Competition watchdog earns PM’s ire over wheat fiasco

Updated January 21, 2020

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Sources say the  Competition Commission of Pakistan  has imposed fines of more than Rs26 billion since 2009. — Reuters/File
Sources say the Competition Commission of Pakistan has imposed fines of more than Rs26 billion since 2009. — Reuters/File

ISLAMABAD: Prime Minister Imran Khan on Monday expressed his displeasure over Competition Commission of Pakistan’s (CCP) unsatisfactory performance to check cartelisation of flour millers.

The prime minister further directed the Finance Division to review CCP’s performance against prescribed benchmarks.

The direction came from the premier at a time when the CCP has already imposed a penalty of Rs75 million on Pakistan Flour Mills Association for fixing the price and quantity of wheat flour in violation of Section 4 of the Competition Act 2010. The said section prohibits associations from entering into any agreement or making any decision in respect of the production, supply, distribution, acquisition or control of goods or the provision of services, which have the object or effect of preventing, restricting, reducing, or distorting competition within the relevant market.

Chairing a meeting to review the performance of CCP in terms of checking cartelisation and other malpractices in the country, the premier seemed unhappy and noted that the commission was only imposing fines.

Premier notes a potent organisation is being rendered ineffective

An official source privy to meeting told Dawn that the CCP has imposed more than Rs26 billion fine since 2009, however, all these are sub judice.

The challenge is not the imposition of huge fines but rather the implementation and collection from sectors which have violated different section of the Competition Act.

In December 2019, the premier held four meetings on CCP’s mandate, policy note on essential commodities, sugar and wheat.

According to the official, the premier was also unhappy with the explanation submitted by the CCP.

The CCP official explained the challenges referring to 18th Amendment which came in the way of implementation of orders.

According to the official source, the premier has directed the Finance Division for a comprehensive report on CCP during the last 4-5 years which has to be submitted to the Prime Minister’s Secretariat.

The report should cover surveillance mechanism to reckon anti-competitive practices, decisions on cartels and abuse of dominant position, enquiries conducted and their results, search and inspections with tangible outcomes in each sector, recoveries and penalties imposed.

PM Khan also took up the issue of Chairman CCP Vadiya Khalil and members Dr Shahzad Ansar and Dr Mohammad Saleem who have already obtained stay order from court against the federal government’s decision to remove them from offices ahead of completing their terms.

Sources said the premier expressed concern that despite the Cabinet decision to terminate the services of chairperson CCP on October 4, 2018, being void ab initio, the said official is continuing to perform her functions based on a stay order granted by the Court in November 2018.

The premier also expressed his displeasure that the said case has not been pursued by the Finance Division in the court for the last 14 months. He directed that the Finance Division shall vigorously pursue the court case and also hold an enquiry to fix responsibility for non- pursuance of this case.

At the same time, when Prime Minister Imran was informed by chairperson CCP that the constitutionality of the commission’s mandate has been challenged in the Lahore High Court for the last many years, the premier expressed his annoyance that the case has not been pursued in the court rendering such a potent organisation ineffective.

According to the sources, the prime minister directed that the case shall actively be pursued in court and the Prime Minister’s Office be kept informed accordingly.

The PM also directed the Finance Division to review organisational structure of the CCP thereby revamping it to make it an effective regulator to curb the unfair practices, improve surveillance mechanism, identify priority sectors, expedite enquiries and improve recoveries in enforcement, while remaining within its ambit provided by law and decisions of the courts in this regard, besides induction of fresh blood in the organisation.

Meanwhile, the CCP states that it took 2,399 actions for enforcements in the last 12 years. Of these, 1,051 actions were taken in the last five years. The commission believes its rating or performance can be judged based on performance in four sections — Section 3 (abuse of dominant position), Section 4 (prohibited agreements-price fixing), Section 10 (deceptive marketing) and Section 11 (mergers & acquisition).

The CCP has been awarded three-star rating in the annual ranking of the World’s top antitrust/competition authorities, by the Global Competition Review (GCR) in August 2016.

Published in Dawn, January 21st, 2020