ISLAMABAD, Oct 5: Merger of subsidiaries of transnational corporations should be notified in advance to the competition authority of the host country to ensure that the move does not hurt its national economy.

This demand was made at an international conference on competition and consumer protection held early this week at Naples (Italy), the chairman, Monopoly Control Authority (MCA), Salim Asghar Mian, told Dawn after his return to Pakistan. He represented Pakistan in the conference.

In Pakistan, he said, there is no law requiring involvement of MCA in such mergers, although they can upset the economy by giving rise to cartels and monopolies, rendering thousands of workers out of jobs, raising cost of living and limiting the range of choices open to the consumers at large.

The high court is the sole authority in such matters and the MCA comes to know about approval of mergers only through the media.

The conference in Naples was organized by the International Competition Network (ICN) and Pakistan’s participation was funded by the European Union. Established in October 2001, heads of competition agencies of 75 countries are its members. Since its inception, the ICN has focused on two main areas: multi- jurisdictional merger control and the role of competition advocacy.

ICN, Mian said, was a voluntary body and its resolutions were recommendatory. Representatives from the private sector, academia and other international organizations work with ICN members to produce best practice proposals to bring about a soft convergence between the different authorities.

The ultimate goal of the ICN was to improve competition law and its enforcement and administration in the global marketplace to the benefit of consumers and businesses alike.

The Naples conference, attended by 182 delegates including members from 59 countries and senior officials of international anti-trust agencies and UNCTAD, the MCA chief stated, marked a new beginning in determining how competition authorities should bring about substantive and procedural convergence on a global scale.

It adopted Guiding Principles for Merger Notification and Review in which they recognize overarching principles of sovereignty, transparency, non-discrimination, procedure fairness, etc.

The conference endorsed in principle the recommended practices for merger notification procedures, development of objective and understandable merger notification thresholds as well as appropriate flexibility in the timing of merger notifications.

The importance of advocacy to the ability of competition authorities to promote economic development and pro-competitive reform within the government was underpinned in the report, which is illustrative of how ICN members focus their advocacy efforts.

Asked about his contribution to the conference, the MCA Chairman said many other participants appreciated his remarks on the problems of developing countries with particular emphasis on the role of transnational corporations, particularly in the matter of mergers and acquisitions.

Fearing that the TNCs might withdraw their investment, these countries were chary of intervening even when they know such intervention was warranted by the national interest, he told the conference.

The ICN will hold its next meeting in Mexico in June 2003 which, besides continuing to examine multi-jurisdictional merger review and competition advocacy, would consider proposals for capacity building in national competition agencies.