6 firms in ‘onion cartel’ face P1.76-B fines, raps

MANILA, Philippines —After a yearslong investigation, the Philippine Competition Commission (PCC) has imposed a record P1.76 billion in fines on six businesses and their officers for operating an onion cartel that was uncovered after onion prices surged to as much as P800 per kilogram in late 2022.

At a press conference on Thursday, the antitrust watchdog said it found the following liable for illegally dividing the market for imported onions: Golden Shine International Freight Forwarders Corp., Tian Long Corp., La Reina Fresh Vegetables & Young Indoor Plants Inc., Yom Trading Corp., and sole proprietors Mark Castro Ocampo of Vegefru Producing Store and Nancy Collanta Rosal of Rosal Fruit and Vegetable Trading.

Also held liable were company officers Lilia Cruz and Letty Baculando of Golden Shine, Eric Pabilona of Tian Long and Renato Francisco Jr. of La Reina.

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Additional penalties if…

The PCC said the decision to impose the fine was served on Oct. 1. The respondents have until Oct. 16 to comply. No fine has been settled as of Oct. 15.

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PCC Executive Director Kenneth Tanate said that failure to comply with the decision could result in additional penalties ranging from P60,000 to P2.5 million, plus P55,000 for each day of delay. Daily penalties would begin only 45 days after the decision is issued.

According to the PCC, the cartel coordinated the importation, cold storage and wholesale distribution of red and yellow onions nationwide, collectively controlling nearly 50 percent of import clearances for the commodities.

READ: Onion prices worldwide much lower, deepen questions on incredulous costs in PH

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Scheme among ‘competitors’

The traders were found to have violated Section 14(b)(2) of the Philippine Competition Act, which prohibits agreements among competitors to divide or share markets, whether by sales volume, territory, products, customers or other means.

Under the scheme, Golden Shine allegedly used the respondent importers’ credentials to apply for sanitary and phytosanitary import clearances, then designated the same importers as consignees. Golden Shine allegedly also monitored permit allocations and coordinated shipments.

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Imported onions were subsequently routed through cold storage facilities managed by Tian Long before being distributed nationwide. The cartel operated in Bulacan, Iloilo City, Cebu City, Cagayan de Oro and Davao City.

The PCC said its ruling covered violations of the Philippine Competition Act committed in 2020 and 2021. Before the price surge, onion was selling at around P80 to P100 per kilo in mid-2022, according to price monitoring by the Department of Agriculture then.

Dropped from the initial list of respondents were Philippine Vieva Group of Companies Inc. and Vegetable Importers, Exporters & Vendors Association of the Philippines Inc. due to “insufficient evidence of their participation in the market allocation agreement.”

Largest PCC fine yet

The P1.76-billion penalty is the largest imposed by the PCC to date. Because onions are classified as prime commodities, the Philippine Competition Act requires the tripling of applicable fines.

The commission imposed the maximum P330-million fine each on La Reina, Yom Trading, Vegefru and Rosal Fruit, while P118.32 million was imposed on Tian Long and its officer, Pabilona.

Asked whether the investigation had also looked into possible complicity of certain officials, PCC enforcement director Christian de los Santos said looking into public offices was not part of the watchdog’s mandate.

“Our coverage are the entities, those engaged in economic activity, so businesses. We do not cover public officers,” De los Santos said.

In determining the penalties, the PCC considered the respondents’ relevant turnover, estimated using the volume of import clearances they utilized and the prevailing wholesale prices of onions.

Referred to DOJ

Apart from the penalties, the respondents were ordered to permanently cease the illegal market allocation arrangement.

Beyond the administrative penalties, the PCC is also considering possible criminal prosecution and referring the case to the Department of Justice (DOJ).

Administrative proceedings are separate from any criminal case, which would require the DOJ to independently assess whether the evidence is sufficient to support prosecution.

De los Santos said the PCC was still waiting for a motion for reconsideration from the onion traders, “but that does not preclude us from, as early as now, consulting the DOJ on the merits of the case.”

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Tanate said that even if the respondents paid their fines, “it would not weaken the PCC’s resolve” to pursue a possible criminal case. /cb