ISLAMABAD, Feb 28: The Chairman Competition Commission of Pakistan (CCP) Khalid A. Mirza, said on Thursday that banks were operating like a cartel to charge unfair fees and paying less profit to their depositors.

“Prima facie, banks are involved in cartelisation for which the investigation is being conducted by the commission,” he told a news conference.

He said that in case banks were found to be involved in promoting cartelisation, action will be taken against them. There was Rs50 million fine but under the competition law executives of the banks could also be individually penalised, Mr Mirza said.

He said that Mr Ghaffar, who is one of the senior members of the commission, was investigating the issue and was expected to give his decision in a month’s time.

Mr Mirza pointed out that it was very difficult to establish cartelisation of banks or companies as it required forensic evidence. He agreed to a suggestion that banks themselves landed them in trouble by collectively giving an advertisement in the newspapers about their new saving products.

Responding to a question, he said there were harsher punishments in the developed countries against cartelisation. In the United States the offence carries punishment up to 14-year imprisonment while in some European countries, it was up to 25 years. “In the foreign world, forming a cartel was a criminal offence, while it is considered a civil offence in our country,” Mr Mirza said.

He said that there was a lacuna in the competition law, which needed to be removed so that anybody found guilty of promoting cartelisation could be removed from the directorship of any company.

Mr Mirza also said that his organisation had decided to set up a “competition consultative group” with a view to institutionalising its approach of seeking advice and suggestions to promote competition in Pakistan.

The group, he said, will comprise eminent persons essentially drawn from sector-specific regulatory agencies, relevant professional bodies and the private sector. There will be about 15-member group meeting periodically to discuss and deliberate on issues pertaining to competition.

The objective, he said, was to provide a platform for informal feedback and guidance with respect to the commission’s ongoing actions and proposed initiatives.

Responding to a question, Mr Mirza said that the government had eventually provided Rs50 million seed money to start running the affairs of the commission. He said he was hoping to get Rs100 million as a seed money.

However, he said that he was seeking “tied sourcing” of funding to effectively run his organisation.

“I need Rs200 million annually on account of tied sourcing, which could be provided by different government agencies”.

For capacity building, he expressed hopes that international donor agencies, particularly the World Bank would be providing some funding.

In reply to a question, he said that the commission had initiated an inquiry into the complaint lodged by the Islamabad Stock Exchange (ISE) against the Karachi Stock Exchange (KSE) alleging contravention of the provisions of section 3 of the Competition Ordinance, 2007.

He said that the ISE wanted access to the KSE which the officials of the KSE maintained was already being provided through brokers.

Similarly, he said that Fauji Fertiliser and Fauji Bin Qasim, which enjoyed 60 per cent share of the local market, were also allegedly involved in cartelisation for which certain investigation was being conducted.

To another question, Mr Mirza said that the commission was not dealing with the issue of prices and its job was to discourage anti-competition behaviour and unfair trade practices.

He said if the aim was to make the private sector an engine of growth, then the role of the three bodies - central bank, SECP and competition commission has to be made very effective. The real purpose, he said, was to ensure productive efficiency.