Free market concept allows firms to decide how much, when, how to, and what should be produced, etc. However, price is determined by the market forces of demand and supply. Not in all markets, the price is set by the market forces. In fact, the level of competition helps in setting the price of a product.

Firms having monopoly are most likely to have more control over the price of their product, as compared to those having less power. Monopoly is not good from the economic point of view. It distorts the resources, creates unhealthy environment for competition, exploits the consumer, and much more.

Most Pakistani markets, as compared to any western, work inefficiently and with limited information sharing mechanism. The level of competition, in some areas, is almost absent due to poor government policies and lack of interest on the part of investors.

The role of Monopoly Control Authority (MCA), to make the local markets more competitive, has also been not encouraging. The MCA established in 1970, to check the concentration of economic and monopoly powers, and restrictive trade practices.

The authority is allowed to take steps to create competition in the market, protect consumers, discourage formation of cartels and price fixing, and look into mergers and acquisitions, more closely.

The authority has also been empowered to make recommendations to the central or provincial governments. The main functions of the MCA are; the registration of individuals, undertakings, registration of grouped undertakings, conducting enquiries regarding general economic conditions of the market, and collecting information from the concerned parties to further investigate the case, passing the verdict and penalties through law, judicial court, and the government agencies.

The MCA is organized into five units, namely, research, investigation, registration, administration and the miscellaneous. The authority's work has not been very impressive as far as achieving its objective is concerned. Though, the authority enjoys power to check unhealthy practices of firms but because of lengthy paperwork and slow moving of court hearings, decisions are made late which result in frustration in the minds of complainants.

The investigation cycle starts when the MCA receives an application from the complainant. The complaint passes to the legal department and the research department. The research department demands firm(s) to provide more information about the matter, if needed. Penalty is imposed if firms try to dodge the MCA by providing false information or misleading data.

The research department does its own homework and studies the case in detail before it passes a judgment. In case of submitting false information, the MCA might fine the concerned party under the law. The concerned party has the right to go in the High Court to appeal against the decision which might consume considerable amount of time of the MCA and the complainant.

The MCA can also make recommendations to federal and provincial governments to lessen the monopoly power of a firm and unreasonably restrictive trade practices.

There have been cases in the past where the MCA took effective action against firms or group of firms and imposed penalties on them. In February 1998, the MCA took serious notice of a sudden rise in the cement prices, restricting activities in the housing sector and the construction cost going up.

Though, the All Pakistan Cement Manufacturing Association (APCMA) suggested to the MCA that the price hike was due to the rise in cost of production, but the MCA did not accept their claim and after studying concluded that the increase in price was no match to an augmentation in the costs of production. But, the manufacturers were charging excessively high prices in the backdrop of slight increase in the input costs.

However, at the same time few manufacturers went to the Lahore High Court and filed a petition against the case; informal meetings with the manufacturers resulted in restoring the prices of pre-January 1998 period. Once again the price of cement is on the rise and has jumped to Rs240 per bag from Rs185, since July 2003. With 24 manufacturers in this industry and 40 per cent capacity idle, the cartel has made the housing sector hostage. In this case, the MCA appears helpless.

In the above backdrop discussion, it appears that the MCA has been struggling to play its due role. Funds are limited, manpower does not match with the required number, existing infrastructure is not up-to-date, the authority does not even have a website to facilitate visitors and researchers, and most importantly listen to the complaints. And limited database on market/industry related information seems to be a major handicap.

The level of competition is not that great in several Pakistani markers. For example, Pakistani banking industry is dominated by three nationalized banks having 75 per cent of the market in their hands; three foreign banks dominate the local market in foreign-based banks. The Visa and Master-card have duopoly and control the entire Pakistani market. Nowhere, in the world, credit cards carry annual fee, but in Pakistan.

Imagine how banks are making extra income by charging annual fee on credit cards. Though, it is outside the domain of the MCA to regulate the banking industry but thanks to the SBP.

Forty-four per cent of tea market is controlled by a multinational company; ice-cream production is monopoly of a multinational firm. In October 2002, a paper mills set up a 'pool' to create monopoly to fix price and output. The MCA again seemed helpless. There have been more cases reported in the press about the oligopoly problem prevailing in the polyester fibre and pharmaceutical industries, where few firms dominate a particular product and fix the quota of production to manipulate the prices. The MCA also took notice of such practices but not much detail was made public about the outcome.

The PSO, the Shell, and the Caltex are tri-poly and control the entire Pakistani petroleum market. The PSO is the leader in this race. The Oil Companies Advisory Committee (OCAC) was formed to monitor the price of petroleum products few years back. Public however, is having very little faith in the OCAC's fortnightly decisions. The rupee has been getting stronger against the US dollar over the last couple of years. Also, Saudi Arabia and Kuwait provide crude oil at concession rates, yet the price of oil remains above Rs30 for most of the time.

It appears that the OCAC is not independent to make decision in this regard. The GoP has been pushing hard the OCAC to set prices in such a way that the government's target of generating revenues from this vital source is met. The government collects more than Rs50 billion a year from the surcharge alone. The landed cost of petrol is around Rs12 per litre and we pay more than Rs30 per litre.

Also, thanks to our government which have been protecting the automobile industry like an infant child and have given freehand to play with the pockets of the consumers. With Suzuki having 66 per cent market in passenger cars, Honda 15 per cent, Toyota 15 per cent, Kia and Pride 2 per cent, and Nissan 2 per cent, the industry is treated as tight oligopoly.

As the imports of reconditioned cars are banned the buyers have been left on the mercy of these players. The manufacturers, it appears, have formed a cartel with hidden agenda in their head called 'covert collusion' in economics.

Dealers are charging extra premium between Rs150k and 250k at the time of booking, given the desperation of buyers. According to market sources one manufacturer has asked buyers to pay in full in advance at the time of booking. And about Rs4 billion got stuck for a few months. Nowhere, in the world you can find such malpractice being done by the manufacturers, and the government keeps on sleeping and playing delaying tactics to accomplish the hidden agenda of the manufacturers.

Experts are of the opinion that there are three main culprits involved in this dirty game; the manufacturers, dealers (middlemen) and someone sitting in the ministry. Even the minister of production has been accused by his colleagues, both in the Senate and the National Assembly of safeguarding the interests of the concerned players.

The bottom-line is that the role of the MCA in this regard is seen nowhere. Though, we understand that the Authority has the legal rights to look into the matter yet the federal government constituted a committee comprising of bureaucrats, ignoring the MCA experts to investigate the matter further.

The committee was formed under immense pressure from all walks of live, however till the writing of this article the findings have not been made public. Indications are that the delaying tactics have been adopted by the concerned parties to delay the matter until dust settles down.

Also it can be suggested that the role of consumers has been really disappointing in this regard. Rights of consumers need to be projected and highlighted using print and electronic media.

There is said to be an association working for the rights of consumers in Pakistan, but its influence on policymakers and on the society has not been visible.

Unless, the consumers wake up and raise their voice against the mafia who have been making huge profits by manipulating prices with the help of the invisible hands, the suffering will continue.

Consumers need a solid ground to raise their voice and for that matter they need to have complete information about the working of markets. Perhaps the educated class needs to come forward and form a think tank which can work closely with the consumer protection society to disseminate information about such mafia.

The role of the MCA also needs to be highlighted and working relationship between the consumer protection society and think tank needs to be strengthened to create awareness on the issue.