Monday, March 28, 2011

Brew too hot for Nestle?

"Brew too hot for Nestle?"
by Willie S. Baun
Originally published in People's Journal, STREETLIGHT, 26 March 2011
(Also available online here)

"SOMETHING’S been percolating at Nestle Phils., Inc. but the aroma it exudes is unlikely to be as enticing as its world-famous brew. The Swiss company, largest food and beverage on the planet, faces a gamut of charges here, ranging from alleged unjust contract termination, predatory pricing, perjury and deception, to false and fraudulent testimonies.

The complainants are the Sy family-owned Banco de Oro and two of Nestle’s long-time distributors –- Service Edge distribution, Inc. and FDI Forefront II Trading Corp. -– both recognized and awarded as Nestle ace marketing arms.

Pending are charges of false and deceptive testimony filed by BDO against the Swiss multinational. The bank claimed NPI fed it with “fraudulent information” in 2009 on the financial condition of Inter-brand Logistic and Distribution, Inc.

On the basis of the NPI info, BDO trustingly extended 19 loans aside brom renewing the Interbrand credit facility for a total of P19 million exposure, all of it now in jeopardy because the company has closed shop.

In yet another case, distributors Service Edge and FDI Forefront haled Nestle to court principally for alleged predatory pricing or selling its products at prices way below actual cost. Under duress, they reportedly have had to adopt the illicit practice or face immediate contract termination.

False statements purportedly submitted in court by top NPI executives have incurred perjury charges against Chairman-CEO John Martin who is not as lucky chief financial officer Peter Nozsek who managed to slip out of the country and is now reportedly in the United States.

According to these two complainants, aside from the occasions of misconduct cited, Nestle has not been as transparent and candid in dealings related to the cases filed against it.

Nestle was also allegedly deliberately untruthful when it told media that the predatory pricing suit filed by Service Edge and FDI Forefront had been dismissed by the Department of Trade and Industry for lack of merit.

The truth, they said, is DTI declared it had no jurisdiction over the complaint “due to lack of jurisprudence and the absent of pertinent laws on predatory pricing and unfair trade practies.

The legal tussle is being watched with keen interest by the business community in light of the massive Public-Private Partnership socio-economic program launched by the Aquino administration. Who else but the giant multinationals, like Nestle, would indeed most likely to be in the PPP – given the billions in investments the program envisions?

Needless to say, the Aquino government is expected to even now be legally on red alert for oppressive practice some multinationals would perpetrate or perpetuate to shortchange their local partners.

Streetlights kibitzer Jose is saying that NPI has just celebrated it 100th year of operations in the Philippines. He winks as he handed me a statement of the NPI about how its business conduct has been “consistent with universally accepted practices adhering to fairness, transparency, and compliance with all applicable laws.”

I do not wish to believe that for so long a time now, some multinationals hosted by the Philippines have been pulling the wool over the eyes of their Filipino partners and the government."

Thursday, March 24, 2011

Manila Standard responds to Nestle allegations

"That party line on impeachment" by Emil Jurado
Published on 23 March 2011, Manila Standard Today, TO THE POINT (original article may be viewed online here).
*In reaction to Nestle's response here.

"Allow me to congratulate Nestle for its 100th year in operation in the Philippines. According to its CEO John Miller, “one hundred years of service to the Filipino consumer is a great source of pride within Nestle Philippines,” and that the company’s centennial “signifies its continuing commitment to the country.”

Well said, Mr. Miller. Unfortunately, there are many Filipinos—ironically, your very own distributors—who assert that your presence here in the Philipines has been anything but a service. These entrepreneurs initially held on to the promise of your company’s international reputation, only to find out latter on that Nestlé operates quite differently here in the country.

I summarize many of the woes experienced by Nestle distributors in my column last March 11. Edith de Leon, head of Nestlé’s corporate affairs office, wrote the Manila Standard Today an official response “categorically rejecting the assertions” mentioned in my column.

I read the points cited by Ms. De Leon very carefully, hoping that Nestlé could provide some clarity on the issue. More importantly, I wanted to hear what they had to say about the company’s being constantly regarded as the poster boy of corporate bullying in the Philippines. However, she must have had too much Nestlé coffee as her reply was filled with generic motherhood statements, as well as some “facts” which left me scratching my head. Santa Banana, is this what we can expect from Nestlé in the next 100 years?

* * *

Let’s rewind a bit and analyze Nestle’s rejoinder to my column. First, Nestlé implies (quite creatively) that the cases filed against it by Service Edge Distribution Inc. (SEDI and Forefront II Trading Inc.) were dismissed by the Department of Trade and Industry for “lack of merit.”

The fact is, the Order dated Jan. 5, 2011 clearly stated that the dismissal was due to “lack of jurisdiction.” I also understand that not a single case filed by SED1 and FD2 against Nestle has been dismissed.

Perhaps, it is the same tactics that have gotten several perjury cases filed in Quezon City and Makati courts. These cases were filed against top Nestlé executives that include, aside from Mr. Miller, Shahab Bachan and Doreswanby Nandkishore. My gulay, is the Nestlé head office in Switzerland aware of what’s happening here?

Second, to dismiss the complaints filed by these distributors as “unfounded” is to have a rather short memory. It was only five years ago that the Supreme Court itself (Nestle Philippines Inc. vs. FY Sons Inc. May 5, 2006 G.R. No. 150780) ruled that FY Sons (yet another distributor) was “lured to invest huge sums of money, time and efforts” by Nestlé only to have the latter “breach the distributorship agreement by committing various acts of bad faith such as, but not limited to, failing to provide promotional support, and concocting falsified charges to cause the termination of the distributorship agreement without just cause.”

If this sounds painfully familiar, it’s because Nestlé distributors are still singing the exact tune now. Fact two.

Third, Nestlé claims that it cannot possibly be accused of predatory pricing simply because its goods are not the cheapest in the market. Likewise, there is this assurance that its pricing policy are “compliant with the laws as well as recognized standards of trade practice in the country.”

* * *

At last, Nestlé and I agree on something: its goods are certainly not cheapest in the market. But if a company imposes vertical price restraint agreements with its distributors, isn’t that predatory pricing as well? My friends, who are experts in marketing, point out that this practice of setting a minimum price by which its distributors are required to sell Nestle products does not take into consideration the operational costs which are shouldered by the Filipino SMEs. Turning out a profit then becomes an immense struggle, considering capital outlay and lack of marketing and promotional support from the multinational.

Furthermore, how can Nestlé possibly be “complying with the country’s laws and standards” when there is no standard on vertical price agreements to begin with? To date, Philippine courts have no actual guidelines for determining whether or not predatory pricing has occurred or whether a vertical price agreement is restrictive of trade and monopolizes competition. Fact three.

