In an exclusive interview, Chairman Competition Commission of Pakistan (CCP), Ms Rahat Kaunain Hassan tells the Business Recorder team comprising newspaper's Islamabad Resident Editor Anjum Ibrahim and staff reporters Sohail Sarfraz and Wasim Iqbal that an effective professional lobbying paved the way for the passage of the CCP Bill 2010 from parliament. Her greatest achievement: the increase in the rate of compliance with CCP orders. During the interview, CCP Member Ms. Vadiyya S. Khalil was also present.
The following are excerpts from the interview:
Business Recorder: What was the biggest challenge you have faced as chairperson?
Rahat Kaunain Hassan: A lapsed ordinance was the very first challenge I was faced with when I took over as chairman. I had to lobby to place this on the agenda of the National Assembly. This required effective lobbying focused on people to people contact that paved the way for the passage of CCP bill.
BR: What is your overarching objective?
RKH: Being financially independent. Financial autonomy is a difficult task but critical for an organisation like ours. We collected around Rs 40 million as merger processing fee 2009-10. With financial autonomy, we would be able to proactively pursue our cases in courts where cartels have retained big lawyers at massive fees to contest our decisions.
All regulators -Oil & Gas Regulatory Authority, Securities and Exchange Commission of Pakistan - are eligible to pay CCP 3 percent of the total fees and charges they collect. Unfortunately this is not happening. We at CCP have broken the ice and met the head of Oil & Gas Regulatory Authority and Chairman Securities and Exchange Commission of Pakistan who came to Competition Consultative Group meeting for the first time ever to discuss this pending issue.
BR: What is your operational cost and expenses?
RKH: We reduced our operational cost from Rs 92 million to Rs 18 million through streamlining our internal systems and procedures.
BR: What is the road map of the CCP under your leadership?
RKH: I would first like to state that we at the CCP work as a team. However as a chairperson I identified some priority areas which were discussed and supported by my team. Our objective is to bring corrective behaviour in companies to check cartels, with the goal of ending deceptive marketing practices, collusive bidding and tendering. The case of Jute Mills has sent a clear message of corrective behaviour to other undertakings. I know change does not come overnight but compliance with the orders of the Commission has significantly increased.
Our approach is compliance-oriented with a lenient treatment towards undertakings willing to correct their business behaviour. This has started producing positive results. Several business undertakings that approached the CCP with the aim of correcting their business behaviour have received lenient treatment from the Commission.
BR: You have cited Jute Mills case? Any details?
RKH: We imposed penalty of Rs 23 million on Jute Mills for violating the competitive rules which would likely be paid in due time of 45 days.
BR: How many inspections have been undertaken during your tenure?
RKH: Two inspections in five months have been undertaken. Those are Pakistan Ship's Agents Association and Pakistan Vanaspati and Ghee Manufacturers Association. In case of ghee and cooking oil we have collected very important documents. We have to keep a balance between enforcing the law and bringing correction in competitive behaviour. We don't take help from any law enforcement agency during search/inspections to ensure 100 percent secrecy.
BR: How many inquiries did you undertake during the last five months?
RKH: We also concluded inquiries for violating healthy competition against Peshawar Electric Supply Company, Pakistan Jute Mills Association and Jute Mills, Riaz Ahmed & Co., Poultry Mills, Wateen Telecom Ltd., RITS Corporation, Pakistan Ship's Agents Association and Ms Lotte Pakistan and Engro Vopak Terminal.
Recently we concluded the hearing in the case of Defence Housing Authority (DHA) and the exclusive rights granted to Cineplex. Decisions may be taken sometime this week.
BR: Have you initiated any action against any association or union?
RKH: The CCP has initiated action against alleged cartelization by Medical Centres' working under the Gulf Corporation Council Approved Medical Centres Association (GAMCA). It has been alleged that medical centres have been allocated without the consent of its customers, and uniform prices by the Medical Centres are being charged while dividing Pakistan into five regions for provision of pre-departure medical test services which amounts to cartelization which is totally against the law.
In the last five months, CCP has issued 47 show cause notices, and 45 No Objection Certificates (NOCs) to mergers in six months while the total for three years was 209. Incidentally we charge a fee between Rs 250,000 to Rs 700,000 to issue NOCs. We have granted 34 exemptions in five months out of a total of 250 granted during the last three years. The Commission is also engaged in issuance of policy notes to different government departments like Civil Aviation Authority.
BR: What do you bring to CCP?
RKH: I represent continuity and the ability to work with my team. I am also very proud that for the first time ever a cartel, Jute Mills, admitted that it had violated the law. In the last three years we have taken 32 decisions with respect to various inquiries. And seven decisions have been taken under my chair.
BR: Is the CCP engaged in any research studies?
RKH: Yes in five sectors that include private schooling, health care, polyester staple fibre, automobiles and cooking oil and ghee. The studies of behaviour in textile and pharmaceutical sectors are underway. These are open and fair studies and we place them on our website for stakeholders and public comments.
BR: Is CCP a price regulator of essential commodities?
RHK: The CCP is not a price regulator. If the companies are collectively involved in price fixation, then it is a violation of Competition Act.
BR: Do any have any reference filed against you pending before the National Accountability Bureau?
RKH: Yes a complaint was filed against me by a disgruntled CCP employee against whom action was taken for alleged irregularities. But it was withdrawn and the applicant apologised to me in writing.
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