Quoting official sources, a Recorder Report has it that the Monopoly Control Authority, after detailed hearing of their replies to show cause notices, has directed 18 cement factories to restore status quo ante and reduce cement prices, with retrospective effect, as they had failed to justify the increase from May 2003 onward.
MCA had issued show cause notices, under section 11 of the Monopoly Control Ordinance, to these cement companies against forming a cartel to increase prices, as it had hurt the interest of the consumers. Moreover, it has been pointed out that these companies had failed to pass on the benefit of Rs 12 per bag to the consumer, which the government had given them by reducing central excise duty.
The MCA decision in the matter, affecting 18 cement factories for the time being, may not take the issue to its logical conclusion. For, from all indications, this happens to be all that the Authority can do towards redressing the consumers' grievances against indulgence of businesses in monopolistic and restrictive trade practices.
Of course, MCA has been positively responding to complaints of the consumers, and the government alike, on the issue of manipulated increases in prices. But the fact remains that loopholes in the law, under which it operates, provide enough opportunities to the offending individuals and groups, identifiable as cartels, to get away with malpractice's with abandon, or to delay the process of implementation of MCA decisions.
For many and varied have been instances of such proceedings, leading to show cause notices, as also culminating in fixation of responsibility and pronouncement of remedies. However, as they say, there is many a slip between the cup and the lip, the cartels and monopolies remaining undaunted by that the MCA directives, eventually to the increasing detriment of the consumers.
However, awakening, though belatedly to this kind of a situation, a beginning was made some time ago to make suitable amendments to the law, but in a slovenly manner, which enabled the offenders to devise ways and means to defeat them. It will be noted that manufacturers of sugar and cement, two items on which there is a lot of public hue and cry, claim that they were not to blame, but that other players were also involved in price spiral racket.
According to them, distributors, wholesalers and retailers, who wanted to mint maximum money, artificially increase prices. To the contrary, it will be recalled that the cement industry, though getting a shot in the arm by switching over from too expensive furnace oil to much cheaper coal, claims not to have come out of the woods.
This has reference to APCMA chief's earlier passing reference to rising trend in coal prices in the international market.
It may be recalled that in 1998, MCA tried to break the collective arrangement between cement makers but with partial success due to weak enforcement of the law. Moreover, the former deputy chairman of planning commission, was reported to have spoken publicly of growing cartelising, not only in sugar and cement, but also in cooking oil, steel and almost every industry.
And the matter rested there until the emergence of a renewed urge to bring about the needed changes in the monopoly law. Besides the Monopoly Control Authority, the ministries of law, finance, commerce, privatisation and others were involved in the new initiative.
However, it was in June last that the National Assembly's Standing Committee on Government Assurances expressed dismay over non-submission of Monopoly Control Authority Bill as per commitment.
Having discussed the assurance given by the Minister of State for Finance, Omar Ayub Khan, on the floor of the National Assembly on a submission from MCA, it took serious note of the non-implementation of the assurance, and directed the minister to accord top priority to the matter and submit the MCA Bill without any further delay.
The Minister of State said the ministry had decided to alter the Monopoly Control Authority Act (MCA), 1970, and that work on drafting a new competition law was in progress and it would be tabled before the House for enactment by the end of the year.
He was also reported to have sated that the new law would more effectively regulate the business for the benefit of the consumers and to cope with current economics conditions. The committee asked the ministry to give periodical progress reports on the new competition law to the committee and complete the consultative process as soon as possible.
It will be in the fitness of things for the government to hasten with the task of empowering the MCA by the proposed new law, to help it deal effectively with cartels.
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