ISLAMABAD, Sept 6: President Gen Pervez Musharraf is likely to promulgate an ordinance shortly to convert the Monopoly Control Authority (MCA) into a Competition Commission aimed at discouraging growing corrupt business practices.

Informed sources told Dawn on Thursday that the draft of the ordinance, prepared jointly by the ministries of law and finance, was lying with the prime minister since August 30 to be sent to the president’s secretariat within this week advising him to promulgate an ordinance to have the much delayed new commission.

The officials of the prime minister’s secretariat had sought the views of the ministry of finance and the MCA for issuing the ordinance. And they were told that a new law was urgently needed to halt corrupt practices and the formation of cartels in the country.

Earlier, the government had shelved the proposal of creating this Competition Commission that also sought to prevent restrictive trade practices. A lobby of influential businessmen is reportedly resisting the creation of the new commission.

Strict laws have been proposed in the new law to check cartelisation and business manipulation over which the World Bank has also expressed its concern and asked the government to have the new commission quickly.

Sources said that there still existed various departmental hurdles for broadening the scope of the proposed commission for including merger of the companies.

The WB is said to have asked the government to firm up an action plan to be supported by the donors for the drastic restructuring of the MCA and thus having a competition commission.

Initially, the WB has agreed to offer roughly $10 million for setting up of the new organisation.

It is assisting in providing necessary funding package for establishing the proposed commission and its capacity building as a new institution.

The World Bank has been urging Pakistan to track down illicit cartels to regulate businesses in the absence of which it would be difficult to attract sizable local and foreign investment in the country.

The WB believed that proven or suspected cartels existed and many still operate in cement, sugar, ghee, autos, fertiliser and perhaps other industries, which need to be investigated.

The WB is of the view that cartels are at large the chief impediment to competition in Pakistan and that there is a need to conduct a thorough inquiry as what types of anti-competitive conducts are most prevalent in Pakistan.

It has also asked the government to create a new “Mergers and Acquisitions Division” with a view to ensure transparency and prudent business practices by banks, corporate giants and other companies.

The on-going mergers and acquisitions of banks and companies in Pakistan have invoked the World Bank interest, which wanted an early creation of the mergers and acquisition division in the proposed competition commission.

According to the details, the division would conduct merger reviews in terms of the competition law consisting of determining jurisdiction, assessing whether a merger is likely to substantially prevent or lessen competition, judging whether efficiency gains outweigh the likely lessening of market competition, impose conditions, if necessary, and monitor post- merger performance.

The primary analysis and negotiation will be carried out by the Merger department, with input from the Research Department on the nature and state of competition in the relevant market, and, if necessary, assistance from the enforcement department on market behaviour.

Similarly, the proposed enforcement department, as the centre of investigative activity in the competition agency, will be responsible for investigating contraventions of the competition law covering abuse of dominant position, prohibited vertical and horizontal agreements and deceptive marketing practices.

The department will also review requests for exemptions under section 5 and entertains leniency applications under section 35. The department would recommend penalties and other sanctions to the commission.

The new chairman of the commission will build the organisation and the consultants will need to work very closely with it as primary interlocutor and client for the work and will be expected to carry out the predominant bulk of the work.

The competition commission’s primary functions will involve monitoring competition levels and market transparency in the economy, investigating anti-competitive conduct in violation of the law, assessing the impact of mergers and acquisitions on competition.