An Analysis of the Structure of the Philippine Retail Food Industry

The enactment of Retail Trade Liberalization Act of 2000 (RA 8762), which liberalizes the Philippine retail trade business, was not based solely on the overall thrust of the government to pursue market-oriented policies. It also stemmed from the observation that the sector lacked competition. Large retailers, particularly supermarkets, continue to displace sari-sari stores and are alleged to exercise market power, such as that enjoyed by the food manufacturers. This paper examines the structure of the retail food industry and analyzes the demand and supply factors and government policies affecting the industry. It argues that while there is some evidence supporting allegations of market power in the retailing and manufacturing sectors, it appears insufficient. Thus there is a need to empirically test these allegations.