The Philippine Competition Commission (PCC) charged 12 onion importers and traders and imposed a total of P2.423 billion in penalties for anti-competitive and “cartel” practices.
On 9 July, the PCC Enforcement Office filed before the Commission a Statement of Objections against 12 traders for violating section 14 of the Philippine Competition Act.
The biggest fine was P113.231 million, while seven violators were charged with P330 million, four with P773.231 million, and one with P443.231 million.
“The respondents were charged with market allocation and the administrative exchange of business information in violation of section 14 of the PCA,” PCC Competition Enforcement Office Director Christian Loren de los Santos said.
Section 14 violations involved cartels or those businesses conniving to manipulate the market to their advantage, he explained.
According to the PCC official, these cartels may cause significant harm to consumers by engaging in coordinated anti-competitive conduct inducing price fixing, bid rigging, and output restriction.
“These violations are also known as issues of the supply chain and are known to be a part of the issue. In a competitive market, businesses must independently determine their quantity and prices,” he said, further explaining that in the onion market, importers and traders decide on the number of sanitary and phytosanitary import clearances (SPSIC) they will apply for and utilize and the actual volume of onions to import.
Thus, importers and traders in the process will compete by maximizing the utilization of SPSICs, increasing their import volume, and lowering their prices. He, however, noted that with market allocation, the ideal situation is replaced with collusion, resulting in poor SPSIC utilization, limited import volume and high prices.
“In this case, the investigation by the Enforcement Office revealed that respondents agreed to allocate the supply of imported onions in the Philippines,” he said.
“Our evidence showed that respondents assigned amongst themselves the sanitary and phytosanitary import clearances issued by the Department of Agriculture, Bureau of Plant Industry, and the distribution of the volume of imported onions.”
“By agreeing to allocate SPSICs and divide among themselves the actual volume of imports, respondents effectively controlled more than 50 percent of the volume of onions imported into the Philippines during the relevant period,” he added, noting that based on their evidence, traders, despite being competitors, “shared extremely little and exchanged and discussed commercially sensitive business information such as price, suppliers, customers, volume, shipping, distribution, and storage.”