by Emil Jurado
MANILA STANDARD, To The Point, 06 September 2011
(Original article available here)
Calls for the passage of an effective and all-embracing anti-trust law in the country appear to have received renewed interest in the wake of a resolution handed down by the Office of the Quezon City Prosecutor in a case filed against multi-national Nestle Philippines Inc.
In an August 15 resolution, City Prosecutor Donald Lee approved the recommendation of First Assistant City Prosecutor Meynardo Bautista Jr. that charges be filed in court against high officials and executives of NPI for violation of Article 186 of the Revised Penal Code.
This particular provision contains a prohibition against entering into, or being a party to, any contract or agreement, or from taking part in any conspiracy or combination in restraint of trade or commerce, for the purpose of preventing by artificial means, free competition.
Those recommended for indictment are NPI chairman and CEO John Martin Miller, Chief Finance Office Peter Oszek, Business Executive Manager Shahab Bacani, Regional Sales Manager Jose Ceballos and Area Sales Manager Elisa Lupena.
The case stemmed from complaints filed against Nestle by service Edge Distributors Inc. and FDU Forefront II Trading Corp. (FDI 2), two Filipino firms serving as distributors of Nestle products in Metro Manila.
The allegations against Nestle include predatory pricing, violation of the terms of distribution agreement between Nestle and the two distributors, unjust termination of the said agreement, imposition of inflexible price bulletins that resulted in huge losses to the distributors, unilateral withdrawal of promised marketing support, perjury and offering false testimony in evidence.
Investigations established the existence of a vertical agreement between Nestle and its distributors, wherein the former fixes the resale price of the products. The agreement compels the distributors to sell the goods only at the price dictated by Nestle, otherwise, their distributorship contract will be revoked.
The resolution also said that the respondents, who were then officials of Nestle Philippines, Inc., knowingly committed the crime or permitted or failed to prevent the commission of the said crime. Hence, they are criminally liable.
Nestle was also accused of fixing the resale price of its products and imposing upon its distributors that these prices be maintained. This is in violation of Article 18 of the Revised Penal Code, which says that price fixing is automatically illegal and there will be no valid justification to legitimate price-fixing agreement.
If I may read between the lines, I would say that the resolution represents a triumph not only of the two Filipino distributors, but also of the common Filipino consumer. This case sends a strong message to other multinationals that their abusive practices will not be tolerated. Significantly, it also encourages similarly situated Filipino distributors and marketing outfits that they can rely on the government to uphold and to protect their rights."