No to Kuya Noy’s Anti-Trust Law
Anti-trust law is one of the most non-objective laws in the United States. But since we have this habit of borrowing even the bad legal doctrines, principles, and legal concepts from other countries, the United States in particular, the new administration promised to implement an anti-trust law in the Philippines.
In his first State of the Nation Address (SONA), President Noynoy Aquino vowed to ensure that the market is fair for all. Thus, he said:
According to our Constitution, it is the government’s duty to ensure that the market is fair for all. No monopolies, no cartels that kill competition. We need an Anti-Trust Law that will give life to these principles, to afford Small- and Medium-Scale Enterprises the opportunity to participate in the growth of our economy.
Now the Senate came up with its proposed anti-trust act (Senate Bill 123) entitled An Act Prohibiting Monopolies, Attempt to Monopolize an Industry or Line of Commerce, Manipulation of Prices of Commodities, Asset Acquisition and Interlocking Memberships in the Board of Directors of Competing Corporate Bodies and Price Discrimination Among Customers, Providing Penalties Therefor, and for other Purposes.
The main proponent of the act, Senator Juan Ponce Enrile said: “The enactment of the bill would prevent abuses, such as those perpetrated by Meralco, including overcharging of customers, price manipulations, ghost deliveries, book manipulations and charging of system losses to customers, amounting to billons of pesos, and others.”
Prohibiting price fixing is just one aspect of the proposed antitrust legislation. Broadly speaking, competition laws seek to either regulate or outlaw the following acts:
- Prohibiting agreements or practices that restrict free trading and competition between business entities. This includes in particular the repression of cartels;
- Banning abusive behaviour by a firm dominating a market, or anti-competitive practices that tend to lead to such a dominant position. Practices controlled in this way may include predatory pricing, tying, price gouging, refusal to deal and many others, and;
- Supervising the mergers and acquisitions of large corporations, including some joint ventures. Transactions that are considered to threaten the competitive process can be prohibited altogether, or approved subject to “remedies” such as an obligation to divest part of the merged business or to offer licences or access to facilities to enable other businesses to continue competing.
It’s good that Sen. Enrile revealed that the Senate proposal is merely a rip-off of the three United States laws, which are the basis of the proposed anti-trust and unfair competition laws: the Sherman Act (15 USC § 1-7), the Clayton Act of 1914, and the Robinson-Patman Act of 1936 (15 USC § 13).
This means that it is simply OK to criticize the proposed bill based on the substantial body of work either expressed in scholarly works, jurisprudence, legal commentaries, among others.
However, an anti-trust legislation must be opposed on the ground that it is anti-innovation and anti-business.
I don’t have the time yet to deal with this issue so let me point out the basis why an anti-trust law must be rejected.
The Antitrust laws—an unenforceable, uncompliable, unjudicable mess of contradictions—have for decades kept American businessmen under a silent, growing reign of terror. Yet these laws were created and, to this day, are upheld by the “conservatives,” as a grim monument to their lack of political philosophy, of economic knowledge and of any concern with principles. Under the Antitrust laws, a man becomes a criminal from the moment he goes into business, no matter what he does. For instance, if he charges prices which some bureaucrats judge as too high, he can be prosecuted for monopoly or for a successful “intent to monopolize”; if he charges prices lower than those of his competitors, he can be prosecuted for “unfair competition” or “restraint of trade”; and if he charges the same prices as his competitors, he can be prosecuted for “collusion” or “conspiracy.” There is only one difference in the legal treatment accorded to a criminal or to a businessman: the criminal’s rights are protected much more securely and objectively than the businessman’s.
She also states in “Antitrust: The Rule of Unreason,” The Objectivist Newsletter:
The alleged purpose of the Antitrust laws was to protect competition; that purpose was based on the socialistic fallacy that a free, unregulated market will inevitably lead to the establishment of coercive monopolies. But, in fact, no coercive monopoly has ever been or ever can be established by means of free trade on a free market. Every coercive monopoly was created by government intervention into the economy: by special privileges, such as franchises or subsidies, which closed the entry of competitors into a given field, by legislative action. (For a full demonstration of this fact, I refer you to the works of the best economists.) The Antitrust laws were the classic example of a moral inversion prevalent in the history of capitalism: an example of the victims, the businessmen, taking the blame for the evils caused by the government, and the government using its own guilt as a justification for acquiring wider powers, on the pretext of “correcting” the evils.
“Free competition enforced by law” is a grotesque contradiction in terms.
Business people in this country must understand the perils or evils behind this non-objective proposed legislation.
For more information about anti-trust law, go to Capitalism.org.