Out to target CCP?

The Chairman of the Competition Commission of Pakistan (CCP), Khalid Mirza, has said at a seminar on "Corruption in the Private Sector," in Islamabad, arranged by Transparency International, that certain "vested interests" and "mafias" are trying to destroy the Competition Ordinance 2007 so as to weaken the CCP.
He has, therefore, stressed the need for the Parliament to ratify the cutting-edge law at the earliest, otherwise everything the Commission has accomplished so far will go waste, as a result of which economic productivity in Pakistan will continue to stagnate.
He has hinted at influence-peddling by vested interests, which have become active apparently to get favourable amendments incorporated into the Competition Ordinance, which has to be ratified by the Parliament within 120 days. The groups doing their best either to effectively destroy the law or weaken the Competition Commission, include some against whom the Commission had acted.
Khalid Mirza has rightly observed that apart from the perception of the existence of corruption in the private sector, a more damaging form of "corruption" is the anti-competition behaviour that has become pervasive in almost all spheres of commercial and economic activity in the country.
The Competition Ordinance empowers the CCP to move against cartelization in different sectors of the economy, collusive tendering, abuse of market dominance, unacceptable concentration and deceptive marketing practices - factors that have bred a mindset that discourages fair competition.
The major aim of the Competition Ordinance is to provide a legal framework to create a business environment based on healthy competition, which will help improve economic efficiency, develop competitiveness and protect the consumers from anti-competitive practices.
Cartels and vested interests in Pakistan, as elsewhere in the world, enjoy sizeable representation and clout in state institutions, including the parliament and government machinery, to influence legislation and the implementation of rules and regulations to shield their collective interests.
But due to weak institutions in Pakistan, the private sector, with its huge clout and financial stakes, often tries either to circumvent or dilute, through different means, the regulatory mechanisms that are in place, or tries to influence legislation through favourable amendments. It is said that at times, big stakeholders fund election campaigns of candidates, who they think can later pay them back with their support of laws that will be favourable to them.
It is true that cartelization and other malpractices exist in other countries as well, but in Pakistan these have done the gravest harm to the economy because of weak institutions and lack of foolproof regulatory mechanisms and oversight. This has not only eroded our competitiveness, but also our credibility.
A double-edged policy instrument, promoted on different grounds, has been the unwarranted protectionism extended to various sectors, presumably to allow them to gain sufficient competitive strength, while remaining in the cocoon of protectionism. But the policy has proved counter-productive, as it has sapped the vitality of these sectors and made them uncompetitive.
Unfair marketing practices and resort to cartelization are symptoms of the same underlying malaise that can be cured only through genuine rule of law. What the CCP chief has disclosed at the Islamabad seminar, dovetails with the way things have traditionally been manoeuvred to protect and promote the stakes of vested interests. There are basically two points that need to be stressed here.
One, the Competition Ordinance 2007 must be ratified by the Parliament within the timeframe set by the Supreme Court. And two, the CCP must be given greater financial and operational autonomy, on the pattern of the Auditor-General, for it to be fully effective in combating the malpractices the CCP chairman has identified.
The Ordinance seeks to combat cartelization in all its forms, abuse of market dominance, certain types of anti-competitive agreements, deceptive market practices, mergers that substantially curtail competition etc. And it provides a legal framework that must not be compromised at the behest of any lobby or vested interest. Unfortunately, a perception has somehow developed that certain elements in the parliament have become a party to the cartels and vested interest.
Strengthening regulatory mechanisms and institutions, instead of supporting such cartels and vested interests, will be in the best long-term interest of Pakistan and its economy. The government should seriously ponder over the points Khalid Mirza has raised at the seminar and act accordingly.