Honorable Vicente T. Paterno

September 29, 1989 Honorable Vicente T. Paterno Committee on Economic Affairs Senate 8th Floor, Philippine Veterans Bank Building Bonifacio Drive, Port Area Manila Sir : This refers to your letter dated August 23, 1989, requesting comments on Senate Bill No. 996, entitled "An Act to Reexamine, Realign, and Recast Into The Requirements of the Constitution The Laws Prohibiting Monopolies, Combinations in Restraint of Trade and Unfair Competition, and For Other Purposes". llcd Our laws have time and again shunned such acts and practices tending to promote monopoly and restraint of trade. Fundamental of these, is Section 19, Article XII of the Philippine Constitution, enshrining the following provision in relation to our national economy and patrimony: "The state shall regulate or prohibit monopolies when public interest so requires. No combination in restraint of trade or unfair competition shall be allowed. Likewise, Section 140 of the Corporation Code imposes upon the NEDA, the duty to make, from time to time, a determination of whether the corporate form of organization has been used to frustrate the provisions of the Constitution relative to national economy and patrimony or those applicable laws, and whenever it deems necessary to recommend to the Batasang Pambansa (now Congress) the setting of maximum limits to family or group ownership of stocks in corporations vested with public interest. The Code provides, thus: "SECTION 140. Stock Ownership in certain corporations . Pursuant to the duties specified by Article XIV of the Constitution ,the National Economic and Development Authority shall, from time to time, make a determination of whether the corporate vehicle has been used by any corporation or by business or industry to frustrate the provisions thereof or of applicable laws, and shall submit to the Batasang Pambansa, whenever deemed necessary, a report of its findings, including recommendations for their prevention or correction. llcd Maximum limits may be set by the Batasang Pambansa for stockholdings in corporations declared by it to be vested with a public interest pursuant to the provisions of this section, belonging to individuals or groups of individuals related to each other by consanguinity or affinity or by close business interests, or whenever it is necessary to achieve national objectives, prevent illegal monopolies or combinations in restraint of trade ,or to implement national economic policies declared in laws, rules and regulations designed to promote the general welfare and foster economic development. In recommending to the Batasang Pambansa, corporations, businesses or industries to be declared vested with a public interest and in formulating proposals for limitations on stock ownership, the National Economic and Development Authority shall consider the type and nature of the industry, the size of the enterprise, the economies of scale, the geographic location, the extent of Filipino ownership, the labor intensity of the activity, the export potential, as well as other factors which are germane to the rationalization and promotion of business and industry. The introduction of the Bill is timely considering that there are reports of alleged business cartels of certain industries or basic commodities by some businessmen. Undoubtedly, such alleged cartels would deprive others of fair chance to engage in similar activities, and therefore hinder the growth of free enterprise in our economic system and in effect would have an adverse effect on the prices of basic commodities. Considering that the bill is designed to promote and preserve healthy business competition in a free enterprise and is in keeping with the aforecited provision of the Constitution and the policy of the government to encourage business competition and discourage illegal monopolies in business activities, we do not interpose any objection on the said Senate Bill. However, we take exception to the creation of an independent ANTI-TRUST COMMISSION to carry into effect the objectives of the Act. It is worth mentioning that the present policy of the government is to streamline the bureaucracy by reducing the present government work force apparently to reduce the overwhelming budgetary deficit. The creation of a new agency, at this point, will certainly not be a move towards this goal. Thus, instead of creating the Anti-trust Commission, it is recommended that the functions of the said proposed Commission be vested in the Department of Justice. Very truly yours, (SGD.) GONZALO T. SANTOS, JR. Acting Chairman