All gov’t agencies ordered to enforce competition policies

Published October 25, 2021, 2:16 PM

by Bernie Cahiles-Magkilat

All government agencies, including local government units (LGUs), are ordered to comply and implement the National Competition Policy (NCP) to ensure level playing field among businesses in the country.

This developed following the signing by President Duterte Administrative Order (AO) No. 44 (s. 2021) directing government agencies to adopt and implement the National Competition Policy (NCP), marking a milestone in mainstreaming competition policy across the public sector.

Under AO 44, all national government agencies, government-owned or -controlled corporations (GOCCs), and local government units (LGUs) 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.

“Mainstreaming a culture of competition requires a whole-of-government effort. While the importance of competition is mainly felt by businesses and consumers, its success requires appreciation of competition principles by leaders, regulators, policymakers, and the entire bureaucracy,” said PCC Chairperson Arsenio M. Balisacan.

Issued as Joint Memorandum Circular No. 01-2020 by the PCC and the National Economic and Development Authority (NEDA) last year, the NCP is set for nationwide implementation through AO 44 signed on 20 October 2021.

The NCP provides the framework for government agencies in formulating and adopting pro-competitive policies, rules and regulations, and issuances to avoid competition distortions and an uneven playing field for businesses. It complements the Philippine Competition Act and the Philippine Development Plan 2017-2022 in guiding the design of government interventions, especially those relating to the economic recovery of vulnerable sectors like micro, small and medium enterprises (MSMEs).

Notably, the NCP directed the Department of Budget and Management and GOCCs to promote competitive neutrality, or level playing field between state-owned enterprises and private companies, the Governance Commission for GOCCs (GCG) and DBM, in consultation with GOCCs’ respective parent-agencies are directed to review the mandates of GOCCs within their respective jurisdictions and recommend appropriate action to the President, subject to the provisions of the GOCC Governance Act of 2011.

GOCCs and DBM must recommend structural measures to address any identified anti-competitive behavior relating to the mandate and/or operations of GOCCs, recommend the separation of proprietary and regulatory activities of GOCCs, assess and monitor the nature, form, extent, costs and benefits, and impact on the business environment of existing subsidies and state interventions in favor of GOCCs, in consultation with the Department of Finance (DOF) and other relevant government agencies.

These agencies are required to establish guidelines on the grand of subsidies in consultation with DOF and other relevant government agencies.

In addition, these agencies must implement regulatory and non-regulatory measures necessary to neutralize any advantages or disadvantages that may accrue due to public sector ownership, in consultation with appropriate government agencies

With regard to enforcement, the NCP mandates all government agencies to support PCC’s watchdog functions against cartels, abuses of market dominance, and anti-competitive mergers and acquisitions.

“By ensuring that government responses and interventions follow competition principles, we can prevent policies which may exacerbate market failures and distortions. 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 the AO, compliance with the NCP will be included in the good governance conditions criteria for the grant of Performance-Based Bonus (PBB) to government personnel, and in the conferment of the Seal of Good Local Governance (SGLG) on cities and municipalities.

The NCP was developed as the primary reference on all competition policies across the Philippine government. It supports the strategic initiatives drawn from the updated Philippine Development Plan 2017-2022, and is the complementary framework for the Philippine Competition Act to create an enabling economic environment and to prohibit anti-competitive practices.

The NCP was signed on 30 July 2020 as a Joint Memorandum Circular No. 01-2020by the Philippine Competition Commission (PCC) and the National Economic and Development Authority (NEDA), and signed for implementation under Administrative Order No. 44 by President Rodrigo R. Duterte on 20 October 2021.

All government agencies and instrumentalities are directed to (i) adopt pro-competitive policies and government interventions within their mandates, (2) apply competitive neutrality between state-owned corporations and the private sector, and (3) assist in the enforcement of competition laws and issuances.

In adopting pro-competition policies and government interventions, government agencies across the entire bureaucracy should review relevant policies, rules and regulations, issuances, and other interventions to determine whether they restrict, prevent, or lessen competition or render undue advantage to some firms within the same sector or industry.

Government agencies must also remove impediments to foreign trade and investment, especially in sectors where competition between domestic and foreign players would prospectively remain viable, subject to the provisions of the Constitution and relevant laws.

They are also expected to formulate and implement strategies that reduce, mitigate, avoid, or eliminate potential harm to competition, and provide measures to address the potential anti-competitive effects of legal, policy, and regulatory instruments.

Businesses must also be provided easy access to information on all policies, rules, and regulations that may affect the private sector and their investments.

Government agencies must also ensure that all incentives do not distort the level playing field and that access to these incentives is open to qualified participants in the market or across the industry, and ensure open, transparent, impartial and competitive selection process and equal treatment among qualified local and foreign suppliers participating in public procurement

 
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