The Philippine Competition Commission (PCC) has called for measures to improve consumer choice in water services, saying practical barriers and exclusivity arrangements often prevent households from switching providers even when alternatives are available.
Market study highlights competition concerns
In its latest market study on the country’s water distribution sector, the PCC said the industry remains a natural monopoly because of the high costs of building and maintaining water infrastructure. However, it noted that competition concerns still arise in areas where multiple water service providers (WSPs) operate or where consumers could potentially choose among suppliers.
The study found that while households generally have the legal right to select and switch water providers, actual choices are often limited by decisions made by property developers before construction and by operational policies imposed by residential managers and homeowners’ associations.
Switching costs and exclusivity clauses
The PCC also highlighted significant switching costs that discourage consumers from changing providers. These include expenses related to modifying existing water connections and infrastructure, as well as contractual restrictions that may lock residents into a particular supplier.
“Even when alternative providers are available, the practical ability of residents to switch providers is severely constrained,” the study said.
Recommended reforms
To address these issues, the PCC recommended the creation of a centralized and regularly updated online platform that would allow consumers to identify available WSPs in their areas and compare service options.
The competition watchdog also urged stricter enforcement of rules against exclusivity clauses at the household level to ensure that consumers can exercise their right to choose their preferred water provider.
The National Water Resources Board (NWRB), which participated in policy discussions on the study, expressed support for improving transparency in the sector and pointed to its Listahang Tubig database, which contains information on more than 28,000 WSPs nationwide.
Balancing exclusivity and choice
The NWRB, however, noted that exclusivity arrangements may be necessary during the early stages of residential developments to support investments in pipeline installation and system design. Such arrangements, it said, should be time-bound and eventually allow homeowners to choose among providers once projects are completed.
The PCC emphasized that the study is not an argument against the natural monopoly structure of the water sector, which can deliver efficiency and lower costs. Instead, it said consumers should not face unnecessary restrictions when multiple service options are legally or practically available.
The study forms part of the PCC’s broader efforts to examine competition issues in priority sectors and identify policy reforms that could improve service quality and consumer welfare.