Finally, the company assures the public that its activities are conducted “in compliance with Nestlé Corporate Business principals adhering to fairness, transparency and compliance to laws and regulations.” Perhaps as far as Nestlé Philippines is concerned, yes. But, considering its main headquarters is in Switzerland, a vertical price restraint is patently against the standards of the Swiss Competition Council.

Santa Banana, this appears to be a case of the hand doing something that the head is not aware of!"

Oh what a tangled web you weave

Nestle claims dismissal on the merit and rejects predatory pricing. Similar articles were sent by Nestle to Business Mirror and Manila Standard (see below). Responses by Manila Standard here.





Tuesday, March 22, 2011

Nestle's idea of fairness and transparency

"Nestle's idea of fairness and transparency"
by Ducky Paredes
22 March 2011, Malaya (original article available online)

“BDO charged that Nestle ‘acted in utmost bad faith and in wanton, fraudulent, reckless, oppressive and malevolent manner.’”

WE wish to assure the public that our activities are conducted in compliance with the Nestle Corporate Business Principles, consistent with universally accepted practices adhering to fairness, transparency and compliance with all applicable laws and regulations. These same principles have governed the way Nestle has done business in the Philippines for 100 years, allowing us to earn the trust of our consumers all these years. In turn, we expect our partners to be guided by the same principles."

This is the assertion of Ms. Edith de Leon, the Head of Corporate Affairs of Nestle Philippines, Inc. (NPI), a Switzerland-based multinational company producing and marketing a wide range of consumer products.

De Leon was reacting to media articles critical of the company’s business practices that, among others, included unjust termination of agreements, predatory pricing, perjury and offering false testimony in evidence.

The particular complaints in this regard were filed by two of its major distributors, Service Edge Distribution, Inc. (SEDI) and FDI Forefront II Trading Corporation (FDI 2).

"Adherence to fairness, transparency and compliance with all applicable laws and regulations." Grandiose words, nice to hear but, if not sincerely meant, amount to nothing.

But how does her company’s actual actuations square with her lofty Corporate Business Principle?

Was Nestle Philippines being fair and transparent when, it ‘’knowingly and deliberately provided false and fraudulent information’’ in 2009 to Banco de Oro regarding the financial status of its distributor, Interbrand Logistics and Distribution, Inc. which was then renewing its loan and credit facility with the bank?

The bank renewed Interbrand’s credit facility and extended it a series of 19 loans totalling P123.25 million in the second half of 2009 on the strength of Nestle’s repeated positive endorsements and certifications about its distributor’s financial stability and payment performance. It turned out (eventually) that Nestle knew all along that Interbrand was in serious financial trouble; yet, just the same, Nestle participated in what amounted to a cover-up in order to protect and advance its own business interest.

Banco de Oro took Nestle to the court, accusing it of having "knowingly made a false representation with intent to mislead the bank into renewing Interbrand’s credit facilities and allowing Interbrand to make further availments under the same to finance the purchase of (Nestle’s) products which would eventually lead to (Nestle’s) benefit."

BDO charged that Nestle "acted in utmost bad faith and in wanton, fraudulent, reckless, oppressive and malevolent manner."

Referring to the complaint on predatory pricing filed by SEDI and FDI 2, De Leon said this was dismissed by the Department of Trade and Industry. True or false?

According to the two distributors, what actually happened was that the DTI declined to make a definitive ruling on the merits of the case supposedly because it did not have jurisdiction over the complaint, due to the lack of applicable jurisprudence and the absence of pertinent laws on predatory pricing and unfair trade practices.

This is precisely why several anti-trust bills seeking to curb these abusive practices have been filed in the Senate and in the House of Representatives.

The fact is that top Nestle officials are also facing perjury charges before courts in Quezon City and Makati City and these are now being evaluated by prosecutors of the Department of Justice. Named respondents are Nestle chairman and CEO John Martin, chief financial officer Peter Noszek, business executive manager for liquid beverages Shahab Bacani and regional sales manager Jose Ceballos.

Was Nestle also being transparent when it quietly shipped out Peter Noszek, who is now reportedly in the US? Of course, there was no Hold Departure Order for him, but Nestle insiders say that Noszek’s departure was kept so hush-hush that they only found out about it one morning via an office advisory.

It may be assumed that the company also did not inform the DOJ officials concerned about Noszek’s departure. So he is now effectively out of reach of the country’s judicial system. Neat, isn’t it? Sure it would be -- for a criminal organization but, for a legitimate business? One has to wonder if similar "reassignments" are also in the works for chairman and CEO John Miller and other officers.

De Leon also asserts that Nestle’s pricing policies are compliant with the laws as well as recognized standards of trade practice in the country. But does Nestle include in these "recognized standards" the distributors’ expenses in distributing and delivering Nestle’s products to the wholesalers, dealers and other retail outlets? Does it also take into account the financing cost and high interest rates that distributors have to shoulder in purchasing Nestle products?

Both SEDI and FDI 2 claim that the price bulletins issued by Nestle for its products are so inflexible and do not take these factors into consideration.

They were allegedly also ordered by a Nestle regional sales manager to give unrealistic discounts to a favored group of wholesalers.

They also allege that Nestle’s unfair price strategy, aggressive sales targets and unilateral suspension of in-house financing arrangement caused them to incur heavy losses and placed FDI 2 in dire financial straits. This purportedly prompted Nestle to demand that additional capital be infused into FDI 2, which was complied with, using borrowed money.

In spite of having complied with the demand for additional capital, Nestle allegedly terminated the distributorship agreement on December 21, 2007. This forced the company to cease operations, with the result that it was unable to pay its employees, or to give their 13th month pay.

Again, was Nestle adhering to ‘’fairness and compliance with all applicable laws and regulations" in the case of its distributor, FY Sons, Inc.?

Nestle sued FY Sons before the Makati Regional Trial Court in relation to a dispute over supposed unpaid accounts. But the court handed down an adverse ruling against Nestle and ordered it to pay FY Sons P1 million in actual damages and P200,000 as exemplary damages and attorney’s fees. Nestle elevated the case to the Court of Appeals but to its chagrin, the CA upheld the lower court’s ruling and even raised the penalty to P1.5 million.

It was established in both the Regional Trial Court and the Court of Appeals that Nestle "indeed failed to provide support to respondent; unjustifiably refused to deliver stocks to respondent; the imposition of P20,000 fine was void for having no basis; that petitioner failed to prove respondent’s alleged outstanding obligation; that petitioner terminated the agreement without sufficient basis in law or equity and in bad faith; and that petitioner should be held liable for damages."

Nestle took the case further up -- to the Supreme Court but Nestle again received a stinging rebuff when the High Tribunal sustained the CA decision. The SC ruled that Nestle failed to prove that FY Sons owed it the sum of P995,319.81 and that the seizure of the distributor’s time deposit of P500,000 was improper.

