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Corporate bullies

Bullies are small-brained kids smacking and intimidating fellow smarter kids.

In the adult world, there are bullies too, although laws have reined in their predatory ways.

The corporate jungle is where bullies thrive. Monopolies and oil cartels with global tentacles is a classic example. Twice in the past century, it almost ground the world economy to a halt.

Some governments have fought back with anti-trust laws and legislation that slap heavy penalties on their illegal practices. The Philippines has one of the weakest anti-trust laws in the world, where local corporate bullies can get away with P4 per kilowatt/hour rate hike in electricity without a proper public hearing.

Now, another corporate bully is being unmasked in the fight between the international Goliath Philip Morris Fortune Tobacco Corporation (PMFTC), and local David, Mighty Corporation (MC). When it started losing its market share to the native company last year, PMFTC instigated congressional inquiry into the business practices of its rival, instead of fighting fair in the open market.

Until recently, the giant tobacco companies combined controlled 95 percent of the domestic cigarette market. They had a hand in crafting the new sin tax law, aimed to wipe out its last remaining rivals, with taxes that would uniformly impose P30 tax per pack of cigarette in 2017.

PMFTC started producing and selling cheap Marlboro Black brand of cigarettes in defiance of a BIR decision last year, disallowing it to downgrade its Marlboro brands to the low-priced category and escape higher taxes.

MC is willing to reveal its trade secret on how it captured a large share of the low-end cigarette market if its foreign competitor stops bullying them and monopolizing the market, says spokesman Oscar P. Barrientos, executive vice president, adding that they’ve’ eaten part of PMFTC market because their people have not been doing their job well and that their down-the-line distribution is gone.

MC anticipated the possible effects of the Sin Tax Law and drew up its own strategy, while PMFTC relied mostly on its traditional marketing style, pushing premium and sub-premium brands.

MC has increased its excise tax payment by 1,400 percent from P515 million in 2012 to P8.2 billion in 2013.

  • JoshueGuzman

    WOW! Increased tax payments to 1,400%. But is P8.2 billion the correct amount of tax due? There is a study which a the congressional committee of ways and means was presented with which found Mighty evading P4 billion of taxes. The numbers don’t lie. How can Mighty explain this? They could not even explain how they continue to do business when all they they have for gross sales is a measly P1.22/ pack ( retail P14.70 less P12 Sin Tax and less P1.58 VAT = P1.22). Can it cover raw materials, labor costs, marketing and distribution costs? I guess not. That is why their numbers do not tally.

    By the way, is exposing somebody about illegal deeds bullying? I guess not.

  • noel

    Calling the attention of Finance Secretary Cesar Purisima and Customs Commissioner John Peter Sevilla. Why is it that despite the very strong evidence proving that the importation of tobacco leaf by Mighty Corp. is very much undervalued, why is it that no case of technical smuggling has been filed against this tax cheat of a company? As an honest taxpayer, I am asking this question because some corporations and personalities have been charged in court for tax evasion even without concrete evidence. Is Mighty Corp. a HOLY COW?