DOJ: High garlic prices caused by collusion, cartel

The unusual spike in garlic prices in recent months was caused by collusion between government officials and a garlic importer who allegedly cornered most of the supply, according to the Department of Justice (DOJ) in a report released Wednesday.

In the report, the DOJ Office for Competition found out that there was no shortage of garlic supply and that the National Garlic Action Team under the Department of Agriculture should be abolished for being "unnecessary, unhelpful" and for allegedly contributing to the problem.

The DOJ recommended instead the creation of a "fair and transparent system that will allow competition in the garlic industry consistent with the dictates of economic justice."

"The price of imported garlic, considering all incidental costs in its shipment, should not reach as high as P350 per kilo, even factoring in the increase in trucking charges and related costs," said the DOJ report.

Dummy entities

The DOJ found that majority of the import permits for garlic were granted only to one preferred group of four individuals and allied interests through a web or series of dummy entities duly accredited by the Bureau of Plant Industry.

The DOJ said that a certain Lilia M. Cruz alias Leah Cruz cornered at least 75 percent of the total garlic importation in the country by virtue of such BPI import permits.

"Due to a cornering of supply, this group can dictate the high prices," said Justice Secretary Leila de Lima.

The demand for garlic is largely supplied by imports—73 percent imports and 27 percent local produce. The importation process requires an import permit from the BPI.

Collusion seen

Last June, De Lima tasked the National Bureau of Investigation to look into reports of hoarding, profiteering and cartel activities that may have caused prices of basic goods to soar.

On Wednesday, De Lima said the NBI will gather further evidence to prosecute the personalities mentioned in the DOJ report, and the BPI officials who may have been in collusion with them.

"The lack of clear-cut guidelines and established procedures in determining the allocation of import permits has made the BPI system prone to partiality, manipulation, and collusion," read the DOJ report.

"The flawed permit system abetted the establishment of a garlic cartel, possibly with the collusion of some BPI and DA officials," it added.

The price of garlic has risen to a range of P300 and P400 per kilo in Metro Manila in June.  —KBK, GMA News