The Court ordered Nestle to refund the amount, with interest.

Furthermore, the SC castigated Nestle for "being at fault and in bad faith" and rejected its plea for moral damages and attorney’s fee from FY Sons.

In effect, the Supreme Court said Nestle was guilty of violating certain laws and of committing unfair trade practices.

This is what Ms. De Leon calls Nestle’s "adherence to fairness, transparency and compliance with all applicable laws and regulations?"

***

Thursday, March 17, 2011

Parts 1 and 2: Is Nestle guilty of predatory pricing

"Is Nestle guilty of predatory pricing" - Complete Series
Part 1 of the article by Jose Pablo Salud, published in Business Mirror/Philippines Graphic appears here.
Complete parts 1 and 2 appear below, by Jose Pablo Salud (original article available online here).

"Nestlé Philippines, a subsidiary of the world’s largest food conglomerate Nestlé International (2008 net profit: US$16 billion), is facing charges of alleged predatory pricing before the Department of Trade and Industry (DTI).

Locking horns with Nestlé Philippines are its own distributors—Service Edge Distribution Inc. (SEDI) and FDI Forefront II Trading. Both alleged that the multinational corporation “caused them to incur P300 million in losses because of the strict controls and aggressive sales targets of Nestlé.”

According to Atty. Lorna Kapunan, legal counsel for the respondents: “The complaint alleged that the pricing policies of Nestlé constituted predatory pricing because Nestlé was selling its products at a very low price, intending to drive competitors out of the market or create a barrier of entry for potential new competitors.”

Predatory pricing
Predatory pricing, by definition, should not be confused with normal price competition. In a nutshell, predatory pricing is the slicing down of prices to levels way below competitive standards for the mere intention of cutting down competitors.

The practice of vertical price restraint pertains to the agreement between manufacturer and distributor on the setting of minimum price levels at which the product can be sold in the market.

Purportedly, Nestlé Philippines denied the allegations in the complaint, claiming that “the individual respondents did not do anything wrong; that the FDI issue is closed because of the quit claim; and that SEDI’s distribution agreement has been received,” according to the distributor’s counsel.

As such, following the legal technicalities that ensued, Nestlé argued in its Motion to Dismiss that “the DTI has no jurisdiction over the case because it is merely a civil suit masquerading as a regulatory case to escape the payment of filing fees.”

Furthermore, Nestlé insisted that respondents had failed to solidify a case of predatory pricing by “failing to hurdle the two-pronged test in the US case of Brooke vs. Brown.”

“We filed our Oppositions on the two Motions, arguing that the grounds cited in the Motions to Dismiss are best threshed-out in the trial on the merits and that the hearing officer only followed its mandate to arrive at a just resolution of the case in a speedy and expeditious manner,” counsel for the respondents said.

The hearing officer thereafter issued an Order requiring the Bureau of Trade Regulation and Consumer Protection (BTRCP) of the DTI to see if there is “probable cause” to file a formal charge against Nestlé.

“We filed a Manifestation stating that a formal charge is to enforce the administrative liability and not criminal liability as implied by the term ‘probable cause,’” counsel for the respondents explained. “We also informed the DTI that we have filed a criminal case in Quezon City to enforce the criminal liability of Nestlé.”

Also last year, following an independent investigation of the case at hand, one of the country’s largest banks—Banco de Oro (BDO)—hauled Nestlé Philippines in a P170-million legal debacle.

Business model
Kapunan said that Nestlé Philippines follows the typical Fast Moving Consumer Goods (FMCG) distribution flowchart, wherein distributors purchase bulk amounts of Nestlé products and re-sell them to retailers with a small profit margin.

Re-orders and re-stocking, which siphon huge amounts of capital from distributors, are done periodically, depending on how fast a distributor can resell the goods.

Nestlé, for its part, promised support for its distributors through marketing, promotional and advertising efforts, and assurances of reasonable income.

A regional or area manager’s performance and compensation benefits are wholly tied in with how much his or her distributors purchase from the company.

Nestlé’s distributorship business model, however, were reportedly all good only on paper; in practice, Nestlé allegedly reneged on the promised support to its distributors, forcing the latter to spend more on such efforts to meet aggressive sales targets.

Bearing the weight
According to Kapunan, the practice of vertical price restraint weighed down retailers and distributors for no less obvious reasons: Spending more in order to market and sell the goods purchased from manufacturers.

Apparently, competitive or even low prices are not sufficient to convince the market to purchase their goods, hence the need to boost sales by adding promotional and demonstration efforts. The cost of such efforts, which multinational manufacturers feel are vital to the whole thrust of marketing and selling the products, are now passed on to the retailer who needs to dispatch the products more creatively and vigorously in order to reach cutthroat sales targets.

Kapunan explained: “The most obvious disadvantage of vertical price restraint is to the small- and medium-scale entrepreneur, who in the Philippines typically acts as a retailer and/or distributor for large multinational manufacturing or production firms like Nestlé. Nestlé’s current distributorship agreement, for instance, does not take into account all relevant costs associated with distribution of its products. The costs are borne by the distributors, with lackluster or merely initial support on the part of Nestlé in terms of marketing or promotional work.”

Kapunan adds: “Such practice of making the Filipino small- and medium-scale entrepreneurs suffer the costs of distribution, and without considering such costs in driving down or setting prices, is a potential threat to the greater market as it results in productive inefficiency. Productive inefficiency results by incurring higher production costs as there are no competitive forces to reduce costs to the lowest possible level.”

She said that such underhanded practices reduce the Filipino entrepreneur into what can be deemed as a losing proposition, bearing the brunt and cost of fixed pricing as demanded by the multinational manufacturer. It also poses a serious threat to competitors.

The end game, so to speak, is for conglomerates like Nestlé to sell its products at its desired price, sans the intention of backstopping any or all additional costs incurred by its distributors through the latter’s promotional efforts to boost sales and meet target quotas.

What is worse, is that vertical price restraints every so often force the small- and medium-scale entrepreneur to arrive at certain compromises if only to make ends meet or bring in some semblance of profit.

Illegal under Swiss law
What is disturbing in all this, according to Atty. Kapunan, is that such practices by Nestlé, if set in train in Switzerland, its home country, is considered a threat to competition under Swiss law (Article 5 [1 and 4] of the Swiss Competition Act), thus making it illegal.

“(1) Agreements, which substantially restrict competition on a market for good services and which are not justified by economic efficiency, as well as agreements which prevent competition on a market for goods and services, are illegal… (4) Agreements between enterprises on different market levels regarding fixed or minimum prices… are deemed to prevent competition.”

