MRTPO to prevent restrictive trade practices

The new Monopolies and Restrictive Trade Practices Ordinance (MRTPO) will prevent unreasonably restrictive trade practices. Pakistan is ranked 73 among 125 countries in respect to "intensity of local competition", while neighbouring India is at fourth place.
As far as effectiveness of anti-trust policy is concerned, Pakistan was ranked at 79 as against India, which placed at 27. The Monopoly Control Authority Chairman, Khalid A Mirza, said this while talking to Business Recorder after a seminar on "The Role of The Monopoly Control Authority" here on Thursday.
He said: "It is also a function of the authority to register undertakings, individuals and agreements as prescribed in the ordinance or as additionally notified under the rules in order to cover all situations."
The government was fully conscious of the deficiencies in the MRTPO and the limitations faced by the authority, he said, adding that internationally, the institutions like MCA were being replaced by "competition agencies" that have a broader, more progressive and refined mandate.
He said: "Instead of seeking to curtail the growth of the economic muscle, these competition agencies endeavour to promote healthy competition amongst economic agents and prevent manipulative business practices." Most importantly serving as an authoritative advocate on all matters pertaining to competition, he pointed out.
Khalid said, firstly, the MRTPO's emphasis on constricting or reducing concentrations and monopolistic situations based on certain yardsticks. The proposed 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 suggests in any way that the dominance is being abused. The proposed law does not rule out either dominance or abuse thereof at lower levels of market share.
The MRTPO prohibits only 'restrictive' trade practices that "unreasonably" lessens 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 would be notified under the rules.
Secondly, the proposed new law makes provision for the 'competition commission' to prescribe block exemptions from prohibited agreements on grounds of efficiency or economic merit but there is no provision for such block exemptions in the MRTPO.
Thirdly, the proposed new law seeks to substantially eliminate unnecessary transactions or compliance with costs eg the requirement for registration of agreements, undertakings and individuals specified in the MRTPO has been eliminated in the new law.
Fourthly, 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 and 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 is not a case under the MRTPO.
Fifthly, under the proposed 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 grant leniency or a reprieve as may be merited under the provisions of the law. These provisions do not exist in the MRTPO and should considerably strengthen the investigative capacity of the commission.
Sixthly, the proposed law offers members of the Commission a certain degree of protection from arbitrary removal and security in order to preserve the independence of the commission, which members of the MCA do not enjoy. Further, there are provisions in the new law, which, if duly implemented, should provide the commission sources of funding sufficient to meet its operational needs without resorting to subventions from the Federal Budget.
The MRTPO contains no such provision and the MCA is wholly dependent upon allocations from the budget. Seventhly, penalties in the proposed law are 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 can only fine undertakings, the commission would be able to fine the relevant employees as well. Further, while the MCA can 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.
Eighthly, while orders of the MCA are appealable to the High Court, the new law provides that order of an officer or a single member can be appealed before an Appellate Bench comprising at least two members, who have not been involved in the original decision. Of course, judicial redress can always be sought against the final order of the commission.