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Johannes Benjamin Bernabe. (Photo: PCC)

PCC eyes cement firms in anti-trust investigation

By Luis Leoncio 

The Philippine Competition Commission (PCC) is investigating anti-competitive practices in the cement industry, PCC Commissioner Johannes Benjamin Bernabe said in a forum last week. 

He said PCC’s Competition Enforcement Office has found “indications of anti-competitive agreements” in the local cement industry.

Bernabe added that the Competition Enforcement Office is continuing its study and investigation, but he added tthat he PCC has not yet established that there is cartel in the industry.

In August 2016, former Department of Trade and Industry (DTI) undersecretary and now Laban Konsyumer Inc. president Victorio Mario Dimagiba filed an affidavit-complaint against the Cement Manufacturers Association of the Philippines (CeMAP) president Ernesto Ordoñez in the antitrust body.

Dimagiba’s complaint alleged that Ordoñez, in his capacity as president of CeMAP, LaFarge Holcim Philippines, Inc., and Republic Cement and Building Materials Inc., violated provisions in the Philippine Competition Act by engaging in anti competitive agreements.

“These allegations were the basis of PCC to investigate the cement industry,” Bernabe said.

“We found reasonable grounds to believe that anti competitive acts or practices have been committed,” he added noting that this made the Commission to proceed to conduct a full administrative investigation.

The PCC also reminded businesses to comply with the provisions of the Philippine Competition Act (PCA) or face hefty fines and penalties.

PCC Chairman Arsenio Balisacan said that, with the transitory period ending on August 8, businesses that still do not comply with the provisions of the PCA could be meted out with substantial fines and penalties.

“The PCA provides a two-year transitory period to allow affected parties time to renegotiate agreements or restructure their businesses to comply with the PCA. Upon expiration of the transitory period on Aug. 8, 2017, an existing business structure, conduct, practice or any act which violates the PCA shall be subject to the administrative civil and criminal penalties,” Balisacan said.

Balisacan said after due notice and hearing, the PCC may impose administrative fines of up to P100 million on the first offense and up to P250 million on the second offense.

“Aside from the fines, the penalty of imprisonment of up to seven years may be imposed by the courts upon directors and officials of any corporation involved in an anti-competitive agreement,” he added.

Illegal acts under the PCA include anti-competitive agreements such as cartels and bid rigging; abuse of dominance; and anti-competitive mergers and acquisitions.

Balisacan said the PCC has so far received a total of 26 queries and complaints for possible anti-competitive conduct in various industries, three of which have advanced to preliminary inquiry and subsequently progressed to full administrative investigation.

He said there are those in the manufacturing sector, public services sector, and agriculture sector.

The PCC and the Office of the Ombudsman (OMB) also forged a partnership to boost detection, investigation, and prosecution of anti-competitive conducts.

In a statement, the PCC said the partnership targets a solid campaign against bid riggers, price fixers, and cartels in government procurement and projects.

Since the OMB has jurisdiction over public sector and the PCC, over anti-competitive conducts in the private sector, the two agencies can converge its their efforts versus bid rigging, which is punishable under Section 14 of the PCA.

“There are significant synergies and complementary of the two agencies in pursuing a shared mandate to detect and penalize misconduct. We expect this partnership between the OMB and the PCC to provide a big boost in promoting integrity both in the public and corporate sectors,” PCC Commissioner El Cid Butuyan said.

“The PCC may look into cases where market leaders bag large scale transactions while government officials receive payoffs by providing cover for anti-competitive conduct,” the anti-trust body said.

Penalties for conducting bid rigging range from P100 million to P250 million, as well as criminal penalties of two to seven years of imprisonment and a fine of P50 million to P250 million.

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