With the Swiss government’s Revised Notice on Competition Law Treatment of Vertical Restraints, revised in July 2007, it is clear that under Swiss law, the practice of vertical price restraint or even the mere restriction of inter-brand competition in a distribution system triggers an irrefutable “presumption that competition has been eliminated, and may result in a fine in an amount equal to a maximum of ten percent (10%) of the company’s turnover during the past three (3) business years.”

In the United States, vertical price restraint agreements are not illegal per se, so long as in the practice of it all relevant economic factors and effects are taken into account. This is called the Rule of Reason. Without considering the so-called Rule of Reason, “every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among several states, or with foreign nations, is declared to be illegal.” (15 U.S.C. § 1).

Anti-trust in PHL law
In Philippine law, however, such penalties or policy framework are non-existent, hence unable to address economically inefficient agreements between manufacturer and distributor.

A thorough browse of the anti-trust provisions in the 1987 Philippine Constitution reveals that State must “regulate or prohibit, for the sake of public interest, monopolies, combinations in restraint of trade, and other unfair competition practices, and to protect Filipino enterprises against unfair foreign competition and trade practices.” (Article XII Sections 1 and 19).

Clearly noticeable in these provisions are the lack of specific definitions between competition and unfair competition, as well as penalties due to the lack of actual cases to which the courts can apply the said law. That such laws warrant jurisprudence in the exercise of the Rule of Reason presents a problem as to the test and sufficiency of the legal doctrine.

Face the music
It is clear that moral issues have to be considered in the practice of vertical price restraint in order for Filipino entrepreneurs to stand on equal footing with titan conglomerates like Nestlé.

It may not be illegal, per se, in the Philippines, but agreements between manufacturer and partner-distributors should nonetheless guarantee support from multinational manufacturers and a fair return to their Filipino partners. Recovering capital or the hope for a return on investments is a fundamental business paradigm even Nestlé presumably understands.

The country must look into ways whereby it can crank up judicial and legislative frameworks as to distributorship agreements between Filipino entrepreneurs and multinational giants like Nestlé. A nation that prides itself in business process outsourcing has no choice but to look into the relevance of policies and laws that deal with predatory pricing.

While granting that the business community is a tightly welded cauldron of secrets, every so often these secrets find a way out to nudge an unsuspecting public—through hairline cracks on the seams, or in this case, an alleged business practice gone awry. Walls have eyes and ears, needless to say, and little can be said about scandals in this country, save the fact that in most cases, the public will find out—sooner or later. G"

Plastic in Lean Cuisine: Nestle product recall!

"NESTLE Product Recall: Bits of Plastic in Lean Cuisine"
Originally published in Equalizer Post on 16 March 2011 here.

"Aren’t those Lean Cuisines dinners supposed to be a healthy alternative? Nestle Prepared Food Co. announced Tuesday a voluntary recall of frozen spaghetti and meatball dinner after reports of red plastic being found in the meatballs.
From News Medical
By Dr Ananya Mandal, MD

Lean cuisine Spaghetti With Meatball has been recalled in the U.S. after bits of red plastic have reportedly been found in a few of the ready-made meals.

The recall notice was issued Tuesday by the U.S. Department of Agriculture and affects about 10,260 pounds of frozen spaghetti and meatballs. Food maker Nestle, in its statement, says the affected packages were produced in October. The health risk associated with this recall is low, the USDA’s Food Safety and Inspection Service explained. If the product is consumed, there is only a remote probability of adverse health consequences.

Nestle Prepared Foods received complaints from consumers in Minnesota, South Dakota, and Wisconsin, that consumers had found hard plastic in the frozen meals, the FSIS said. The products were sold east of the Rocky Mountains in 9.5 ounce units entitled “Lean Cuisine Simple Favorites, Spaghetti with Meatballs” and have the establishment number “EST 7991.” They all have a November 2011 expiry date on the side of the package.

“We apologize to our retail customers and consumers and sincerely regret any inconvenience created by this voluntary product recall,” Nestlé said in a statement.

About Nestlé USA
Named one of “America’s Most Admired Food Companies” in Fortune magazine for 13 consecutive years, Nestlé USA provides quality brands and products that bring flavor to life every day. From nutritious meals with LEAN CUISINE® to baking traditions with NESTLÉ®®, Nestlé USA makes delicious, convenient, and nutritious food and beverage products that enrich the very experience of life itself. That’s what “Nestlé. Good Food, Good Life” is all about. Well-known Nestlé brands include: NESTLÉ® TOLL HOUSE®, NESTLÉ®®, NESTLÉ® COFFEE-MATE®, STOUFFER’S®, LEAN CUISINE®, HOT POCKETS® and LEAN POCKETS® brand sandwiches, NESCAFÉ®, NESCAFÉ® TASTER’S CHOICE®, NESTLÉ® JUICY JUICE®, BUITONI®, DREYER’S/EDY’S®, NESTLÉ® CRUNCH®, NESTLÉ® BUTTERFINGER®, and WONKA®.
TOLL HOUSE NESQUIK
CNN) -- Nestle Prepared Foods Co. on Tuesday announced a voluntary recall of a frozen spaghetti and meatballs dinner it manufacturers which may be contaminated with pieces of red plastic.

The recall applies to packages of LEAN CUISINE® Simple Favorites Spaghetti with Meatballs frozen dinners that were manufactured during a one-hour period in October, according to a news release by the Solon, Ohio-based company.

The production code on packages subject to the recall is 0298595519 P, the release stated.

"Nestle is taking this action after a few consumers reported they had found red plastic in the meatball portion of the entrée," the statement read. "No injuries were reported by any of these consumers."

"Thus far, the plastic complaints appear to be confined to a very short period of production," the company stated. "However, out of an abundance of caution, Nestle is recalling the entire hour code of that product."

The company stated that no other products were affected by the possible contamination."

Monday, March 14, 2011

The most controversial company in the Philippines?

"NESTLE PHILIPPINES: The Most Controversial Company In The Philippines?"
Originally published in the EQ Post on 11 March 2011 here.


"John Miller, Nestle Philippines CEO, is a spin doctor. He spins in unusual directions. He tells his employees in Nestle Philippines that it's in their best interest to communicate honestly. He persuades them to listen more, to tell the truth, to take responsibility for their actions, and to treat customers with respect.

But John Miller does not practice what he preaches.
He does not tell Nestle Vevey the awful truths that he covers up.

