The Philippine Competition Commission (PCC) has released a market study that assesses the competitive landscape within the country’s residential water distribution sector. The study was conducted to analyze current market dynamics, the nature of competition among water service providers (WSPs), and how this affects consumer choice.
The study reveals that while water distribution is characterized as a natural monopoly, there are multiple WSPs in some areas due to supply gaps or infrastructure limitations that are dependent on geographic conditions. In these areas, switching WSPs or availing of additional WSP services remains an option. This market structure requires the use of both “competition for the market” and “competition in the market” frameworks. The analysis spans from the district level, which provides the broadest perspective, down to the household level, representing the smallest unit.
At the district level, market entry is predetermined through competitive selection processes or legislative mandates, such as public bidding for concessionaires or the legislative creation of local water districts. As a result, consumers generally have little influence over the selection of their WSP at this level.
At the household level, although the regulatory framework does not legally bind households to a single provider, 73.6 percent of residents surveyed nationwide reported a complete absence of alternative WSPs in their area. This lack of choice is intensified within subdivisions and condominiums, where property developers may have a predetermined provider that could be an affiliated private water utility or the developer’s own water supply system.
Even where alternative WSPs are available, transitioning to a new provider remains impractical due to significant costs and limited information.
To make the market more competitive and consumer-friendly, the study recognizes that it is crucial to enhance consumer choice and ease barriers to switching WSPs. Opportunity for switching could provide recourse to consumers when faced with issues such as poor service quality, low water pressure, or non-potable tap water supply.
The study recommends regulatory restrictions on exclusivity arrangements between developers and WSPs to afford consumers the liberty to switch providers based on service quality, price, and other factors. It is also seen as beneficial to have a centralized and user-friendly online platform that could map out service coverage, publish authorized tariffs, and provide performance indicators to help developers and individual households compare available options. The study emphasized that where alternative options can practically exist, consumer choice must not be artificially or inadvertently suppressed.
This market study aligns with the PCC’s strategic effort to evaluate key economic sectors, address emerging market vulnerabilities, and advance evidence-based policy interventions. By conducting these studies, the Commission continues to fulfill its statutory mandate of enhancing consumer welfare and sustaining fair, dynamic, and inclusive markets.
