by Bernie Cahiles-Magkilat

The Philippine Competition Commission (PCC) has found reasonable grounds to proceed to full administrative investigation of the local cement industry for possible violations of anti-competition practices and abuse of dominant position.

The PCC updated Atty. Vic Dimagiba, former DTI Undersecretary for Consumer Protection and now president of Laban Konsyumer, Inc., on the progress of his complaint affidavit filed on August 22, 2016 to probe the local cement industry Cement Manufacturers Association of the Philippines (CeMAP) and its president Ernesto M. Ordonez for alleged anti-competition practices.

“Please be informed that the commission conducted a preliminary inquiry of the allegations in your affidavit-complaint. It found reasonable grounds to proceed to full administrative investigation for possible violations of sections 14 and 15 of the Philippine Competition Act,” the PHC said in a letter signed by PCC Director for enforcement Orlando P. Polinar on January 27, 2017.

Section 14 or Anti-Competitive agreements of the Philippine Competition Act prohibits agreements between or among competitors such as restricting price competition; fixing price; setting or controlling production, markets, technical development or investment; dividing or sharing the market; and other agreements which have the object or effect of substantially preventing, restricting or lessening competition.

Section 15 or Abuse of Dominant Position prohibits one or more entities to abuse their dominant position by engaging in conduct that would substantially prevent, restrict or lessen competition. These activities include selling goods or services below cost; imposing barriers to entry; making a transaction subject to acceptance by the other parties of other obligations which, by their nature have no connection with the transaction; setting prices or others or conditions that discriminate unreasonably between customers or sellers of the same goods or services, among others.

Violations of these provisions will carry a fine of P100 million on the first offense and not less than P100 million but not more than P250 million on the second offense depending on the gravity and the duration of the violation.

In his affidavit-complaint, Dimagiba alleged that CeMAP Ordonez in his capacity as president of CeMAP, LaFarge Holcim Philippines, Inc. , and Republic Cement and Building Materials, Inc. violated the provisions of the Philippine Competition Act by engaging in anti-competitive agreements such as restricting competition as to price or components thereof or other terms of trade, abusing their dominant position by engaging in conduct that substantially prevent, restrict, or lessen competition, imposing barriers to entry, or committing acts that prevent competitors from growing within the market.

Among his allegations, Dimagiba stated that Respondent CeMAP acting through co – Respondent Ordonez used the trade association and pseudo consumer groups to justify the violation of the Philippine Competition Act.

Among others, he pointed out that it filed unsubstantiated and frivolous cases solely against non-CeMAP imported brands alleging substandard cement; it widely circulated in media and other forums misleading and unsupported information that current oversupply and low demand in other Asean countries risks flooding the country with substandard cement; it maintained prices of domestic cement in the retail market unreasonably high, opening independent importers to suits on predatory pricing; it widely circulated unverified reports inferring that independent importers of cement are technical smugglers; it sought to embed in the DTI the interests of CeMAP thereby ensuring continuing protection of its principals’ interests.

In his prayer, Dimagiba asked the Commission to enjoin Respondents from continuing in their anti-competitive actions, to specifically remove respondent Ordonez from CeMAP, to require Respondent CeMAP to conduct, hold, and disseminate information to consumers on cement that comply with standards and are sold at reasonable prices.

The affidavit-complaint also asked the Board of Investments to remove and blacklist Respondent Ordonez in the crafting of the Philippine cement industry roadmap and to allow the participation of the traders and importers in the stakeholders forum and consultation and to remove Ordonez as president of CeMAP.

Dimagiba alleged in his affidavit complaint that Respondent Ordonez, who was also a former DTI Undersecretary handling consumer protection, is using the trade association in what the Complainant calls a “creeping regulatory capture “to favor the trade association members’ interest over those of the importers.