PRIME Minister Shaukat Aziz has approved the draft law to convert the Monopoly Control Authority (MCA) into a Competition Commission for promoting good business practices through reward and punishment.

After vetting by the ministry of law, the draft will be sent to the cabinet very soon for its formal approval. President General Pervez Mushrraf is expected to promulgate the ordinance anytime during the current month to make the commission fully operational.

The government has agreed to empower the commission to discourage market abuse by proposing by heavy penalties against the violators of law and prosecution through courts.

An outdated MCA had proved to be ineffective and needed to be replaced with a competition commission to protect the rights of consumers.

One of the many important features of the proposed commission will be the introduction of “public hearing system” for developing and promoting healthy competition and a competitive behaviour in business class.

The prime minister has asked a senior official of MCA to ensure that no injustice is done to anyone and all decisions should be reached after taking into confidence the stakeholders including the consumers.

An official of the proposed commission said that while there will be a level playing field for business organisations, the commission will ensure that that there is no “manipulation” by industrial houses or companies. “Our job will be to ensure rational commercial conduct”, he said, adding that action will be taken against manipulators.

‘On having received any complaint against a company, the commission will first make it sure that the complaint itself was genuine. Later, investigations will be made and if any wrong doing was found, a show-cause notice will be issued against the defendant. Its hearing will be conducted before the commissioner. An appeal against decision could be filed before a bench comprising two commissioners, he said.

“And if the decision still goes against the business concern, it will enjoy a right of appeal before the High Court”, the official added.

Continuing, he said the job of the commission will be to discourage cartelisation and monopolisation by companies. But the commission would not ignore the global business practices which allow profit-making.

The price-fixing will not be the job of the proposed commission as the government believes in market mechanism of demand and supply and will not be unnecessarily create problems for the businessmen, he added.

The commission will take steps to discourage cartels rather than taking a punitive action and will take a liberal approach by “not” penalizing people without substantial evidence.

Although the role of the commission was that of an advisory nature, its decisions are expected to be accepted by the government.

The World Bank has agreed to develop the capacity of the Commission which was not available to MCA. It was said that technical skills of the commission are to be largely developed to ensure its improved functioning aimed at encouraging businesses and at the same time, looking after the interest of consumers.

A bigger research capacity has been planned to be developed through outsourcing by the commission for which good forensic accountants, micro-economists and prominent lawyers will be appointed.

Very often questions are asked as to why MCA could not deliver. It has become outdated as it was established as far back as August 17, 1971 under Sec 8 of the Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance 1970 (MRTPO). Nor was it able in the past to function as an autonomous body.

The ordinance was promulgated to provide for measures against undue concentration of economic power, growth of powerful monopolies and restrictive trade practices.

Now, the official policy is to keep a balance between rapid economic development, social justice and consumers protection as there is a traditional conflict between these aims. It is, therefore, necessary to regulate trade, commerce or industry in the interest of free competition.

The broad objective of MRTPO was to provide for measures against undue concentration of economic power, monopoly power and restrictive trade practices. The law provides for registration of undertakings in order to make available, information relevant to the purposes and functions of the Authority.

Those who worked in senior positions in MCA concede that they could not make the organisation vibrant over the years, the major reason being that MCA had never been an independent body and at times it had to succumb to the pressure of higher authorities.

The role of the commission in ensuring good business practices has yet to be seen. However, its chairman, Khalid M. Mirza says that he did not believe in delaying things or accepting any pressure from any side. As long as he was the chairman of SECP, he says he worked independently and enjoyed the full support of the president and the prime minister.

“I hope to have the same co-operation, especially from the prime minister for running the new organisation”.