ISLAMABAD: Many industries and sectors in the country have formed cartels in order to obtain an undue economic advantage, mostly at the cost of their consumers, Finance Minister Ishaq Dar told the National Assembly on Wednesday.

He was responding to a question put by the Pakistan Tehreek-i-Insaf’s Dr Shireen Mazari.

Dr Mazari asked if it was true that cartels existed in various industries and, if so, which industries were they. She also asked whether there was a law to deal with cartelisation.

Although the question couldn’t be taken up for open discussion since the routine business of the National Assembly was suspended to take up the Protection of Pakistan bill, a written response from Senator Dar was provided to lawmakers.

Says cartelisation permeates banking, manufacturing, telecom and media sectors

In a detailed answer, the finance minister said that between April 2008 and April 2013, the government had found that a number of sectors of the national economy were operating under the influence of cartels. These included: banking, accountancy, print media, stock exchange, cement, sugar, telecom, jute bags, poultry, power equipment, ghee and shipping.

Answering the second part of the question, Senator Dar explained that cartelisation was a civil offence in Pakistan. “The existence of cartels can only be proved on the basis of evidence after an inquiry is conducted under the Competition Act, 2010,” he said.

The Competition Act of 2010 provides for free competition in all spheres of commercial and economic activity, to enhance economic efficiency and to protect consumers from anti-competitive behaviour.

Section 4 of the Competition Act 2010, inter alia, prohibits cartelisation by competitors, adds the minister. This section is generally enforced ex-post facto by the Competition Commission of Pakistan (CCP).

Regarding the punishment for such activities, the minister said cartelisation carried a maximum penalty of up to Rs75 million in fines or ten per cent of the annual turnover of the undertaking of the relevant company, under Section 38 of the Competition Act, 2010.

The CCP was established on October 2, 2007 under the Competition Ordinance, 2007, which was re-promulgated in November 2009. The main aim of this ordinance was to provide a legal framework to create a business environment based on healthy competition to improve economic efficiency, develop competitiveness and protect consumers from monopolistic practices.

Prior to the Competition Ordinance, Pakistan had an anti-monopoly law, namely the ‘Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance’ (MRTPO) 1970. The Monopoly Control Authority (MCA) was the body that administered this law. The MCA was replaced by the CCP in 2007.

Talking to Dawn, a former head of the CCP said the body had failed to effectively check cartelisation in major industrial sectors even though there was nothing wrong with the CCP Act or the functioning of the CCP. The CCP had repeatedly pointed out how cartels had formed in various sectors of the national economy, be it the cement industry or sugar mills.

The CCP had effectively imposed penalties for cartelisation, but nearly each party had had gone to court and secured stay orders against the CCP rulings.

“Unfortunately, due to our over-burdened superior judiciary, the cases aren’t being heard, therefore, all the good work done by the CCP is undone,” the former CCP chairperson said.

Published in Dawn, July 3rd, 2014