ISLAMABAD, May 8: The government has decided to repeal the Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance 1970 to establish Competition Commission of Pakistan (CCP) in view of emerging post-privatization market competition.

Finance Ministry sources said that ministries of law and justice and finance are in the final stages of vetting the “Competition Ordinance 2002” to repeal the 1970 monopoly ordinance. The law is expected to be presented to the cabinet for consideration by end of this month, these sources said.

Besides the normal consumer items, the law would also cover communication, construction, real estate, telecom, money changing, hundi, storage, processing, indenting, leasing, financing, brokerage, courier, postal, information media, information technology, electronic commerce, professional services like medical, legal, education, accountancy, professional institutions and services of any description, which is made available to users excluding rendering of any service free of charge.

The commission shall have at least five members including a chairman. No person shall, however, be appointed as or continue to be a member of the commission if he has or acquires any such financial or other interest as is likely to affect prejudicially his functions as such member.

But the government would have no powers to remove a member from or chairman from the office unless convicted of moral turpitude or incapability or otherwise by the High Court on a reference by the federal government.

The provision of limiting share holding by an individual to not more than 50 per cent in a public limited company has been done away with while banks and insurance companies would be allowed to make loans advances to their associated undertakings on favourable terms.

Under the law, there shall be no monopolistic trade practices, restrictive business practices or unfair trade practices. The monopolistic trade practices shall be deemed to have been resorted to, or continued if any such relationship is created or maintained between two or more undertakings, which makes them associated undertakings where they are competitors in the same market and together produce, supply, distribute or provide not less than one fourth of the total goods or services in such market.

An undertaking (single firm) either by itself or together with other undertaking(s) is controlling one fourth of the relevant market for a particular good or service or group of goods and services would now come under the law.

The proposed law spells out monopolistic trade practices such as maintaining price of goods and services at unreasonable level, preventing or lessening of competition in the production supply or distribution or any goods or services, limiting technical development or capital investment and increasing unreasonably the cost of production of any goods or charges for the provision of any service.

The scope of restrictive trade practices have been expanded with the inclusion of a situation where a party refused to deal with, purchase or supply goods and services. Collusive tendering or bidding for sale, purchase or procurement of any goods and services have also been covered by the proposed law.

The proposed law has also been expanded to following items: (i) an arrangement between producer/supplier and distributor, wholesaler or retailer for fixing prices or other terms of sale; (ii) a practice, which has or may have the effect of preventing, distorting or restricting competition in any manner, and in particular which tends to obstruct the flow of capital or resources into the stream of production or which tends to bring about manipulation of prices, delivery or to affect the flow of supplies in the market relating to goods or services in such manner as to impose on the consumers unjustified costs or restrictions; (iii) an agreement or arrangement between a supplier and a user having the effect of tying up the sale of goods or service to the purchase other goods or services or making guarantee or warranty subject to purchase of related goods or services; (iv) provision of prohibiting unfair trade practices has been incorporated.

Unfair trade practices has been described as any deceptive trade practice including misleading information or representation in regard to origin, standard, quality, quantity, grade, brand, style, model, composition, constitution, performance, efficiency, efficacy, accessories, uses, benefits, labelling, characteristics, guarantee, warranty, length of life, sponsorship, approval, listing, registration, affiliation of goods or services that is likely to have or has caused loss, damage or injury to a person or an undertaking.