DOJ proposes review of SRP system

The Department of Justice (DOJ) has suggested a review of the government's suggested retail price (SRP) system, saying businesses should no longer be required to seek approval from government when increasing prices of basic and prime commodities.

In a 16-page report, the DOJ Office for Competition (OFC) observed that while public welfare justifies government intervention against deceitful business practices, the "misapplication" of the SRP system has created "unintended consequences."

"As a form of price regulating mechanism by some government agencies, the SRP amounts to undue interference in the market and restrict competition," said the DOJ.

Justice Assistant Secretary Geronimo Sy, head of the OFC, said the DOJ recognizes the authority of implementing agencies like the Department of Trade and Industry to oblige manufacturers, distributors and retailers to provide advance notice for proposed price increases.

However, the requirement to seek clearance from implementing agencies for planned price increases negates the recommendatory nature of the SRP, Sy added.

"Suggested Retail Price should just be a suggestion - not an imposition by government. Price control distorts competition and does not help the market determine the optimum prices of goods," said Sy.

Apart from the DTI, other implementing agencies under the Price Act are the Department of Agriculture, the Department of Health, and the Department of Environment and Natural Resources.

Under the Price Act's Implementing Rules and Regulations, these agencies are tasked to conduct regular monitoring of basic necessity and prime commodity, in order to identify and investigate causes of market and price irregularities.

The DTI has already said the SRP is merely a public advisory used as a tool to ensure there is no profiteering, and that the SRP's issuance is neither a price control nor price capping mechanism.

Justice Secretary Leila de Lima said the current SRP system does little to prevent or detect price manipulations by cartels.

"SRPs are set by various government agencies especially on how retail prices are determined for basic necessities and prime commodities. We have pending cases against the rice, garlic and onion cartels that the SRP has failed to prevent or detect," she said.

The OFC said what aggravates the problem is the fact that there are currently no adequate rules and guidelines on the imposition of SRP.

The DOJ suggested that the SRP should only be implemented during emergency situations and similar occurrences.

"In times of calamity and conflict when there is a likely shortage of basic goods and prices are expected to increase, there is greater imperative to monitor and prevent hoarding, price manipulation, and other unscrupulous business practices," said the DOJ.

The DOJ also said other alternatives to the the SRP system should be explored.

Lastly, the DOJ also suggested the removal of any requirement to seek the agency's approval prior to price increase and any penalties for violation of the SRP.

The DOJ also suggested the use of appropriate term for the "suggested reasonable retail price," like Reference Retail Price, to distinguish it from the manufacture-issued SRP. —KBK, GMA News