1)TRADE BULLY OF THE PHILIPPINES

'THIS is a re-telling of a fairy tale that did not end happily ever after. You read about it in this column before. It is about the biggest food multinational (MNC) in the world and one of its Filipino distributors.
It began thus: Once a upon a time this MNC known for producing milk, cereals, coffee and a Chocó drink that supposedly energized young people, appointed FDI Forefront I1 Trading Corp. (FD12) and Service Edge Distribution (SEDI) as two of its many distributors.
FDI2 and SED1 had common minority shareholders.
Since MNC was one of the most desired companies because its products sold like the proverbial hot cakes, FD12 and SEDI were ecstatic.
They were assured of adequate advertising and promotions support, in-house financing to acquire the goods they would resell to retailers like groceries and supermarkets, and products whose cute ads made them fly off the shelves. In return, while boosting the MNC’s sales, they would make for themselves a handsome profit. Clearly, it seemed to them, to be a win-win situation.
FD12 won MNC’s Distributor of the Year in 2005 and 2006 and the MNC’s Area Sales Manager (ASM) assigned to coordinate with FD12 won company awards and corresponding incentives and bonuses.
But along the way, the MNC prince turned into a beast. MNC increased the sales targets or quotas of goods that FD12 and SEDI had to sell even as MNC reduced its marketing and promotional support. Then it forced these two outfits to service additional retailers that had established reputations of being poor payers or had long outstanding receivables. Then sometime in 2006, MNC transferred distributors’ financing to local banks that imposed higher interests rates and a shorter 30-day maturity period.
Yet despite all these limitations, FD12 soldiered on and even won the two awards from MNC. But despite the accolades, the cash flow was miserable and their bottom line was shrinking.
There was a reason for this. Eventually, an independent audit disclosed collusion between the MNC’s Area Sales Manager and the FD12 operations manager. FDI2 was giving retailers discounts way above what FDI2 allowed, in effect practically giving the goods away. Why? Apparently, they were carrying on an illicit affair since the FD12 manager was married.
When FD12 brought this loss – and the reasons behind it – to MNC’s attention, citing conflict of interest, the Pinoy distributor was told that the company considered the affair as one between two consenting adults. This is despite the fact its Corporate Code of Ethics requires its management and employees to “avoid even the appearance of impropriety in its business relationships on behalf of the company.” And, what about the Pinoy’s losses?
To add insult to injury, the MNC illegally and, without warning, terminated its distributorship four days before Christmas of 2007 resulting in 100 employees being laid off.
Not content with this bullying, when FD12 went back to get outstanding claims worth P11 million, it was coerced into signing a Release and Quit Claim on future legitimate claims based on a proposed joint audit by the MNC and FD12 of the latter’s financial records. FD12 signed under duress, believing the promise of the MNC lawyer that the company would honor good-faith claims made against it. Of course, the MNC lawyer later denied making such a ridiculous promise.
I wrote about this evil MNC in April and May this year. Under the glare of publicity, MNC initiated talks with FD12 to settle their differences, but, of course, when one is dealing with legendary Swiss misers, nothing came of the talks.
In fact, it gets worse for the MNC’s distributors. Apparently, five of MNC’s six distributors in Central Luzon were also victimized by one of the company’s employees, a Regional Sales Manager who ordered the distributors to give preferential discounts of 10 to 12% to a particular customer who, in turn, sold the discounted goods to Metro Manila (MM) wholesalers at 8 to 10% off. Manila distributors like SEDI and FD12 could not compete with these in-house cut-throat competitors even as they were being bullied to “hit target at all costs.” Everyone – in central Luzon and in Metro Manilas ended up losing more money, even as MNC and its managers were hitting their targets and more.
Things eventually came to a head when the checks that the five CL distributors received from the Metro Manila customer to whom they were giving the preferential discount bounced. The bad checks turned out to be from the joint account of the MNC’s Regional Sales manager who, it turned out to be was the wife of the preferred customer!
When the conspiracy surfaced, the manager’s husband got cash advances from the MM wholesalers, one of which forked out P22M for goods he never got. Apparently this MNC manager became one because she was constantly hitting or exceeding her sales targets and under her watch, Central Luzon won Best Area Award in 2007 and 2008.
What did MNC have to say about this financial brouhaha? Again, they dismissed it as the product of a rogue individual, and will only pay for the legal fees of the distributors when they sue the manager who has absconded with the cash and whose whereabouts are now unknown.
However, according to independent lawyers, the MNC manager by her verbal and written orders (some on MNC official letterhead) bound the company through the doctrine of Apparent Authority. The lawyer may be right but trying to get what is due you from the miserly Swiss may be harder than getting blood from a stone.
My advise to the distributors of this MNC: Get together and sue. This MNC should be booted out of this country. This MNC is the moral equivalent of the Ampatuans or the A(H1N1) that victimizes – even kills off — just about anyone that has dealings with it.' By Ducky Paredes

2) COVER-UP

With the aid of their large advertising budgets, Nestle Philippines media team work on mainstream media to recycle press releases and to suppress news that might adversely affect Nestle.
EXAMPLE:The news blackout on Milo Marathon tragedy.
Is it true that a man collapsed and died of heat stroke two days after in the recent 34th Milo Marathon eliminations last July 4 and Nestle is suppressing the news in mainstream media??? EQualizer Post :July 16

They issued a belated apology on the July 4 incident only after the EQ Post expose.
Nestle posted this letter of condolence only at 4:12 pm, July 16 only in Facebook:



There has been no report on this tragedy in mainstream media!"

Full article with images available here.

Friday, March 11, 2011

To the point: predatory pricing

Appeared in "To The Point" column, Manila Standard Today, by Emil Jurado, on 11 March 2011

"There’s this case filed recently by two Filipino-owned companies against a giant multinational company whose products the local firms distribute. The case bears watching. Service Edge Distribution Inc. and FDI Forefront II Trading Corp. sued Nestle for predatory pricing and perjury.

Predatory pricing is selling one’s products at very low prices to put competitors out of business or discourage them from entering the market. In this case, Nestle allegedly forced SEDI and FDI II to sell products at controlled prices, way below the actual cost of distributing the product, with threat of termination of contract if they failed to do so.

Santa Banana, it’s bad enough to take a low blow against competition. To do something like this to one’s own distributors is one for the books!

The case of perjury involves four top executives of the multinational company who allegedly presented false testimonies as evidence in their counter-affidavits to the complaints filed against them.

Cases such as these that involve not-so-aboveboard practices of some multinational companies doing business in the Philippines give urgency to the passage of an anti-trust law that will protect small and medium enterprises that are owned and managed by Filipinos.

In the Senate, pending are Bill 123 by Senator Serge Osmeña, Bill 1838 by Senator Miriam Defensor Santiago and Resolution 123 by Senator Manny Villar. These call for an inquiry into cartels and monopolies. There is another measure by Senate President Juan Ponce Enrile that prohibits price-fixing and price discrimination.

Representing the private sector in the Senate inquiry is lawyer Lorna Patajo Kapunan, who has brought public attention to the way some multinationals, for the longest time, have taken advantage of the absence of an implementing law that will stop their underhanded practices."

Also available online here.

Wednesday, March 9, 2011

Anti-trust issues fester

"Anti-trust issues fester"
by Willie S. Baun
Originally published on 08 March 2011, People's Journal, STREETLIGHTS, p. 4
Also available online here.

