May 26, 2008	Monday	Jamadi-ul-Awwal 20, 1429

It was not long ago that the Pakistan Peoples Party (PPP) parliamentarians led by Naveed Qamar, now finance minister, demanded that the Competition Ordinance must be a state-of-the-art law and the Competition Commission of Pakistan (CCP) should not be a tooth-less but a powerful autonomous institution to curb cartels.

The erstwhile opposition (PPP) is now leading the coalition government. The CCP is functioning under the Competition Ordinance 2007 and has starting showing its teeth as is evident from investigations into banks’ cartel-like behaviour, somewhat monopolistic designs of mobile companies and laying hands on the cement industry .

Ethically speaking, the PPP-led government should support the nascent CCP by enabling it to be financially autonomous and discourage any political intervention whatsoever in its functioning.

But the government’s apparent laxity shows that it is all but interested in seeing this vital institution play its role independently at a time when unethical business practices are hurting the consumers by creating artificial shortages of commodities and raising their prices.

The government has not yet formed rules of implementation for more vital sections of the Competition Ordinance including the appointment and terms of reference of members and other officials of the CCP and a mechanism to sustain it as a financially autonomous body.

Worst of all, the employees of the commission have not received salaries for the past six months. A number of other rules have also to be made in time to enable the CCP to function smoothly.

The Monopolies and Restrictive Trade Practices Ordinance (MRTPO)-1970 was a fairly modern law and its mission was quite appropriate which included measures to contain undue concentration of economic and monopoly powers and restrictive trade practices. The MCA could not deliver and cartels and monopolies came into being and prospered.

The failure of MCA was mainly due to a chronic shortfall in funding as the authority was wholly depended on the budgetary allocations. It was unable to retain trained manpower and collect basic data to monitor prohibitive trade practices in every sector.

Now the history is being repeated. The CCP is so far not financially autonomous in practical terms. While there is a provision in the Competition Ordinance about the CCP’s financial self-sustainability, the government is yet to form rules about how the commission should sustain itself financially.

Internationally, competition commissions take a certain percentage of fees which other regulatory organisations charge. In the case of Pakistan, these regulatory organisations include the Pakistan Tele-communication Authority (PTA), Oil and Gas Regulatory Authority (OGRA), State Bank of Pakistan (SBP) and Securities and Exchange Commission of Pakistan (SECP. The percentage varies in different countries, but in Pakistan, it can be between two to four per cent of the fees charged by these regulators which should go to the CCP.

Chairman CCP Khalid A Mirza told Dawn that financial autonomy was imperative for the smooth functioning of the commission. The CCP had to promote competition and facilitate business growth. Now there was also a road map to make the CCP operational including its capacity building over a three-year period to the point where it achieved effectiveness of near-international standards.

For this, Mr Mirza said, four factors were important:

* the enactment of an adequate new competition law, which had already been achieved;

* the appointment of appropriate persons of eminence, who could work together as team members of the commission. This too had been achieved; * the earmarking of tied sources of funding to the CCP so that it did not have to depend on allocations from the federal budget; the issue is still pending; and

* donor funding to support capacity-building of the agency which was in the pipeline.

In response to a question, the CCP chairman said the commission would continue to operate according to the competition law and would take action against cartels. Recently, a special enquiry and inspection of the office of the All Pakistan Cement Manufacturers Association (PCMA) was conducted by CCP with regard to the alleged cartel-like behaviour of the cement manufacturers.

The commission was actively engaged in several important investigation and judicial proceedings including cartel-like behaviour of 42 banks, the alleged dominance of stock exchanges, alleged restrictive trade practice on the part of Mobilink by irretrievably tying sale of Blackberry handsets with its telephony products, alleged monopolistic practices of the Fauji Foundation Group, McDonalds, KFC and Pizza Hut etc.