The government is giving up its power to set suggested retail prices (SRPs) for prime commodities—often a contentious matter between businesses and regulatory agencies—as long as industry competition is healthy.
“We’ll let the market decide. Setting of the SRPs is a company decision; and supermarkets, more often than not, follow the SRPs and even price them below the suggested schedule of the manufacturers,” Trade Secretary Ramon M. Lopez said on the sidelines of the closing ceremony for the European Union’s Trade Related Technical Assistance 3 on Wednesday.
The Department of Trade and Industry’s (DTI) authority to issue the SRPs is found in its Joint Administrative Order (JAO) 1, Series of 1993, with the departments of Agriculture, Health and Environment and Natural Resources issued in 1993, which states: “The implementing agency may, whenever necessary, issue SRPs for certain basic necessities and/or prime commodities for the information and guidance of concerned trade, industry and consumer sectors.”
The JAO serves as the implementing rules and regulations of the Price Act, according to a competition report prepared by the Department of Justice in 2015. These agencies, including the Department of Energy, are empowered to issue SRPs after conducting a review on the manufacturer-set prices.
Lopez said he intends to review the legislation that grants this authority.
“I’m telling the Philippine Competition Commission, there should be no ‘approval’ process in the DTI when it comes to SRPs,” Lopez said. “If we observe in an industry that they all increased at the same time, of course, we’ll call their attention. We still have to review industries that are dominated by a few players.”
Manufacturers of basic goods and prime commodities are enjoined to submit their price schedules to the DTI’s Consumer Protection Group for the monitoring of their price movements. Although not explicitly stated in the law, these prices undergo a review process, wherein the DTI decides if the modification in prices is justified.
The Executive department then issue approved SRP schedules, which serve as pricing guides for supermarkets and other retailers.
The DTI earlier justified the issuance of the SRPs as a consumer-protection tool—essentially to prevent profiteering on the part of retailers, and to set a guide for consumers as to the range of reasonable price hikes.
But Lopez said that, as long as there is competition in commodities and price segments, he would let market forces dictate the movement of prices.