Under this law, price manipulation is declared illegal.

However, under Section 4 of the said law, the President of the Philippines could impose price controls on basic goods, prime commodities or services during times of disasters in order to protect consumers from overpricing. Price controls are a form of market intervention by the government on the prices of commodities and services to make them affordable.

CARTEL EXAMPLE

MANILA, Philippines (UPDATE) - The Department of Justice (DOJ) has recommended the filing of its first-ever cartel case. In a 10-page resolution dated October 19, 2011, Prosecution Attorney II Cesar Angelo Chavez III found probable cause to charge LPA Marketers Association(LPGMA) party-list Rep. Arnel Ty and eight(8) others in court for violations of the Revised Penal Code and Republic Act(RA) No. 8479(An Act Deregulating the Downstream Oil Industry) for alleged "uniform-selling price" of liquefied petroleum gas(LPG) in the market. The other respondents include Danilo S. Chua(president of Gaz-Plant Incorporated), Alison Sy (president Nation Gas Refilling Corporation), Rene Rosell(major shareholder of Equal Gas Corporation and Bayan Gas Corporation), Ronnie Sevillana (president Equigaz Marketing Corporation), Mar Dave Tang (president of North MKT Ventures Corporation), Virginia J. Cid (director of Northland Gas Corporation), Bonifacio Eleria (president of Bayan Gas Corporation), and Antonio del Rosario(major shareholder of Duraflame Gas Corporation). All respondents are members of LPGMA. Respondents were charged by Jesus Arranza, chairman of the Federation of Philippine Industries(FPI), last year for cartelization. "Applying the law and jurisprudence to the facts of this case, we find sufficient ground to engender [a] well-founded belief that respondents Arnel Ty, et al. committed the crime charged," the resolution read. In his complaint, Arranza alleged that LPGMA declared uniform selling price of LPG in the market through its president, Ty, based on news reports. The complaint said Ty, as president of LPGMA and president of Omni Gas Corporation, Suncrest Corporation and Pinnacle Gas Corporation, made declarations in news reports that there would be price rollbacks. Arranza pointed out LPGMA itself made submissions to the Commission on Elections (Comelec) of various news clippings of announcements of uniform selling price for LPG in their application for registration as a party-list organization in the 2010 elections. The DOJ, in its resolution, said "[s]uch is an act of combination in restraint of trade or competition."

"The law is clear that the act of restraining trade is punishable. The claim [by respondents] that the announcement of lowering of LPG prices is specious. It is a basic economic principle that for a price to be lowered, there was a previous increase," the resolution read. "The series of announcements cutting LPG prices necessarily presupposes a round of increases that were not publicly announced in a similar manner," the resolution read. The DOJ said all of Ty's co-respondents should also be charged in court because they all "failed to prevent the commission of the crime charged and knowingly permitted the same since there was no dissent made by them." "It can be concluded that said respondents agreed on the declarations made by respondent Ty when they also decided to have price rollback of LPG. In competition law, this is part of a strategy that includes a practice known as 'price signaling,'" the resolution read. The DOJ said its evidence against respondents is strong because the news clippings, which were "formal submissions to a government entity, a constitutional body at that, to prove that the respondents were dedicated to public welfare by the series of price rollbacks," stops them from challenging the same documents which were subsequently officially admitted by the poll body as part of their petition for party-list registration. Respondents' defense In their defense, respondents questioned the jurisdiction of the investigating state attorney in conducting the preliminary investigation, stating that a complaint involving Section 11(Anti-trust Safeguards) of RA No. 8479 should be filed with the joint DOJ-Department of Energy(DOE) Task Force, which, they claimed, is the proper body to investigate the reports. Respondents also maintained that Ty's pronouncements were made in his capacity as president of his own corporation, not as president of LPGMA. They pointed out that no meetings to discuss price adjustments among respondents preceded Ty's media interviews. They further said LPGMA's articles of incorporation do not state restriction of trade or fixing of prices as one of its purposes, and that the lower price of LPG offered by their association is not detrimental to consumers. Respondent Tang and Sevillana, for their part, claimed that the complaint against them had no basis since they are no longer trustees nor officers of LPGMA, and news reports regarding Ty's pronouncements constituted hearsay. Constitution and state policy In its resolution, the justice department pointed out that under Section 19, Article XII of the 1987 Constitution, it is the State's declared policy to "regulate or prohibit" monopolies and to prohibit combinations in restraint of trade or unfair competition.

RA No. 8479, meantime, defines cartelization as "any agreement, combination or concerted action by refiners, importers and/or dealers, or their representatives, to fix prices, restrict outputs or divide markets... in restraint of trade or free competition, including any contractual stipulation which prescribes pricing levels and profit margins." "It is evident that agreements or arrangements by dealers in liquid petroleum products to fix prices of their products is prohibited. An association of dealers, with substantial number and prominence, as in the case at bar, has considerable influence in their market. "A simple announcement or declaration in the news claiming that they have reduced the price of their product creates a significant effect between them and their 'competitors,'" the resolution read. The DOJ stressed that the purpose of the law is to ensure a truly competitive market where prices are fair, and where there is adequate and continuous supply of environmentally clean and high quality petroleum products. "Competition, not combination, should be the law of their business," the resolution read. The resolution was approved by Prosecutor General Claro Arellano who told ABS-CBN News the information against respondents will be filed next week.

DTI files profiteering charges vs flour millers

abs-cbnNEWS.com Posted at 06/10/2010 5:01 PM | Updated as of 06/10/2010 8:02 PM MANILA, Philippines - The Department of Trade and Industry (DTI) has filed cases against 11 flour milling companies for alleged profiteering. Summons have been already sent to the respondents, namely Universal Robina Corp., Wellington Flour Mills, Morning Star Milling Corp., Delta Milling Industries Inc., Philippine Foremost Milling Corp., General Milling Corp., Liberty Flour Mills, Pilmico Foods Corp., San Miguel Mills Inc., Philippine Flour Mills, and Republic Flour Milling Corp. They have 10 days to answer the complaint. According to DTI, the companies failed to bring down prices of flour despite the decrease in international prices of wheat. The DTI said local flour should be selling only at P630 to P680 per sack, instead of the current price of P790. It said it issued letters to all flour millers, but only 2 responded and rolled back their prices.

The government agency warned that retailers who violate the Consumer Act would face fines ranging from P5,000 to P2 million. Members of the Philippine Association of Flour Millers, meanwhile, said they are ready to face charges filed against them. They claimed that the DTI was referring to the wrong figures. The DTI argued, however, that the data they used came from flour millers themselves. - Report from Zen Hernandez, ABS-CBN News