First, as opposed to the MRTPO's emphasis on constricting or reducing concentrations as well as monopolistic situations, based on certain yardsticks, the new law does not seek to curb or reduce a dominant position but merely addresses the abuse of dominance; and although the law does indicate a certain minimum market share beyond which there is a presumption of dominance, this is by no means definitive nor does presumption of dominance or even its determination suggest in any way that the dominance is being abused.
Also, depending on the facts, the new law does not rule out either dominance or abuse thereof at lower levels of market share. Further, while the MRTPO prohibited only "restrictive" trade practices that "unreasonably" lessened competition, the new law prohibits any agreement that reduces competition within the relevant market, whether or not it is "unreasonably restrictive". In addition, the new law forbids unfair trading practices and stipulates an elaborate procedure for review and clearance of mergers and acquisitions which meet the thresholds that are notified under the regulations.
Second, the new law makes provision for the Competition Commission to prescribe block exemptions from prohibited agreements on grounds of efficiency or economic merit but there was no provision for such block exemptions in the MRTPO.
Third, the new law seeks to substantially eliminate unnecessary transactions or compliance costs eg the requirement for registration of agreements, undertakings and individuals specified in the MRTPO has been eliminated in the new law.
Fourth, the new law specifically requires the Competition Commission to carry out studies for promoting competition in all important sectors of the economy and to engage in advocacy through various means in order to create an awareness regarding competition issues as well as promote a culture of competition.
An important function of the Commission would be the holding of open hearings on any matter affecting the state of competition in Pakistan and to publicly issue a non-binding opinion or edict in this respect. This was not the case under the MRTPO!
Fifth, under the new law, the Commission will have the ability to authorise its officers to enter and search any premises, including through forcible entry, ie, carry out "dawn raids", under appropriate safeguards provided in the law, and also to grant leniency or a reprieve as may be merited under the provisions of the law. These provisions did not exist in the MRTPO and have considerably strengthened the investigative capacity of the Commission.
Sixth, the new law affords the Members of the Commission a certain degree of protection from arbitrary removal, and security of tenure, in order to preserve the independence of the Commission which Members of the MCA did not enjoy. Further, there are provisions in the new law, which, if duly implemented, should provide the Commission tied sources of funding sufficient to meet its operational needs without resort to subventions from the Federal Budget. The MRTPO contained no such provision and the MCA was wholly dependent upon allocations from the budget.
Seventh, penalties in the new law are considerably higher than in the MRTPO with further provision for varying these penalties by notification in the official gazette with the approval of the Federal Government.
Also, while the MCA could only fine undertakings, for not carrying out the Authority's orders the Commission would be able to fine both undertakings and also relevant employees for violations of the law itself as well as for disobeying the Commission. Further, while MCA could only recover its penalties as arrears of land revenue, the Commission can arrange recoveries through a variety of other means as well eg, by way of attachment, appointment of a Receiver, and recovery from any person who is due to make payments to the defaulter.
Eighth, while orders of the MCA were appealable to the High Court, the new law provides that an order of an officer or a single Member can be appealed against before an Appellate Bench comprising at least two Members of the Commission who have not been involved in the original decision. Of course, judicial redress can always be sought against the final order of the Commission.
I would like to emphasise that the task of the Competition Commission is to protect competition and facilitate business growth. It will only be regarded as well structured and organised if it actually fulfils this function effectively. A lot of detailed work has been done in this connection with expert assistance secured through the World Bank and DFID of the UK.
There is also now a road map for operationalizing the Commission, as well as its capacity building over a three year period to the point where it achieves effectiveness of near-global standards.
FOUR FACTORS HAVE BEEN, AND ARE, ESSENTIAL TO TRANSLATE THIS GOAL INTO REALITY:
-- First, the enactment of an adequate new competition law, (which has already been achieved);
-- Second, the appointment of appropriate persons of eminence (who can work together as a team) as members of the Commission ? this too has been achieved;
-- Third, the earmarking of tied sources of funding to the Commission so that it does not have to depend on allocations from the federal budget; and Fourth, donor funding to support capacity building of the agency.
Given political will to put in place a modern competition regime, it is very much hoped that all this will be realised. I can assure you - and I hope you can take some comfort from this - that we have an adequate competition law, and highly qualified and capable Commission members. I now badly need the wherewithal to run the Commission properly and independently without seeking subventions from the Federal Budget.
And I also need to secure the support of donor agencies like the World Bank in order to build the capacity of the Competition Commission so that it becomes a first rate agency of close to international standards.
To discharge its onerous responsibilities under the new competition law, in letter and in spirit, it is important for the Commission to have well qualified, highly motivated and capable staff. It is equally important for the staff to have the right temperament for the job. I don't want bureaucrats! We must remember that the foremost function of a regulator and law enforcer is - to quote an oft-repeated cliché' ? that of a "watch-dog". Also, when I talk about the regulator being a "watch-dog" I am only referring to top-quality watch-dogs.
The regulator must be like the dog breed called the Alsatian or the German Shepherd. May I point out, for the benefit of those who are not dog lovers, that the basic attributes of a German Shepherd - qualities for which German Shepherds are actually judged in dog shows - are "bold and resolute", "incorruptible", and "discerning".
And these are the precise attributes that the staff of the Commission must not only have but also manifestly exhibit for all to see and acknowledge. If the Commission is unable to hire and train staff of the required caliber, which will not be possible without the necessary resources, it will certainly fail in its mission and we will be faced with the invidious situation of a sound law that is either badly implemented or not implemented. Under these circumstances, in a worst case scenario, with demoralisation taking hold, it will not be long before the eventual result is a dysfunctional agency, or perhaps, even a rogue agency.
In my experience, I have seen such horrible situations to emerge and nullify the best laid plans simply because care was not taken to ensure due implementation of the law and to give effect to the good intentions embodied in the law.
This is clearly in no one's interest, least of all the business community. If I put myself in your shoes, I would welcome the law which is actually supportive of business enterprises that act in a commercially rational manner - my concern would relate to whether or not the law is properly implemented and whether or not the Competition Commission is duly strengthened and supported to ensure that this happens. May Allah Almighty give all of us the wisdom and the fortitude to do what is right and eschew what is wrong.
(Concluded)
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