The Philippine Competition Act and the small business sector framework for development

The Philippine Competition Act and the small business sector framework for development

Over the past decades, the Philippine Government has institutionalized policies and programs that seek to establish an environment conducive to the growth of the small business sector, which makes up 99.57% of business establishments in the country. Figures have consistently shown the increasing contributions of the sector in employment creation and export, including through subcontracting arrangements with large firms, or as suppliers to exporting companies. Yet development of the sector remains modest, and under the 2017–2022 Philippine Development Plan ('PDP'), the policy focus on access to finance, financial literacy, and access to technology has been reiterated. While an explicit correlation between the growth of micro, small and medium sized enterprises ('MSMEs') and (the presence of a) competition law has yet to be established, there is basis for looking at competition policy, particularly as articulated in Republic Act No.10667 or the Philippine Competition Act ('PCA'), as an area of intervention in support of MSME development.

This Article conducts a survey of the current legal framework for MSMEs to provide an understanding of the underlying policy for enhancing the sector’s development and competitiveness. The role of competition law as a potential platform for policy intervention in the MSME sector is then considered, in terms of examining competition issues that have either been observed as affecting the sector in the country or have arisen in other comparable jurisdictions. It is hoped that this analysis will assist in shaping enforcement of the PCA in a way that is strategic from the perspective of both the MSME policy framework and competition policy. In Part II, the Article offers a discussion of the current legislative and regulatory framework for the MSME sector. Part III identifies the areas of intervention that are peculiar to competition policy and specifically provided for under the PCA. Part IV sets out an overview of the challenges that the Philippine MSME sector is likely to face given the full implementation of the PCA, while Part V complements this discussion with selected MSME case studies from various jurisdictions. The paper will conclude with some high-level recommendations.

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