"WHENEVER a mall opens in a sleepy town, the local community is normally drawn to imaginings of bustling economic activity, hopefully jobs as well, including small businesses in the vicinity linking with the mall to supply it with backdoor goods and services.

But what if the mall owners and operators were a bunch of bullies only out to dominate the local market, or even drive smaller enterprises out of business? Or plague their suppliers with delayed payments and oppress their employees to meet unrealistic production targets?

What then if not just like the small town the Philippines were viewed as such by some giant multinational companies with absolutely no intention, apparently, to be apostles of fair trade helping to grow the domestic economy?

Noted lawyer and anti-trust advocate Lorna Patajo Kapunan has shown the MNC-victimized Filipino entrepreneurs, small and medium enterprise owners, and employees they can fight back – if only to arouse the government to look at their desperate straits.

This was brought to light recently when a client of Kapunan filed a case of predatory pricing and unfair trade practices against a Swiss food and beverage multinational. The client actually was a group of the distributors allegedly driven to bankruptcy by the MNC’s violation of free-market standards.

The group went straight to the Department of Trade and Industry for redress of numerous grievances only to be told, at the end of tedious documentations, that their case was ultra vires, “not within DTI jurisdiction.”

Admittedly, state agencies were at a loss about which bureau has jurisdiction of such cases, not to mention that the penalties for anti-trust and monopolistic conduct are “laughably negligible,” according to Kapunan.

Thankfully, relief is in sight of the distributors and similarly situated small businessmen. Parallel to relevant Senate measures, House Bill 1980 has been filed by Reps. Jack Ponce-Enrile, Rufus by Rodriguez, and (whadyanno?) Gloria Macapagal-Arroyo.

HB 1980 seeks to stiffly penalize “anti-competitive agreements, abuse of dominant power and anti-competitive mergers” and above all, the “establishment of the Philippine Fair Competition Commission.”

In virtual leap from immunity of restraints in trade, the bill threatens the MNC bullies with up to P750-million in fines if found to be in violation of anti-trust regulations.

Moreover, a fine shall be imposed in an amount double the gross proceeds gained by the violators or double the gross loss suffered by the plaintiffs. Damn right, Jose, from a nation of MNC-dependent distributors, the enactment of HB 1980 into law would call for standing ovation.

Kapunan and her clients, of course, deserve a big applause that, I believe, is bound to strike a resonant chord in the Senate and among the hundreds of thousands of small and medium entrepreneurs all over the country."

Monday, March 7, 2011

Special report: possible predatory pricing by Nestle Philippines?

"Is Nestle Phils guilty of predatory pricing?"
by Joel Pablo Salud, Editor, Philippines Graphic
Published online on 06 March 2011; available on the newsstands on 07 March 2011


"Special Report

NESTLÉ Philippines, a subsidiary of the world’s largest food conglomerate Nestlé International (2008 net profit: $16 billion), is facing charges of alleged predatory pricing before the Department of Trade and Industry (DTI).

Locking horns with Nestlé Philippines are its own distributors—Service Edge Distribution Inc. (Sedi) and FDI Forefront II Trading. Both alleged that the multinational corporation “caused them to incur P300 million in losses because of the strict controls and aggressive sales targets of Nestlé.”

According to Lorna Kapunan, legal counsel for the respondents: “The complaint alleged that the pricing policies of Nestlé constituted predatory pricing because Nestlé was selling its products at a very low price, intending to drive competitors out of the market or create a barrier of entry for potential new competitors.”

Predatory pricing

Predatory pricing, by definition, should not be confused with normal price competition. In a nutshell, predatory pricing is the slicing down of prices to levels way below competitive standards for the mere intention of cutting down competitors.

The practice of vertical price restraint pertains to the agreement between manufacturer and distributor on the setting of minimum price levels at which the product can be sold in the market.

Nestlé Philippines denied the allegations in the complaint, claiming that “the individual respondents did not do anything wrong; that the FDI issue is closed because of the quit claim; and that Sedi’s distribution agreement has been received,” according to the distributor’s counsel.

As such, following the legal technicalities that ensued, Nestlé argued in its motion to dismiss that “the DTI has no jurisdiction over the case because it is merely a civil suit masquerading as a regulatory case to escape the payment of filing fees.”

Furthermore, Nestlé insisted that respondents had failed to solidify a case of predatory pricing by “failing to hurdle the two-pronged test in the US case of Brooke v Brown.”

“We filed our oppositions on the two motions, arguing that the grounds cited in the motions to dismiss is best thrashed out in the trial on the merits and that the hearing officer only followed its mandate to arrive at a just resolution of the case in a speedy and expeditious manner,” counsel for the respondents said.

The hearing officer thereafter issued an order requiring the Bureau of Trade Regulation and Consumer Protection of the DTI to see if there is “probable cause” to file a formal charge against Nestlé.

“We filed a manifestation stating that a formal charge is to enforce the administrative liability and not criminal liability as implied by the term ‘probable cause,” counsel for the respondents explained. “We also informed the DTI that we have filed a criminal case in Quezon City to enforce the criminal liability of Nestle.”

Also last year, following an independent investigation of the case at hand, one of the country’s largest banks—Banco de Oro—hauled Nestlé Philippines in a P170-million legal debacle. To be concluded *This article is originally published in this week’s issue of The Philippines Graphic magazine, which hits newsstands Monday, March 7."


Sunday, March 6, 2011

Remembering PNoy's SONA

State of the Nation Address
of His Excellency
Benigno S. Aquino III
President of the Philippines
to the Congress of the Philippines
Session Hall of the House of Representatives
July 26, 2010
[Batasan Pambansa Complex, Quezon City]

"According to our Constitution, it is the government's duty to ensure that the market is fair for all. No monopolies, no cartel that kill competition. We need an Anti-Trust Law that will give life to these principles, to afford Small- and Medium-Scale Enterprises the opportunity to participate in the growth of our economy."

Mr. President, let's hope you deliver on your promise for greater protection for the Filipino SMEs!

Full video of PNoy's SONA available on YouTube here.

Saturday, March 5, 2011

Supermarket association attends Senate anti-trust public forum

"PAGASA at Senate Committee on Trade & Commerce"
By Wave Technologies, Inc., originally published 10 February 2011, at the Philippine Amalgamated Supermarket Association Incorporated website here.


Atty. Lorna Kapunan at the podium (Image from PAGASA site here)

"PAGASA [Philippine Amalgamated Supermarket Association Incorporated] was invited as an observer at the Senate Committee on Trade & Commerce, Committee on Economic Affairs and Special Oversight Committee on Eco. Affairs’ Lecture Forum: “Understanding Antitrust.” At the podium is Atty. Lorna P. Kapunan with her critique on existing and fragmented legislations on antitrust. Other presenters were DTI Usec. Zenaida C. Maglaya and Ateneo’s Atty. Anthony Abad. The forum was headed by Senate Pres. Juan Ponce Enrile and Senator Manuel Villar."

