competition policy in government.
“As the country tackles the economic consequences of the pandemic, the NCP is an important policy tool in improving market efficiency and stimulating economic recovery that is not only robust but also inclusive,” Balisacan added.
Under AO 44, all national government agencies, government-owned or -controlled corporations , and local government units are directed to comply with the NCP by adopting pro-competitive policies and interventions, fostering a level playing field between public and private sector businesses, and assisting the PCC in enforcing the competition law.
