ISLAMABAD, June 21: The government has shelved its own proposal to create a “Competition Commission” aimed at preventing cartalisation and restrictive trade practices because of immense pressure by a group of influential businessmen.
Informed sources told Dawn here on Thursday that a draft law seeking conversion of the Monopoly Control Authority (MCA) into a Competition Commission has once again been deferred by the cabinet division for its presentation and approval by the federal cabinet.
“The draft law, duly approved by the ministries of finance and law and justice, did not come up for discussion and approval during the last many cabinet meetings and the issue now seems to have been shelved,” a source said.
He said strict laws being proposed to check cartalisation and business manipulation were being opposed along with the appointment of Mr Khalid Mirza as chairman of the Competition Commission by a powerful business lobby.
Mr Khalid Mirza, who earlier served in the World Bank and later as chairman, Securities and Exchange Commission of Pakistan (SECP), has the reputation of being tough and uncompromising which was the reason that his appointment was reportedly being resisted by the vested interest.
However, sources said various kinds of departmental hurdles had been removed to set up the Competition Commission for broadening its scope, including effective merger of companies.
Sources said a visiting World Bank delegation met senior government officials on Tuesday and Wednesday last and expressed concern over delay in converting the MCA into a Competition Commission the purpose of which is to create a competitive environment and regulate business activities in the country.
The bank is said to have asked the government to firm up an action plan, to be supported by donors for drastic restructuring of the MCA and thus having a Competition Commission.
The bank regretted that although Prime Minister Shaukat Aziz had, in principle, approved the setting of Competition Commission, it continued to be delayed for the last many months.
The World Bank mission, sources said, has come to Pakistan to gauge the work so far done for having a Competition Commission.
The World Bank and the Department for International Development (DFID) of England are providing necessary financial support for restructuring of the MCA and its conversion into a Competition Commission.
Sources said the bank had asked the officials concerned to expedite the issue, failing which the bank and DFID could revise their decision to offer any funding for the proposed commission.
Initially, they have expressed their willingness to offer roughly $15 million for the setting up of the new organisation.
The bank 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 bank believed that proven or suspected cartels existed and many still exist in cement, sugar, ghee, autos, fertiliser and perhaps other industries which need to be investigated.
Sources said the bank is of the view that cartels are by a long way the chief impediment to competition in Pakistan and that there was a need to conduct a thorough inquiry as what types of anti-competitive conduct are most prevalent in Pakistan.
The MCA has investigated 103 cases of monopoly, including cars, batteries, tobacco, electrical, gases and chemicals. Of course, this figure by itself provides no indication of abuse of monopoly position. At the very least, however, it suggests a wide field for inquiry.
When contacted, chairman of MCA and the head of the proposed competition commission, Khalid Mirza said as soon as the cabinet approves the new organisation, he would start implementing relevant rules for ensuring better business practices.
“Political will is there to have this competition commission and I have to be patient and I am hoping that this commission will soon be approved by the cabinet,” he said when asked whether the issue had been shelved.
He admitted that there had been a delay in converting MCA into a competition commission which had been realised by all the concerned people and that the issue was expected to be finalised soon.
“In fact, I am already working as to what kind of an organisational design for the commission is required,” he said, adding there would be a broader scope of action to put in place healthy and competitive environment.
Responding to a question, he said he would look into illegal cartels and various restrictive trade practices through public advocacy and hearing.
Khalid Mirza said he was watching all businesses and was constantly in touch with the market.
“My job will be to ensure growth of industry but it will have to conduct itself in a non-manipulative manner,” he said.
He said while he wanted the business to grow, he would very much like to protect the public interest. The new proposed law, he said, would protect obligations and that the capacity of the businesses needed to be strengthened.
In reply to a question, Khalid Mirza said there was a clear need for regulation to try and achieve a balance between the policy objectives of capital formation and economic development on the one hand and consumer protection and social justice on the other.
“This was apart from the need to curb the concentration of economic muscle because of the propensity to use this power to hurt or eliminate small competitors and consequently not to be too concerned about efficiency, thus adversely affecting productivity and economic development itself,” he said.
To a question, he said after the approval of the cabinet, it depended on the prime minister as to how he wanted the setting of the competition commission. If the issue was sent to the parliament, there would be a legislation over the issue, otherwise, the prime minister could also get it done through a presidential ordinance, he said.
“In any case, things are expected to operationalising soon,” he said.
He said he got a study conducted to ensure prudent business practices and that he has already cleared pendency in the MCA.
All the cases, he said, had been disposed of as he has adopted a very progressive approach to deal with the issues.
“But we are keeping a watch on collusive approaches and we would apply the law to deal with unscrupulous people,” Khalid Mirza said.
He said the working of MCA has been streamlined to some major extent. He said his emphasis would be on integrity, and that anybody telling a lie during proceedings in the MCA is taken to task.