MANILA, Philippines – The Philippine Competition Commission (PCC) charged 12 onion traders for alleged market allocation or working as a cartel since 2019 — controlling the market price of 50% of imported onions at one point.

According to Enforcement Office Director Christian delos Santos, the case has the “largest recommended fine” at P2.423 billion.

“The fine was computed based on the sales of the respondents, the gravity of the violation, the duration of the agreement, and other factors,” Delos Santos said in a press conference on Thursday, September 5.

Authorities did not specifically state how much the cartel earned while they controlled the onion market in the country from 2019 to 2023. Delos Santos said “we cannot attribute” if the cartel was the driving force behind onions reaching sky-high prices — but noted that they did “contribute.”

In 2022, the suggested retail price of one kilogram of onion stood at P250, although market prices went as high as P700 per kilogram.

The PCC raised by 10% its fines for violations of competition rules in 2021. Firms participating in cartel behavior could be fined as much as P110 million.

However, fines for the onion traders were tripled as the product involved is a prime commodity.

Agriculture Secretary Francisco Tiu Laurel welcomed the PCC’s decision and is mulling to block the traders from re-entering the market. 

“In addition to the fines and legal charges, the Department of Agriculture will explore the possibility of blacklisting these unscrupulous traders and potentially withdrawing the accreditation of cold storage facilities whose owners were complicit in this scheme,” he said in a separate statement on Thursday.

How they were caught

The PCC conducted a dawn raid or an administrative search in September 2023, pursuant to Section 12 of the Philippine Competition Act (PCA) which allows the body to inspect business premises and records of any entity under investigation.

Authorities noted that the companies being investigated were all in one building, just in different offices.

“Sales and import documents and other business files found in the premises of the respondents revealed that the cartel earned millions from the collusive agreement. Documents obtained also showed that the anti-competitive conduct among the respondents existed as early as 2019 and was implemented by the officers of the involved entities,” Delos Santos said.

The PCC said respondents “assigned amongst themselves” the sanitary and phytosanitary import clearances (SPSIC) and divided among themselves the distribution of onions imported into the country.

Through the dawn raid, the PCC was able to collect pieces of evidence such as letters, emails, contracts, shipment monitoring lists, SPSICs, corporate documents, sales ledgers, and receipts.

“Our evidence showed that respondents — despite being competitors — share, exchange, and discuss commercially sensitive business information such as price, suppliers, customers, volume, shipping, distribution, storage, and many others,” Delos Santos said.

The Enforcement Office filed a Statement of Objections with the Commission on July 9. The PCC will preside over the case in its power as a quasi-judicial agency and has since ordered a summons from the respondents on July 16 to file a verified answer within 60 days from receipt of the summons. – With a report from Iya Gozum / Rappler.com