Monday, May 30, 2011
Thursday, May 26, 2011
Hit the stands on 26 May 2011
Available online on 25 May 2011
Click on image to enlarge
by Atty. Lorna Patajo-Kapunan
BusinessWorld Online, 25 May 2011
(Original article available online here)
View Part 1 here and here
It cannot be denied that, despite economic reforms, the Philippines continues to move forward as a country of service providers.
Wednesday, May 25, 2011
Available online 24 May 2011
(Click on image to enlarge)
by Atty. Lorna Patajo-Kapunan
Published in BusinessWorld Online Edition on 24 May 2011
(Original article available here).
The recent PLDT-Smart buy-out of Sun Cellular emphasized once again the need for a more comprehensive anti-trust law in the country. Public awareness of the lack of a determinative anti-trust policy has heightened. While the National Telecommunications Commission (NTC) has been tasked with investigating any anti-trust policies in the Sun Cellular sale, there continues to be much criticism for the lack of an anti-trust law with "teeth."
(Published advertisement in the Philippine Daily Inquirer on 23 May 2011)
(Click on image to enlarge)
Image source, and more details in http://antitrustlawcenter.blogspot.com/
Tuesday, May 24, 2011
by Cielito F. Habito
Published 24 May 2011 in the Philippine Daily Inquirer
(Original article also available online here).
"THERE ARE remarkably parallel developments transpiring on both sides of the Pacific in two very different economies: the Philippines and the United States of America. Here’s the general scene: A giant telecommunications company has moved to acquire (and thus merge with) another competitor, threatening to achieve a commanding share of the industry, thereby reducing competition therein.
In the US, American Telephone & Telegraph (AT&T) has announced a $39-billion takeover of T-Mobile USA, in a merger that would make the company the dominant player in an industry that has heretofore had four major players. Industry rival Sprint Nextel Corp. is fighting the move, claiming that the merger threatens its very existence as a standalone company, which could bring back the old telephone monopoly (of the then giant AT&T) that US regulators broke up in 1984. Since the AT&T-led American Bell Telephone Co. opened the first telephone exchange in 1877 in New Haven, Connecticut, this single firm had controlled the American telephone industry. The forced break-up led to a lively competition that resulted in lower costs and wider choices for American consumers.
In a parallel development here at home, the Philippine Long Distance Co. (PLDT) has acquired a controlling stake in Digitel Corp. which operates Sun Cellular, whose entry into the erstwhile duopoly of PLDT/Smart and Globe had dramatically transformed the nature of pricing in the industry, to the benefit of consumers. Just as Sprint Nextel is unhappy in the US, so is Globe in the Philippines as it faces the prospect of being relegated to a small minority share (30 percent) of a two-player market. It is arguing for a more level playing field with the National Telecommunications Commission, inasmuch as PLDT would now own a disproportionate share of the telecommunications frequencies on which the companies may transmit their phone services.
Both mergers have yet to be cleared by their respective governments, even as their merits and demerits have been the subject of active public policy debate. But there’s a key difference between the two stories: the legal and institutional framework within which government clearance for the mergers is being deliberated is quite different in the US from the Philippines. In the US, there has long been a strong law against cartels and monopolies, through the Sherman Antitrust Act of 1890, later reinforced by the Clayton Antitrust Act of 1914. The purpose of the law is to prevent the combination of business entities that could potentially harm competition, such as monopolies or cartels. At the time of its passage, “trust” was synonymous with monopolistic practice (which is no longer necessarily the case today). This was because the trust—a centuries-old form of contract whereby one party entrusts its property to a second party— was a popular way for monopolists to hold their businesses, and a way for cartel participants to create enforceable agreements. Internationally, the more common name now for such laws is “competition law” or “competition policy.”
US antitrust laws declare it a felony for any person to monopolize or attempt to monopolize any part of trade or commerce, or to combine or conspire with any other person or persons to restrain trade or commerce, whether in domestic or foreign markets. Other practices deemed illegal include price discrimination between different buyers if such discrimination tends to create a monopoly; exclusive dealing agreements; tying arrangements; and mergers and acquisitions that substantially reduce market competition. The AT&T and T-Mobile merger could fall under the last, giving the US government explicit basis to stop it if it can be established that this will indeed reduce market competition.
