April 04, 2008	Friday	Rabi-ul-Awwal 26, 1429

ISLAMABAD, April 3: The Competition Commission of Pakistan (CCP) has completed an inquiry against 42 banks allegedly involved in fleecing depositors by forming a cartel, says its Chairman Khalid A. Mirza.

“Currently, a public order is being prepared about these banks and it will be announced in the second week of April,” he told a news conference here on Thursday.

He said that the banks were prima facie found guilty of promoting cartelisation by paying less profit to their depositors and making them pay undue fees and charges on various accounts.

Mr Mirza said the 100-page order was being prepared to effectively deal with the issue. “If it is proved that they were working like a cartel, action will certainly be taken against them,” he assured a reporter.

He said the orders for the case of the alleged banking sector cartel were being prepared under the supervision of Member, Cartel & Merger, Abdul Ghaffar.

The commission, he said, had taken care in ascertaining the degree of culpability of each bank’s alleged cartel-like behaviour and it would issue orders accordingly.

However, Mr Mirza said it was difficult to get forensic evidence against any cartel and the commission had to be very cautious in pronouncing its judgment.

He said the central bank had been taken into confidence about the alleged role the banks had been playing in paying less interest and

charging undue fees on various accounts.

Responding to a question, he said all senior executives of the 42 banks were given an opportunity to explain their points of view. “But the fact that they may have acted like a cartel, it is difficult to get forensic evidence to prove anything against them,” Mr Mirza said.

Another important case under inquiry, he said, was based on a complaint filed by the Islamabad Stock Exchange and a petition a petition of Lahore Stock Exchange against the Karachi Stock Exchange.

The Security and Exchange Commission of Pakistan (SECP) had also been consulted in the matter, he said. Hearings were expected to start soon. As per CCP tradition, a member would be assigned the case.

“We have received today the comments of the Security and Exchange Commission of Pakistan about this issue and we will shortly give a decision,” Mr Mirza said.

The chairman said three more hearings would be conducted to finalise the inquiry against Fauji Fertiliser and Fauji Bin Qasim for allegedly dominating the market by virtue of meeting 60 per cent requirements of the fertiliser market in the country.

“There is a feeling of dominance against the two organisations,” he said, adding that they should behave like separate organisations and should avoid giving the impression of being a cartel.

In reply to a question, he said: “If someone complains and provides concrete evidence (about cartelisation) we will proceed against the cellular companies.”

However, he said the Pakistan Telecommunication Authority (PTA) could take up the issue as and when required.

Responding to a question, he said the CCP was feeling handicapped because of inadequate financial resources for its capacity building programme to implement the law effectively.

The previous government had promulgated a good law and inducted an excellent team of members but it did not seem serious about implementing the law, which included making available sources of funds to the CCP which were independent of the federal budget, he said.

“This has been provided for in the law itself. It’s now simply a matter of implementing this part of the law.”

The new government should implement the law and provide the necessary resources to the CCP to expand its operational capacity, effectively improve competitive environment and influence the behaviour of firms so that they would not form cartels and engage in abuse of dominance to the detriment of business and industry, he said.

“This will have an indirect positive impact on the prices of essential commodities,” he said.

He said the commission needed sources of funding to run its day-to-day affairs and this could be possible if the competition law was implemented in letter and spirit.

He said the previous government was supposed to provide Rs99 million but it extended only Rs79 million to the commission. The remaining Rs20 million was needed so that the commission could pay salaries to its members and do other jobs, he said.

He said the consultative process with the stakeholders initiated by the CCP after its formation four months ago had proven highly productive.

The innovative and non-bureaucratic approach adopted by the CCP of discussion and consultation in a free and frank atmosphere with professionals and the business community had helped it gain their confidence, he said.

“They are no more apprehensive about the CCP. It is now felt that the CCP is there to facilitate them by providing a level playing field for all undertakings and ensuring a healthy competition regime in the country,” he said.

In addition, he said, the CCP was going to form a Competition Consultative Group (CCG) comprising 10-15 nominees from regulatory authorities, professional bodies, academics and eminent members of the business community. The first meeting of the group would be held in a few weeks, he said.

In reply to a question, he said the demand for converting the ‘toothless’ Monopoly Control Authority into an effective organisation was first made by Privatisation Minister Naveed Qamar a few years back in the National Assembly. Mr Qamar wanted to move a bill in this regard. The bill was not moved after an assurance given to the house by the government that it would table a bill itself. The idea developed into CCP Ordinance, 2007, after a lapse of about two years.

He said the CCP had been set up to improve business practices through competition and discourage cartels and cartel-like behaviour by the industrial sector.