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House to probe alleged existence of ‘cartel,’anti-competitive practices in onion industry

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A leader of the House of Representatives has filed Resolution 681 directing two committees of the lower chamber to look into the alleged anti-competitive practices, the alleged existence of a cartel in the onion industry and the sufficiency of the interventions of the Philippine Competition Commission  (PCC) on the matter.

In her resolution filed on Monday, House Committee on Appropriations Vice Chairperson Stella Luz Quimbo said price manipulation, hoarding, and smuggling are suspected by the Department of Agriculture (DA) that may be driving the high price of onions.

Citing National Statistician Dennis Mapa, Quimbo said that rising onion prices had a substantial contribution to inflation in December 2022, with a 0.3-percentage-point contribution to overall inflation.

Quimbo said the Philippine Competition Act  (PCA) prohibits anti-competitive agreements and abuse of dominant position in order to promote free and fair competition and prevent economic concentration that will unduly stifle competition, lessen, manipulate or constrict the discipline of free markets.

According to price monitoring data from the DA, as of January 5, 2023, Quimbo said the retail prices of local red onion and local white onion were at P280 to P650 and P400 to P600, respectively, in select markets in the National Capital Region, which are significantly higher compared to the prevailing retail price of local red onion of P220 and imported white onion at P80 on the same day last year.

“Concerns about the possibility of hoarding of white onions and allegations of an onion cartel have been expressed by citizens and policymakers as early as August 2022,” said Quimbo.

In September 2022, she said the Bureau of Plant Industry seized and destroyed 12,000 kilograms of smuggled white onions.

On December 4, 2022, the lawmaker said the DA discovered 100,000 kilograms or 100 metric tons of misdeclared white onions that were seized at the Manila International Container Port.

Also, on December 13, 2022, Quimbo said a DA official admitted that he received information that some onions bought at a price lower than production cost had not yet been released to the market, and that a syndicate may be hoarding red onions.

Quimbo said the PCC has the power to conduct inquiry, investigate, and hear and decide on cases involving any violation of the PCA and other existing competition laws motu proprio or upon receipt of a verified complaint from an interested party or upon referral by the concerned regulatory agency and institute the appropriate civil or criminal proceedings.

Section 12(d) of the PCA provides that the PCC has the power to stop or redress an entity upon finding, based on substantial evidence, that it has entered into an anti-competitive agreement or has abused its dominant position after due notice and hearing, she said.

Quimbo said the PCC has a leniency program designed to deter the creation of cartels and aid in the detection and prosecution of existing cartels.

Also, she said Congress has to exercise its oversight functions on the PCC, which is expected to effectively perform its mandate to investigate and prosecute anti-competitive practices in the market for onions, considering the continuous rise in the price of onions.

Ombudsman probe

Meanwhile, the Office of the Ombudsman said it would investigate officials of DA and the Food Terminal Incorporated (FTI) over the procurement of onions.

Ombudsman Samuel Martires said his office would look into the DA and the FTI’s procurement of onions from the Bonena Multipurpose Cooperative as well as involvement of traders in alleged price manipulation.

In a radio interview, Bonena Multipurpose Cooperative Chairman Israel Reguyal said traders started a bidding process that resulted in farm-gate prices reaching P550 to P570 per kilo last December.

Long overdue

Meanwhile, House Deputy Minority leader and ACT Teachers Party-list Rep. France Castro welcomed the investigation of the Office of the Ombudsman on DA officials over the higher prices of onions but said that this was long overdue.

“The issue of an onion cartel is nothing new along with the rice and garlic cartels. In fact, in 2014 the Department of Justice-Office for Competition [DOJ-OFC] completed two separate fact-finding investigations of alleged collusion in the garlic and onion industries,” she added.

Based on the DOJ-OFC newsletter, in early 2015, Castro said they confirmed that collusion and cartel existed in the onion industry.

She added that investigation showed that the same personalities as in the garlic case used similar modus operandi to corner import permits as well as manipulate onion supply and its prices.

Both investigation reports revealed that the commodity sector in the country is prone to anti-competitive behavior, the lawmaker said.

Among the DOJ-OFC’s policy recommendations to weed out harmful and abusive business practices in the garlic and onion industries include the removal of the current permit system, considering that supply is dependent on imports, clear and impartial guidelines in the issuance of import permits, and amendment of existing laws and regulations, she added.

“It seems that nothing came out of these recommendations and the cases they filed because the onion cartel is back again in full force and raking in humongous profits. We hope that the Ombudsman’s probe would be more thorough and those responsible would truly be held to account,” said Castro.

Image credits: PNA file photo

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