The US Senate is currently deliberating on the issue, and some lawmakers have indicated public skepticism over AT&T’s claim that T-Mobile was “not an important competitor,” in an apparent attempt to play down the significance of its move. The US legislators have noted, for example, that T-Mobile often undercuts the prices of AT&T and current industry leader Verizon Wireless—something anyone of us roaming with our cell phones in the US can readily confirm (check your bill: a text message sent home from the US via T-Mobile costs P20, but one sent through AT&T costs P25).
In a similar manner, Sun Cellular had constantly been undercutting the prices of PLDT-Smart and Globe, forcing the latter two into offering the “unlimited” packages that it first introduced.
Whether in the US or here, it seems that the strategic response of the more dominant player was to buy out the underpricing competitor. And just as bystander Verizon in the US must privately welcome the elimination of a “price-spoiler,” Globe must also find some private satisfaction in the elimination of a player that had spoiled the profitable party (i.e., before Sun entered the picture years ago).
Still, the Philippines does not have the comprehensive competition policy that the US has long had, to give it a strong legal basis to stop the PLDT-Digitel merger. What it has are piecemeal laws and executive issuances that had opened previously monopolized or protected markets, especially those introduced by President Fidel V. Ramos in the 1990s to break open prominent monopolies and cartels, notably in telecoms and domestic airlines. But many remain, such as in cement, domestic shipping, port handling services, and other key industries. It is high time Congress acted to correct the glaring deficiency.
* * *
by Daxim Lucas
Published in the Philippine Daily Inquirer on 22 May 2011
(Original article also available online here).
More importantly, Forensic Law and Policy Strategies Inc. (Forensic Solutions) pointed out that international mergers pose the biggest threat to developing economies like the Philippines, where anti-trust laws are largely absent to guard against the abuses that could result from such corporate unions.
Forensic Solutions, which is headed by former Justice Secretary Alberto Agra, said the lack of adequate Philippine laws on mergers and other corporate mergers should prompt Congress to pass a new legislation to check against possible abuses.
The latest policy paper, which Agra co-wrote with banking law expert Faye Josephine Miguel Rañola, recommended the crafting of a law calling for review of proposed mergers and the setting up of a threshold above which a corporate merger will be classified as monopolistic.
“Arrangements that do not comply with fair competition guidelines and those that significantly limit competition should not be allowed,” Agra said in the policy paper “Competition Laws in the Face of the Merger Wave.”
Forensic Solutions also said the SEC should be allowed to take remedial action, and impose penalties and sanctions against existing merged corporations that were engaged in anti-competitive practices.
It also proposed the simplification of the current legal mechanisms available to interested parties for them to obtain relief or file injunctions against questionable mergers without going through a protracted litigation process.
The enactment of such laws are necessary, they said, to ensure unfettered competition in local industries and position the Filipino consumer as the “supreme arbiter” in a free market that yields the highest quality of good and services at the lowest prices possible.
Forensic Solutions made this call for new anti-trust legislation at a time when the current trend is toward the privatization and deregulation of vital industries, with governments increasingly ceding state control over economic activities to private businesses.
There are pending bills in Congress addressing certain aspects of corporate mergers.
One of them is Senate President Juan Ponce Enrile’s Senate Bill No. 123, which penalizes combinations or conspiracies in restraint of trade and all forms of artificial machinations that will injure, destroy or prevent free market competition.
The Enrile bill also prohibits stock or asset acquisitions, grant of proxies or voting rights, and board membership in two or more corporations that have the effect of substantially reducing competition or tending to create a monopoly."
Friday, May 20, 2011
By Emil Jurado, TO THE POINT, Manila Standard Today, 19 May 2011
(Original article available online here)
"I recently came across published reports about a product recall being done by Nestle Philippines Inc.
I know that Nestle has recalled many of its products for various reasons—the most noteworthy being 100g glass jars of Nescafe. In this case of contaminated coffee, people were instructed to keep the lids as proof of purchase for a refund, but to “dispose of contents immediately and not to bring the coffee back to the stores where they were bought.”