Friday, March 4, 2011

Highlights of proposed anti-trust bills

"Anti-trust"
by Ducky Paredes
Originally published in Malaya, 04 March 2011, BUSINESS INSIGHT.

"AFTER years of futile attempts, Congress seems to have generated the political will to enact an anti-trust law that would curb the abuses of big business, particularly giant foreign multinational companies that have been getting away with monopolistic and unfair trade practices.

Recently, the Senate Committee on Trade and Commerce held a forum for the discussion of laws aimed at preventing monopolies, combinations in restraint of trade, abuse of dominant power, and unfair competition practices.

The committee invited resource persons from the government and the private sector. They provided valuable inputs and shared their insights on prevailing anti-trust practices. Among them were Undersecretary Zeny Maglaya of the Department of Trade and Industry (DTI), lawyer Anthony Abad of the Ateneo Center for International Economic Law and consumer advocate Lorna Patajo-Kapunan, who is also a prominent law practitioner.

In particular, Kapunan made a presentation that, among other things, provided clear examples of the unfair trade practices of a foreign multinational that drove several of its Filipino distributors to bankruptcy, resulting in huge financial loses that forced them to lay off hundreds of employees.

Kapunan deplored the weaknesses, ambiguities and inadequacies of current laws "that not only subject our local businessmen to bullying and exploitation but actually encourage these practices because of the leniency of existing legislation."

She pointed out that the bullying behavior of large corporations exerts negative effects on the economy. "Just look at these distributors. They are entrepreneurs who were financially wiped out due to unethical business practices of their principals. Businesses have collapsed, jobs have been lost and many lives have become miserable. That is why we need carefully worded and well-crafted anti-trust legislation,’’ said the lady lawyer who has been engaged in a continuing and sustained campaign for the passage of such legislation.

Lucky for us consumers, as well as for these distributors, key members of the Senate are hot on enacting the needed laws. Precisely for that purpose, Senate President Juan Ponce Enrile filed Senate Bill 123, with Senators Ralph Recto and Antonio Trillanes as IV as co-authors.

Similar bills were also filed by Senator Miriam Defensor-Santiago (S. B. 1838), Sergio Osmeña III (S. B. 150), and Senator Panfilo Lacson (S. B. 1600). Senator Manny Villar has also sponsored Proposed Senate Resolution 123 urging inquiry into cartels and monopolies.

Similar measures have also been filed in the House of Representatives.

The most recent is a bill (in substitution of 12 other similar bills) by Cagayan Congressman Jackie Ponce-Enrile, with Cagayan de Oro City Congressman Rufus Rodriguez as main sponsors with more than 70 other co-authors.

The bill would create an independent Philippine Fair Competition Commission to regulate trade practices, promote ethical business conduct in the country and implement the national policy on fair trade competition. It would penalize anti-competitive agreements, abuse of dominant power and anti-competitive mergers.

So what exactly is an anti-trust law? It is one that aims to prevent the emergence of trusts which come in the form of "mergers, acquisition of control, or any act whereby companies, partnerships, shares, equity trusts, among others.

Assets are concentrated among competition, suppliers, customers or any other business entity." Such a situation is considered inimical to public interest as they usually lead to the rise of unlawful monopolies, combinations in restraint of trade, and unfair competition practices.

A monopoly emerges when a certain type of business or industry is concentrated in one group or in the hands of a few. It prevents the existence or the emergence of competition and can result in the control of prices, or the production and distribution of certain goods and commodities. Hence, even legitimate mergers of companies or business consolidations can lead to monopolies.

Combinations in restraint of trade, on the other hand, refer to "an agreement or understanding between two or more persons, in the form of a contract, trust, pool, holding company or other form of association." Its purpose is to restrict competition, monopolize the trading of a certain commodity, and control its pricing, production and distribution. This results in interference in the free flow of trade and commerce, to the prejudice of consumers. Thus is monopoly achieved.

Unfair competition arises when a dominant business resorts to such practices as price manipulation, spreading false information aimed at discrediting competition, monopolizing any merchandise or commodity, or conspiring with other persons to alter the price of certain goods in order to ruin competition and maintain or increase one’s dominance of the market.

Generally, an anti-trust law is intended to harmonize the legal and regulatory system governing the operation of business. It seeks not only to promote the welfare of consumer but also to prevent giant business firms from bullying and exploiting weaker and undercapitalized businesses, particularly the so-called SMEs or the small and medium enterprises.

Anti-trust legislation is anchored on provisions of the Philippine Constitution, particularly Sections 19 and 22 of Article XII. Section 19 provides that "The State shall regulate or prohibit monopolies when the public interest so requires. No combinations in restraint of trade or unfair competition shall be allowed."

On the other hand, Section 22 calls for the enactment of laws that would impose civil and criminal penalties against parties who violate the prohibitions. This provision specifically states: "Acts which circumvent or negate any of the provisions of this article shall be considered inimical to the national interest and subject to criminal and civil sanctions, as may be provided by law."

Why are others so eager to call for amendments to our constitution, when we have not yet even touched some of the tasks that it mandates for the State?"


*Original article also available online here.

Nestle: clean up your mess!

"Nestle Philippines' Centennial: Clean Up Your Mess!"

By EQ PostSentinel, originally published on 03 March 2011 here.


Excerpts:

"Nestle:1911-2011

In 2011, Nestlé will celebrate 100 years in the Philippines. One hundred years of service to the Filipino consumer is a great source of pride within our company and it is fitting that most of the Tanauan factory’s construction will take place during Nestlé Philippines’ centennial, signifying our continuing commitment to the country.” JohnMiller, Nestle Philippines CEO

John Miller:Current President and CEO of Nestle Philippines Inc.
Problems did not occur under him but being unfamiliar with the situation or perhaps covering his own ass, he does not want to “take the bull by the horns”. He allegedly lets his committee decide what should be done, whether right or wrong, especially with how they are trying to weasel their way out of problems. Could be guilty of sin of omission. Must step up and be morally upright to salvage reputation.From Consolidated Amalgamated

Why does NESTLE have such a bad corporate reputation in spite of its excellent products?

1) They try to muzzle the press.

With the aid of their large advertising budgets,Nestle Philippines media team work on mainstream media to recycle press releases and to suppress news that might adversely affect Nestle.

EXAMPLE:The news blackout on Milo Marathon tragedy.
Is it true that a man collapsed and died of heat stroke two days after in the recent 34th Milo Marathon eliminations last July 4 and Nestle is suppressing the news in mainstream media??? EQualizer Post :July 16

There has been no report on this tragedy in mainstream media!

