ISLAMABAD, Oct 27: Three weeks after the promulgation of the Competition Ordinance by President Musharraf, the relevant ministry has yet to notify the setting up of the Competition Commission for regulating businesses across the country.

Informed sources told Dawn on Friday that the vested interests are using all tricks and their clout in the government, already preoccupied with the political agenda, to delay the notification that will replace the Monopoly Control Authority (MCA) with a Competition Commission.

The MCA became a defunct body on Oct 2 when President Gen Pervez Musharraf promulgated competition ordinance that in effect repealed the Monopoly and Restrictive Trade Practices Ordinance of 1970 under which the MCA was created.

When Prime Minister Shuakat Aziz was informed of the anomaly, he simply promised “to fulfil the legal requirement” by issuing a notification. None has, however, been issued.

As a result, all that was being done by the MCA by way of regulating businesses has come to a halt. The prime task of the MCA was to discourage cartelization. It initiated action against sugar and cement cartels, interests that are said to be active in managing the delay in the formation of the commission. The MCA was also repeatedly asking banks to stop charging undue fee from their customers on various accounts. This was the reason, sources told Dawn, banking bigwigs were also supporting various cartels against having any competition authority.

Senior joint secretary of the ministry of finance, Mr Iqbal Hussain, who is dealing with the regulatory bodies, when contacted, said that the setting up of the Competition Commission was taken care of in the presidential ordinance issued on Oct 2. He said while the Monopoly and Restrictive Trade Practices Ordinance of 1970 had been repealed, at the same time the Competition Commission was also created.

He did not offer any comment when reminded that the issue needed a gazette notification. “Everything is in the ordinance and you don’t have to worry about it,” he said.

However, the former chairman of MCA and chairman-designate for Competition Commission, Khalid Mirza, when contacted, said that the issue needed a notification by the government and that it has been raised at the highest level.

“The work will soon resume as soon as the gazette notification for establishing the Competition Commission is issued shortly by the government”, he said.

He admitted that currently in the absence of a formal notification, no work could be undertaken. Nevertheless, he did not believe that a decision to delay the notification has been taken. He wished for an early completion of formalities for the commission so that the staff can go ahead with its business of promoting competition in the economy of Pakistan. Mr Mirza was confident that the Competition Commission would be notified by the government very soon as matter was being processed at the highest levels.

Sources said that the World Bank which had promised adequate funding to help establish the Competition Commission has expressed concern over the delay in finalising the issue.

Strict laws have been proposed in the ordinance to check cartelization and business manipulation. Sources also said there still exists various departmental hurdles for broadening the scope of the proposed Competition Commission like issues related to merger of companies.

The World Bank is said to have asked the government to firm up an action plan, to be supported by donors for restructuring of the authority into Commission. Initially, the Bank has agreed to offer roughly $10 million for setting up of the new organisation.

The bank is assisting in providing necessary funding 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 bank believed that proven or suspected cartels have existed and many still exist in cement, sugar, ghee, autos, fertiliser and perhaps other industries which need to be investigated. The bank is of the view cartels are by a long way the chief impediment to competition in Pakistan and that there is a need to conduct a thorough inquiry as what types of anti-competitive conduct are most prevalent in Pakistan.

The World Bank 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 Mergers and Acquisitions Division would conduct merger reviews in terms of the competition law 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.

Both the long-term and short-term effects of the merger need to be balanced against each other to determine whether the merger should be approved, subject to conditions, or opposed.

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. The merger department will be headed by a director general with no subordinate divisions and an initial staffing complement of two economists / corporate analysts / forensic accountants, two legal professionals and administrative staff.

Similarly, the proposed “Enforcement Department”, as the centre of investigative activity in the competition agency will be responsible for investigating contraventions and the competition law covering abuse of dominant position, prohibited vertical and horizontal agreements and deception 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.