Competition and consumer protection

A SOMEWHAT hagiographic piece (by ABS-CBN News) appeared in PN on April 14. This extolled the virtues of Arsenio Balisacan who is responsible for the Philippine Competition Commission (PCC). There was emphasis on the importance PCC gives to consumer protection. Great!

Consumers are often powerless and do not generally receive effective support from government instrumentalities which are more aligned to the organizations which are the subject of criticism from the populace, rather than to the populace which they are supposed to represent.

Both Bangko Sentral ng Pilipinas and the Insurance Commission are guilty of this serious defect. If PCC can step in and provide the necessary consumer protection, then its reason for existing would be well established.

But the article also mentioned an important case in the telecommunication sector where I believe the PCC did not acquit itself satisfactorily.

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The article said:

“The PCC’s first fight involved the P70 billion acquisition of San Miguel Corp.’s (SMC) telecommunication assets by PLDT Inc. and Globe Telecom in May 2016. At that time, it stalled the entry of a third teleco.”

Was this a good thing? I do not think so. At this time PLDT’s Chairman, Manuel V. Pangilinan, complained of government interference with PLDT’s strategic decision-making. I agree with him.

To be specific, the decision under scrutiny was the proposal of PLDT and Globe to buy Vega Telecom Inc., the teleco business of SMC, for P69.1 billion.

We should not forget the background to their deal. For many months, SMC had cordial relations with the Australian teleco, Telstra. Unfortunately in early 2016, Telstra disengaged from its promising joint venture with SMC. The reason cited by Telstra is that there is too much uncertainty when dealing with government instrumentalities in the Philippines.

Telstra has been proved correct.

On June 17,2016, PCC said the PLDT-Globe deal will not be approved until after a “comprehensive” (i.e lengthy) review. Whatever happened to the 30- or even 90-day periods required by the Philippine Competition Act?

The PCC decision was regrettable. One of the excuses it gave was the potential adverse impact on public welfare. Filipino internet users are articulate. If they feel disadvantaged by the consequences of implementing the decision by PLDT-Globe to buy Vega, they would say so. The social media would be swamped if things go wrong, and this pressure would ensure that PLDT-Globe would make the requisite changes.

After all PLDT-Globe was prepared to make the P69.1-billion investment. It needed to be successful in order for the investment to be worthwhile.

Although this project was conceived in the last days of the Aquino administration, it is compatible with the “Build Build Build” philosophy which has characterized Duterte’s culture. We desperately need better infrastructure. Had this project pushed through, by now we would have a far more advanced telecommunications environment. Of huge significance is that the infrastructure is funded privately. No contribution from the taxpayers is required, unlike the current “Build Build Build” projects.

PCC has nothing to be proud of in obstructing the telecommunications project.

After all, PLDT Inc. and Globe Telecom are competitors and would both be competing hard to gain the benefits from their investments.

In June of this year, Globe plans to launch its fifth generation (5G) services. Globe is partnering with Huawei Technologies Co. Ltd for the development of its 5G networks which will be launched initially through a home broadband service.

I hope Globe can implement this project without unwanted interventions./PN