2) They bully their trade customers.

In business and economics, predatory pricing is the practice of selling a product or service at a very low price, intending to drive competitors out of the market, or create barriers for entry by potential new competitors. In the Philippines, or in the crap that Nestle Philippines pulls, it's the distributors who are the victims of this nefarious practice.

Distributors cannot sustain equal or lower prices without losing money, they go out of business or choose not to enter the business. Nestle is able to meet its quota while leaving its distributors losing money or worse borrowing money just to keep its business afloat. It's a vicious cycle and they can hardly raise prices above what the market would otherwise bear.

In many countries predatory pricing is considered anti-competitive and is illegal under anti-trust laws. It is usually difficult to prove that prices dropped because of deliberate predatory pricing rather than legitimate price competition. In any case, competitors may be driven out of the market before the case is ever heard.

In the short term predatory pricing through sharp discounting reduces profit margins, as would a price war and will cause profits to fall.


The only winner is that bird on the damned nest.

That is why the Department of Trade and Industry should step in. Down with these multinational buggers!
From Consolidated Amalgamated "


*Read full article in the Equalizer here.

Proposed competition measures seeks to protect small enterprises

"Proposed competition measure seeks to protect small enterprises"
by Ritchelle Alburo, PHILEXPORT News and Features
Originally published in the Philippine Exporters Confederation, Inc.'s site here.

"6. Proposed competition measure seeks to protect small enterprises

A recent proposed legislative measure on competition responds to a glaring need to address unfair competitive practices to the disadvantage of micro, small and medium-scale enterprises.

While protection of consumers from unreasonable pricing has been the rationale for the enactment of many of the country’s competition-related laws, Senate Resolution No. 123 of Senator Manny Villar seeks to operationalize fair market principles and discourage monopolies to allow MSMEs to participate in the growth of the economy.

Atty. Lorna Patajo-Kapunan of Capunan Lotilla Garcia & Castillo Law Offices was very pleased with said bill.

I would like to thank Senator Villar for recognizing the need to protect the MSMEs, said Kapunan, during a forum on Understanding Anti-trust held yesterday at the Philippine Senate, mentioning that many of the country’s small enterprises are disadvantaged by the restrictive agreements and arrangements of giant companies.

These restrictive agreements, as cited by Anthony Abad of Trade Advisory Services during said forum, include price-fixing, collusive tendering, market or customer allocation, sales or production restraints, concerted refusal to purchase or to supply and collective denial of access to an arrangement or association that is crucial to competition.

Aside from SB No. 123, there are four other proposed measures on competition in the Senate. These are SB No. 1 authored by Senator Ponce Enrile, SB No. 175 of Senator Anthony Trillanes IV, SB No. 123 of Senator Sergio Osmena III, and SB No. 1838 of Senator Mirriam Santiago.

Many of these bills seek to respond to the need to codify existing competition laws and come up with a comprehensive competition law that is workable and effectively deters anti-competitive practices.

Kapunan noted that Senate Bill No.1 of Senator Ponce “defines with particularity prohibited acts constituting monopolization and cartelization”.

By increasing the penalty for violation of Article 186 of the Revised Penal Code, Kapunan likewise intimated that SB No. 1838 will serve to deter the anti-competitive measures.

SB No. 1838 seeks to increase the number of years of imprisonment from the current six months to six years and the fine from P200 to 1,000,000.

To effectively enforce a competition law and achieve its desired outcome, Atty. Geronimo Sy of the Department of Justice laid emphasis on the need to fine-tune the evidentiary architecture of competition bills, citing that despite sectoral regulation of basic commodities, such as sugar, tobacco and rice, prices of the same remain prohibitively high, due mainly to the difficulty in providing sufficient evidence demonstrating violation of competition-related laws. -- Ritchelle Alburo, PHILEXPORT News and Features"

Thursday, March 3, 2011

Enrile backs anti-trust forum

"Enrile backs anti-trust forum"
Original article published in Malaya, 02 March 2011, NATIONAL & METRO NEWS, p. B3

Click on image to enlarge and view full article.

Wednesday, March 2, 2011

Anti-trust bills timely

"Anti-trust bills timely"
by Willie S. Baun
Originally published in People's Journal, 01 February 2011, STREETLIGHTS, p. 4

"Multinational companies, particularly those dealing in "fast-moving goods," have enjoyed an array of privileges that otherwise would not be available to them, not even in their own countries.

What makes the FMCGs so profitable in the domestic market, apart from the usual bias for the "imported," is the participation of local distributors.

Numerous small enterprises take on the difficult job of bringing the FMCGs to the buying public, and set their profit margins based on standard retail prices and bulk-discount costs.

In effect the MNC plays commissary that merely takes care of administrative matters but somehow gets the lion's share of the income earned by the distributors.

'In and of itself,' observed a trade official, 'this is already a rather one-sided business deal.' It was added when flagrantly abused by a giant MNC to the graver prejudice of the distributors - the alarm bells should ring against anti-trust.

Two distributors in particular claim to have fallen under the mercy of one such MNC due to its alleged predatory pricing in direct conflict with the corporate codes enforced by the Department of Trade and Industry.

As this case wider currency in business circles, so has "Anti-Trust" attained buzzword standing. Soon enough, I believe, Senate President Juan Ponce Enrile and Sen. Miriam Defensor-Santiago would be asked to include FMCG distributors and other such outsource companies in appropriate bills they have proposed.

Legal proceedings between the MNC and the distributors showed the multi-national may have perjured. That, moreover, the MNC's counter-affidavits and joint counter-affidavits versus the predatory pricing charge are inconsistent with one another and with the facts of the matter at bar.

When their attention was reportedly called, the MNC executives seemed unmindful of the resulting perjury charges. 'Their rebuttals were at best amusing, and, at worst dismissive. Yeah, as in 'we didn't know or realize we were lying!''

They also posited that 'privilege' and 'right' were synonymous and took issue with the distributors for the focusing on semantics. Cited in the MNC's defense, the Webster's Encyclopedic Dictionary defined 'privilege' as a 'right, immunity, or exemption only by a person beyond the advantages of the most.'

On the other hand, Black's Law Dictionary, the authority on legal terms and legal definitions, indicates 'privilege' as a 'particular and peculiar benefit or advantage enjoyed by a person, company, class, beyond the common advantages of other citizens.'

Common sense, of course, tells us that a right is inherent while a privilege is bestowed. Then again, there's no guarantee that common sense is precisely what it says it is.

In any case, here's Mr. Webster just once more; Anti-trust, adj., Pertaining to the regulation of or opposition to trusts, cartels, pools, monopolies, and other organizations and practices in restraint of trade.

So there, Jose, and trust JPE and Miriam to get it right all the way."