The CCP had imposed a fine of Rs25 million each on seven banks and Rs30 million on Pakistan Banking Association (PBA) for being instrumental in allowing the banks to fleece the people by offering them low profits while forcing them to pay many hidden charges on various transactions.
But at this crucial stage, the CCP has no funds to hire top lawyers to fight its battle with the cartels. The CCP is believed to have informed the government that since it has not been provided with any fund to run its affairs, it may be constrained to close its operations. The commission tried to hire services of some junior level lawyers to plead its case in the Supreme Court. However, each of them was seeking a minimum fee of Rs1.5 million which the CCP could not afford.
The commission had to request the Attorney General Malik Qayyum to plead its case and he has accepted to take up the case. Prominent Lawyer Khalid Anwar is said to have been hired by the banks.
Interestingly, the banks did not exhaust their right of appeal to the commission’s appellate bench as provided in the law and went to the Supreme Court directly. The banks believe that appealing against the decision of the CCP to its other forum was futile.
Now when the interest rates of banks have increased once again after the central bank increased by one per cent its policy rate to 13 per cent, the Central Directorate of National Savings (CDNS) is believed to have approached the finance ministry to also allow it to revise upward its interest rate to help the small savers. However, the move is stated to being resisted by the banks that apparently enjoy the support of central bank.
The return on the national savings for retired and senior citizens had been reduced significantly over the years at the behest of the banks. Many blame the government and the banks for ‘collusion’ to significantly cut the profit rate on saving accounts. For a number of years, it is said that the spread between what banks were paying to their depositors and what they were charging from their borrower ranged between 8-9 per cent against the internationally recognised standard of 2-3 per cent.
In the process, the banks earned huge profits which, according to the Consumer Rights Commission of Pakistan, rose from Rs7 billion in 2000 to Rs123.4 billion in 2006. The IMF, in its 2007 annual report, had said that Pakistan and Columbia were the two countries whose banks earned huge profits in the year 2007.
It was the CCP which took notice of the cartel-like behaviour of the banks and imposed fines on them.
An official of the federal ministry of finance said cartels were being supported by the ministry of industries and production which every now and then was objecting to the CCP moves to curb unfair trade practices.
“The ministry particularly asks the CCP as to why it is raising objection over the increase in prices of cement. The ministry says that the cost of business has increased manifold, therefore, the cement prices have to be increased, said an official requesting anonymity.
When contacted, CCP chairman Khalid Mirza told Dawn that he continued to face financial problems as the government had not given any budget to his organisation and also did not provide ‘tied sourcing’ of funding to help run its day-today affairs.
“We may be without any funds in next few weeks and it would be very sad as the commission would no more be operative. But I am still hopeful that necessary action will be taken before that happens”, the CCP chairman said.
He said the state-of-the-art competition law, essentially inspired by the principles embodied in the Treaty of Rome, was promulgated to replace the antiquated previous law. The commission was designed to be a quasi-judicial, quasi-regulatory, and independent law enforcement agency.
“We have been rather active operationally and have taken some significant steps, including a few landmark decisions. There have been some ‘quick wins’. Of course, we have benefited from some ‘low hanging’ fruit waiting to be picked. Just to give you a few instances regarding the actions we have taken. All 42 banks were adjudged guilty of cartelisation, of which seven banks, as also the Pakistan Banking Association, were fined an aggregate of Rs205 million. The banks have taken the matter to court.
“Investigations are under way with respect to cartelisation and collusive behaviour on the part of economic agents in three important sectors. In one of these cases, we have carried out a forcible search operation — for the first time in Pakistan — which has, naturally, evoked a strong reaction from those affected, but accolades from the general public. Those affected are unhappy, everyone else is very happy”, he said.
Investigation, he said, was also under way with respect to a collusive tendering allegation which pertained to a government-sponsored entity. “We have examined and considered cases brought against the country’s leading stock exchange as well as Pakistan’s leading oil refinery for abuse of dominance by way of refusal to deal, while one of these cases has also been taken to court. We are about to conclude in other matter”, he added.
A leading business school, he pointed out, had also been effectively penalised and ordered to make appropriate refunds to students who were forced to buy lap-top computers from the school at the time of admission.
The business school had also been directed to desist from this practice of tying computer sales to admissions.
“Then a leading cellular company has been ordered to appropriately arrange the unlocking of SIMs of the handsets sold by them, and also to clearly disclose and advertise the tie-ins of the handsets sold with the related telephony services offered.
“Two closely-linked and obviously dominant fertiliser companies, substantially owned by an army trust, have been ordered to suitably de-link and separate so that they act as separate entities, he said.