Republic of the Philippines

University of Rizal System (URS)

Binangonal Campus
Graduate Program

Reporter :
Topic :
Market

Merardo G. Joven. Ph. D.

Government As A Regulation in
and a Provider of Services
D.B.A.
DBA 610 Advance

Course
:
Subject
:
Microeconomics
Sem :
2nd 2014- 2015
Professor: Dr. F. Pearanda

Antitrust Policy and Regulation of Market

Antitrust Policy designed for Free and open market.

In USA, Antitrust law is a collection of federal and state laws

which regulates the conduct and organization of Business Corporation
generally to promote fair competition for the benefits of consumers.
Sherman Act 1890
Clayton Act 1914
Federal Trade Commission Act 1914 purposes
1.
2.
3.

Restrict the formation of cartels and prohibits other collusive practices

regarded as being in restraint of trade.
Restrict the mergers and acquisition of organization which could
substantially lessen competitions.
Prohibit the creation of monopoly and the abuse of monopoly power.

In the Philippines, the proposal acquisition of

Digetel by PLDT, Nestle, own antitrust controversy,
Fraport AG, a German company and its local
partner Philippine International Terminal Co.
(Piatco), in connection with the Ninoy Aquino
International Airport Terminal 3 spark even more
interest in Antitrust policy in the country.
In response to these antitrust controversies,
President Aquino issued Executive order No. 45,
which created an office of the competition Authority
in the Department of Justice, to help enforce our
antitrust law.

Current Law That Serves as Some Sort of

Precedent to the Current Bill
1.

2.

3.

Article XII, Section 19 of the Constitution which

mandates the state to regulate or prohibit monopolies
when required by public interest and at all timer to
prohibit combinations in restraint of trade and other
unfair competition practices.
Revised Penal Code, Article 186 punishes monopolies
and combination in restraint of trade.
Civil Code Article 28 Authorizes the collection of
damages arising from unfair competition in agricultural,
industrial or commercial enterprises or in labor.

The Philippine Fair Competition Act of 2014 seeks to

penalized all forms of Anti-Competitive agreements, abuse

of dominant position and anti-competitive merger with the
objective of protecting consumer welfare and advancing
domestic international trade and economic development.

Antitrust Bill Pending before the Twelfth

Philippine Congress
1.
2.

3.

4.

5.

6.

Senate Bill No. 175 An Act creating the Fair Trade Commission, regulating
trade competitions and monopolies and for other purposes.
SB No. 1361. An Act providing for more effective implementation of
constitutional mandate against monopolies, combination and restraint of trade
and unfair competition by redefining and strengthening existing laws,
processes and structures regulating the same and for other purposes.
SB 1600 An act prohibiting monopolies, attempt to monopolize industries or
of commerce, manipulation of prices of commodities, asset acquisition and
interlocking membership in the board of directors of competing corporate
bodies, and price discrimination among customers, providing penalties thereof
and for other purposes.
HB 1906 An act declaring unfair trade practices as acts of economic sabotage
and providing criminal sanction of the same as smuggling, technical
smuggling, misclassification of importation, dumping and other form of unfair
trade practices.
HB No. 198. An act creating a special body that should regulate and exercise
authority over monopolistic practices, combination in restraints of trade and
unfair competitions appropriating funds therefore.
HB No. 2439 An act penalizing unfair trade practices and combination in
restraints of trade, creating the Fair Trade Commission, appropriating funds
therefore, and for other purposes.

Regulation of Market
Regulated or controlled market where the government

control the forces of supply and demand. It is

common for some markets to be regulated under the
claim that they are natural monopolies. Example:
Telecommunication, water, gas or electricity, often,
regulated market are established during the partial
privatization of government controlled utility assests.
Requirements for Regulations
1. Better and Cheeper services and goods.
2. Protection of existing firms from unfair and fair
competitions.
3. Cleaner water and air.
4. Safer work places and Products.

Two Types of Regulations distinguish by

Economist.
Economic Regulation refers to rules that limit who can enter

a business (entry controls) and what prices they may charge

(price control).
Example: taxi drivers and many professionals (lawyers,
accountants,
beauticians, financial advisers, etc.) must have
licenses to do business.
An example of entry controls. Companies providing
telephone service
are subject to price control.
Social Regulations- broad category of rules governing how
many business or individuals carries out has activities with a
view of correcting one or more market failures. A classical way in
which the market fails is when firm (or individual) do not take
account of the costs their activities may impose on third parties.
Example a manufacturing plant may spew harmful
chemically into the air and water causing harm to its neighbors.
Government response by
setting standards for emissions.

Role of Government in allocating

Resources
Promote Competition
Antitrust legislations
Provide Public Goods
Private Goods can be consumed by only one

individual at a time. Private goods are subject to the

principle of rival consumption.
Rival Consumption individual are rival in
consuming private goods because each persons
consumptions reduces an available for others to
consume.
Public Goods Principles of rival consumption does
not apply.Can be consumed by many individuals
simultaneously at no additional costs and no
reduction in quality and quantity.

 Ensure Economy Wide Stability

Stabilizing rising prices
Eliminate unemployment
Example : Government Reserve Program
Bank Bailouts, Stimulus Packages,
Control of interest rates.

Political Functions of Government

Promote and Restrict Goods

Government Sponsored Good, something deemed socially

desirable
Example: Museum and Parks
Government inhibited goods Something deemed
undesirable through political process. Example: Heroine
Provide Income Redistribution
This is a more recent function of government.
Two systems used for this

1. Progressive income tax

2. Transfer for Payments

 In Capital Market, the role of

government is through the issuance

of Reserve Bank and Treasury Bills.
Legal and Social Framework
Providing the legal foundation and
a social environment conducive to
the effective operation of the
market system.

Environmental and Energy

Problem
A. Environmental
1. Improper waster disposal
2. Metro Clark Waste Management- the only engineered
sanitary landfill in the Philippines.
3. Illegal logging
4. Dynamite fishing
5. Smog mostly in cities
6. Quarrying
7. Kaingin System
8. Squatters
9.
Industrialization (Chemical disposal on rivers and seas)
10. Noise pollution
11. Corrupt Government (just consider them as part of the
environment)

B. Energy Problem
Insufficiency supply in the provinces where low
voltage and frequent brown outs is a common
problem.
2. Demand of electricity is much higher as
investment spread to the provinces.
3. Depending on energy imports and the
expansion of energy production lagging behind
rapidly rising demand.
4. High inflation rate partially caused by an
increase in the demand of almost everything in
the economy particularly energy.
1.

Public Choice Government

Spending and Taxes
Government spending includes all government

consumptions, investment and transfer payments.

Goods and services, infrastructures investments,
research spending.
There are circumstances in which lower levels of
government spending would enhance economic
growth and other circumstances in which higher
levels of government spending would be
desirable.
The Philippine Government main source of
revenue are taxes, with some non-tax revenue
also being collected.

Revenue and Funding

Tax Revenue
Income Taxes
E-VAT
Tariffs and Duties
Non-tax Revenue
The Bureau of Treasury
Privatization
PAGCOR

Spending, Debt and Financing

Government spending and fiscal imbalance

Financing and Debt