The National Assembly standing committee on finance on Wednesday unanimously approved the Competition Commission Ordinance 2007 for presentation before the Parliament. The committee meeting, chaired by Fauzia Wahab, highly appreciated the work of the CCP for taking actions against the cartels, companies involved in deceptive marketing practices and collusive behaviour.
The committee approved the Ordinance with all its actions and decisions taken after its promulgation to the date of passage of bill by the parliament. CCP Chairman Khalid Mirza strongly defended the creation of the commission for promoting competition and checking cartels in the country under the new law.
He briefed the committee about the scope of the Ordinance, reasons for abolishing Monopoly Control Authority (MCA) and actions taken against powerful lobbies and groups involved in cartelisation. Rahat Kaunain Hassan, Member Legal and The Office of Fair Trading (OFT) read the complete Ordinance and responded to queries raised by the committee members.
During the meeting, most of the members of PML (N), including Asif and Shahid Khaqan Abbasi were not present. When asked about CCP actions to check price hike and sugar/flour crisis, Khalid said that the Lahore High Court in its decision had held that Competition law aims at promoting competition.
The high court clearly directed the CCP not to involve in price fixation or crisis management. He clarified that the CCP had already advised the government not to intervene in sugar market and allow free import to tackle sugar crisis. The CCP Chairman further informed the committee that the CCP has nothing to do with the issue of commodity shortage and price fixation of sugar.
However, the CCP has issued five policy notes to different government departments for necessary actions. It depends upon the government department to follow the policy note or not. Out of five policy notes, three were accepted and two were rejected by the government institutions.
When asked about actions taken by the CCP, Mirza said that the CCP has the courage to investigate sectors like cement manufacturers, stock exchanges, banks, LPG producers, Institute of Chartered Accountant of Pakistan (ICAP), All Pakistan Newspaper Society (APNS) and Pakistan Sugar Mills Association (PSMA). Despite limited resources, the CCP initiated action against companies involved in collusive behaviour or cartelisation after completion of all necessary legal formalities.
He categorically said that if the Parliament would not approve the Competition Ordinance 2007 the law of jungle would prevail in the economy. It is a technical law, which supports the business enterprises and growth in the economic sector. In the absence of the law, the whole economy would badly suffer.
He said that if the law would be fully enforced, the CCP would become an organisation of global standard in the next few years. Secondly, visible changes would be seen in the free market due to implementation of the law. In the presence and full enforcement of Competition law and Policy no one would be able to hold hostage the economy of country for its own benefits.
He said that during next few years, the CCP would achieve global standards, conduct of business would improve and free market concept to be visible. Khalid said that the Competition Law and Policy is one of the state-of-the-art laws and need not any changes, and its approval would help ensure healthy competition in each sector of economy.
Healthy competition in the each sector of economy would bring much needed efficiency in production sectors and local industry would be able to compete globally, he added. He said that enactment of the Competition Bill, 2007 (Competition Ordinance, 2007) and establishment of a dedicated Competition Agency in Pakistan is the need of time. The promulgation of the Ordinance itself is a stepping-stone towards achieving improvement in the state of competition in Pakistan.
The Bill, primarily based on Treaty of Rome has been tailored to take in to account the socio economic realities. However, in doing so, it is still on all account in accordance with the international best practices and conforms to all the recommendations of the Organisation for Economic Co-operation and Development (OECD) and other international regional bodies.
The law prohibits abuse of market dominance, anti-competitive behaviour, deceptive market practices, and agreements resulting in monopolies and cartelization and merger of undertakings that substantially reduce competition. The law avoids procedures that may pose unnecessary transaction costs on firms, obstacles to beneficial mergers and acquisitions, and unnecessary restrictions in innovative horizontal and vertical arrangements among firms.
The committee members including Aftab Shaban Mirani and Riaz Fatyana appreciated the role of the Director General Advocacy & Communications, CCP for launching effective campaign against the cartels and companies involved in collusive behaviour. The awareness among the general public about cartels is necessary, committee members observed.
He said that CCP during its early one and a half years strongly reacted to unfair and deceptive market practices, cartelisation, tying the sale of one thing with other, abuse of dominant position. It has imposed fines on cement manufacturers, banks, stock markets, and also issued show-cause notices to sugar, fertiliser and other sectors.
The investigations against sugar, fertiliser, KPT and LPG sector is also underway. The competition assessment study is underway to check the cartelization in automobile sector. About enforcement powers, Khalid shared with the committee that the PSMA had not shown any resistance during inspections of its offices.
On the other hand, cement association not only resisted, but tried to destroy the whole record. The CCP officials have no support of army, police or any other law enforcement agency to assist the CCP during inspection. The meeting was attended by Nafisa Shah, Khalida Mansoor, Riaz Fatyana, Aftab Shaban Mirani, and Arif Aziz Shaikh besides other officials from Ministry of Finance and CCP.
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