Recession strengthened monopolies as smaller players closed: antitrust body

MANILA - The Philippines’ antitrust regulator on Wednesday warned that the recession triggered by the COVID-19 pandemic strengthened already existing monopolies as smaller firms closed down. 

The head of the Philippine Competition Commission said during a roundtable forum that there were already inequalities in many Philippine businesses even before the pandemic hit the country. 

PCC Chairperson Arsenio Balisacan said that relative to other countries in East Asia and the Pacific region, the Philippines harbors a higher proportion of monopolies, duopolies, and oligopolies in the manufacturing sector. 

“Relative to other Asian economies, Philippine markets exhibit higher restrictions on competition, and restrictive state measures significantly contribute to this outcome,” Balisacan added.

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Small and mid-sized businesses were particularly hard hit by the pandemic, Balisacan noted, with many of these firms having no choice but to merge or get bought out. 

“As the failing firms exited and as firms merged, the resulting increase in market concentration has led to a corresponding rise in market power. The rise in market power risks consumer harm if it comes with the ability and incentive to exercise that market power in the form of higher prices, lower quality of goods and services, or less innovation.”

'NEED TO OPEN UP TELCO SECTOR'

The PCC chief added that as the pandemic pushed more people out of traditional brick-and-mortar shops and into online selling and buying, competition in the telco services has become even more important. 

“With foot traffic falling significantly in the traditional brick-and-mortar stores these days, many MSMEs are finding it necessary to move their businesses into the digital sphere. Thus, competition-enhancing reforms in the telco sector have now become even more critical and urgent.”

PCC Commissioner Amabelle Asuncion said the agency has been espousing opening up the telco market to competition precisely to avoid situations where consumers have no choice but to subscribe to one service provider even though it provides bad services.

“As a competition authority, our intervention there is really to advocate for more competition in that sector, lowering barriers to entry, and of course monitoring the market still for any possible abusive conduct on the part of dominant players that would prevent the entry and expansion of smaller, niche players that can service consumers,” Asuncion said.

Balisacan said failure to level the playing field could stifle long-term prospects for innovation, growth, and consumer welfare.