Proper control of monopolies is an integral feature of developed market economies. Pakistan has been trying to establish an effective policy framework in this crucial area for the last few years, but the overall impact has generally been patchy.
Speaking at a seminar on "Implementation of Competition Law and Policy in Pakistan", Khalid Mirza, Chairman of Competition Commission of Pakistan (CCP), defended his organisation by saying that people talk much when the government may be at fault, but when it needs their help to book those who are involved in unlawful activities, no one comes forward with solid proofs to help the government.
Commenting on the inquiry about cartels in the banking sector, he asserted that people do suspect cartels and his team is working on this issue, "but the situation is not what it seems to be". CCP plays its role where there are unfair practices but it also wants to let the businesses grow in the country. It is alright for a company to expand its operations through its quality products or services.
The problem arises only when a company expands at the expense of other smaller companies or indulges in monopolistic practices. Pakistan needs methodological ways to regularise the matters according to competition laws. "We have competent teams to conduct operational works successfully and our grip on competition law would be effective with the time. I have a good team, a good law and a good set-up", Mirza added.
What the CCP Chairman, revealed at the seminar is not something new or very inspiring. The development of anti-cartel laws all over the world has generally followed a uniform pattern in various countries. The framing and strengthening of these laws was accorded a priority only when these countries reached an advanced stage of development. To institute and implement harsh laws at infancy stage was generally considered an anti-development exercise. Also, teething troubles could be expected in the beginning. Besides, it takes time to raise a competent and effective team to do the hard work needed to punish the wrong-doers.
It is also true that civil society and consumer groups are either non-existent or slow in playing their part in the developing countries. Since all these factors applied in the case of Pakistan, the remarks of the CCP Chairman, appear to be justified to an extent. However, it is also true that so far the performance of the now defunct Monopoly Commission of Pakistan was highly unsatisfactory. Some of the cartels like those in the sugar and cement industry which also wield considerable political influence were not been effectively dealt with.
The decision of CCP to initiate action on its own without any help from the affected parties is noteworthy. There is a general perception that banking industry in Pakistan is making abnormal profits largely at the expense of depositors by keeping the deposit rates depressed, while the borrowers complain of abnormally high spreads. However, CCP will need to trend carefully as there appears to be an overlap between SBP Act and CCP law. This is reflective of poor governance.
It is a result of casual consultation of the Government when making a new law with other regulators as well as stakeholders. However, the need to check unfair trade practices does exist - specially in an underdeveloped society with widespread illiteracy.
Overall, we feel that CCP cannot afford to have a laid-back posture like its predecessor, MCP. The CCP law has more teeth but ultimately it is people at the CCP helm who have to establish the writ of the agency and create the fear of law in the minds of unethical businessmen. Only time will tell if the commission will be able to earn the respect of the nation.
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