A variant of Lean Cuisine frozen dinners were recalled as well when consumers reported finding pieces of hard plastic in their food.
Locally, the most recently was the recall of Maggi beef and chicken noodles after traces of salmonella were found in two batches of the beef variant.
Having to take these items off the shelves is just one of the many problems besetting NPI. I believe that the string of cases against the company regarding its dealings with its local partners is, or should be, a major concern. My gulay, it seems that the multinational has made it a habit to squeeze distributors to the point that doing business is no longer profitable. Then, when cases are filed against the company on that very same issue, it tries to squeeze itself out of legal proceedings.
I have written at length about a Filipino company that distributes Nestle products and has been on the receiving end of the multinational’s bullying tactics. Nestle created price caps for its goods and simultaneously shortened the time of payment collection for distributed products. The local company took issue with that and filed formal complaints with the Trade and Industry Department as well as with the Regional Trial Court. This has caught the attention of some lawmakers, who are now working on strengthening anti-trust measures.
In the meantime, Nestle seems to be taking matters in stride as it even failed to give a rejoinder to the Filipino distributor’s claims within 15 days as it was ordered by the court. Santa Banana, is this company that confident about its position, or connections, that it can afford to be complacent?
All these developments come on the heels of news that Nandu Nandkishore is to be promoted Executive Vice President for Asia, Oceania, Africa and the Middle East. Nandkishore was CEO of NPI, who was promptly shipped to the mother company to assume another position when the cases were filed by the Filipino distributor. With his new designation, I presume he is ready to finally face the music."
Monday, May 9, 2011
by The EQualizer Post, 05 May 2011
Complete article with images appears here.
"Nestle Philippines is recalling Maggi noodles for possible salmonella contamination.
The firm said it is recalling Maggi beef and chicken noodles after it found traces of salmonella in two batches of the beef variant.
Nestle said in an ad published in a newspaper that "the product recall is a precautionary measure to ensure the safety and quality of our products."
"We have immediately initiated an extensive investigation to determine the cause of this contamination, and initial findings suggest flavoring ingredients as the cause," it added.
Nestle has stopped production of all Maggi noodles pending the completion of the investigation, it said.
Consumers who have purchased the recalled products are requested to contact the company's hotlines 898-0061 (for Metro Manila) or 1-800-100-637853 (toll free for provincial areas). From ABS CBN NEWS
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 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.
Nestlé To Drop Deceptive Health Claim On Children’s DrinkA subsidiary of Nestlé S.A., the world’s largest food and nutrition company, has agreed to drop allegedly deceptive advertising claims about the health benefits of its children’s drink BOOST Kid Essentials, as part of a settlement resolving the Federal Trade Commission’s first case challenging advertising for probiotics.
The FTC complaint charges that from fall 2008 to fall 2009, Nestlé HealthCare Nutrition, Inc. made deceptive claims in television, magazine, and print ads that BOOST Kid Essentials prevents upper respiratory tract infections in children, protects against colds and flu by strengthening the immune system, and reduces absences from daycare or school due to illness.
BOOST Kid Essentials is a nutritionally complete drink intended for children ages 1 to 13. The probiotics in BOOST Kid Essentials are embedded in a straw that comes with the drink, which was prominently featured in ads for the product. Probiotics are live, beneficial bacteria that are found naturally in many foods, and they are known for aiding digestion and fighting harmful bacteria.
“Nestlé’s claims that its probiotic product would prevent kids from getting sick or missing school just didn’t stand up to scrutiny,” said David Vladeck, Director of the FTC’s Bureau of Consumer Protection. “Parents want to do right by their kids, and the FTC is helping them by monitoring ads and stopping those that are deceptive.”
The advertisements challenged by the FTC featured the drink’s probiotic straw. In one ad, the straw jumped out of the drink box, formed a protective barrier around a girl as she encountered a sneezing boy, and then formed steps allowing her to reach a basketball hoop and shoot a ball into the net.
The ads falsely claimed that BOOST Kid Essentials is clinically shown to reduce illness in children, to protect from colds and flu by strengthening the immune system, and to help children up to age 13 recover more quickly from diarrhea, the FTC charged."