THE Philippine Competition Commission (PCC) yesterday warned responses to the new coronavirus disease 2019 (COVID-19) pandemic may lead to anti-competitive behavior that will harm consumers.
Arsenio Balisacan, PCC chairman, in his talk on “Leveling the Playing Field amid the COVID-19 pandemic” at the Management Association of the Philippines online general assembly yesterday said government and private sector should be wary of unleashing measures whether immediate or long-term – from subsidies to bailouts and price controls – as these could disrupt the competition landscape.
Balisacan warned during the lockdown and the pandemic, “we may see firms exhibiting a pricing behavior different from normal times.”
“ During a time of limited supply and high demand for essential goods, collusive or other forms of behavior that attempt to exploit crisis conditions to raise prices are likely,” Balisacan said.
He said while during a crisis cooperation is sought to solve supply shortages especially of essential goods, “there’s risk that cooperation might spill over to price-fixing, since competitors may regularly obtain info on other firms’ inventories and pricing strategies.”
He was particularly wary of the grant of subsidies to companies, saying these should be applicable to all businesses and should be time-bound.
He also cautioned against the grant of bailouts even as a short-term response to save a company from bankruptcy or protect jobs.
He said bailouts could create bigger problems “not just on the fiscal side but on a competition issue” when concentration of the market to one player becomes higher, such as in the case of the airline industry.
PCC, Balisacan said, will penalize any price fixing and bid riggings and will watch out for rescue mergers that may lead to monopoly.
Crises tend to fuel cartels and abuses of dominance that lessen competition or distort market structures due to public response to pandemic.
Over the medium term, Balisacan said the pandemic can cause increased level of market concentration, prolonged disruptions in supply and
demand conditions as well as market exit of smaller firms due to losses and uncertainty and increased appetite of larger firms for mergers and acquisitions especially “rescue mergers.”
“PCC (will) carefully review rescue mergers to avoid long-lasting negative impact on market structure,” Balisacan said.
Balisacan also said the planned wage subsidies under the proposed Philippine Economic Stimulus Act should be recalibrated to be more equitable and inclusive.
“Competition law is relevant under (the pandemic) and even becomes more so in the recovery period for an inclusive and resilient economic growth,” said Balisacan, adding that government and private sector should be mindful of the risks to competition so as not to weaken process and harm consumers.
