PCC probes ‘cartel’ operation

Published October 23, 2019, 12:00 AM

by manilabulletin_admin

By Bernie Cahiles-Magkilat

The Philippine Competition Commission, the country’s anti-trust body, is looking into the middle phase of the rice value chain in specific geographies in the country to determine the seeming “cartel-like” operation of wholesalers, traders and millers at the mercy of rice farmers and consumers.

Philippine Competition Commission
Philippine Competition Commission

“We have been already monitoring the rice sector. We are looking at the middle phase, so that will involve traders, wholesalers and millers,” said PCC Commissioner Johannes Bernabe.

PCC is undertaking a motu propio investigation on the rice sector taking off from the hearings conducted in the Senate and Congress and other sectors calling for further probe.

“PCC has to step up and look at it beyond simply monitoring. We have to be more actively engaged in the conduct of analysis and inquiries,” he said.

According to Bernabe, the rice sector has different phase in the value chain from production to milling to distribution and retail side. But PCC has prioritized certain phases, particularly the middle phase which includes traders, wholesalers, retailers and millers.

The country’s rice prices have not really gone down significantly even after the influx of imported rice following the imposition of the rice tariffication, but prices of unhusked rice already fell to its lowest level of ₧16 to ₧18 a kilo hurting local rice farmers.

Bernabe said they are focusing on the middle phase of the rice value chain because certainly the rice farmers are not in a position to abuse any position they might have. They are not also organized in the first place and have no any leverage on imposing prices at level which will be sustainable.

“Primarily, the ones who have leverage in this value chain appear to be the middlemen. At this point,” he added.

PCC is also closely watching the retailers because there are certain relevant geographic markets which seem to indicate that it is worth pursuing whether or not there are some anti-competitive behavior going on.

“I don’t want to say anyone is liable, that there are any guilty parties. It’s just that in the PCC, it behooves us to try and narrow down who it is we should be prioritizing in terms of examining behavior or conduct,” he said.

The PCC should be looking at the middle phase because this is where the middlemen, traders, millers, wholesalers are engaged in the distribution and facilitation of distribution of rice to the end user or retail level.

“If there is concentration, if there are players who are in a dominant position in certain markets for this middle phased transactions, then is it worsening the gap between farm gate prices and retail prices. If some of them are in a dominant or, worse, if they are engaged in cartelistic behavior, then they will exacerbate between farm gate prices and retail prices,” he added.

Since an investigation on the rice situation cannot be done at the national level perspective, Bernabe said that PCC has to go down to almost a district or provincial level. There is a need to narrow down which area has the concentration whether cartelization is happening in Visayas or in Mindanao or in the sub-regions like Central Luzon because of the archipelagic nature of the country.

PCC, he said, has tools at their disposal to request for information in the course of its investigation. It’s enforcement office can also conduct inquiries or investination and do surveillance and monitoring.

If PCC is able to establish that there is anticompetitive behavior going on, whether it is in the form of cartel or abuse of dominant position, then the Philippine Competition Act kicks in.