ISLAMABAD, Oct 25: The Monopoly Control Authority has initiated investigation to ascertain whether five industries have formed cartels in violation of the law. These are: Shipping companies and manufacturers of cement, polyester fibre, cable and cars.
This action, MCA chairman Salim Asghar Mian told Dawn here on Friday, was necessitated in the interests of the consumers as well as the national economy which is hit when businessmen started behaving in a manner deleterious to the free market.
Such activities were in violation of Section 14 of the Monopolies and Restrictive Trade Practices (Control) Ordinance, 1970, he stated.
CABLE: One such investigation had been initiated in response to a complaint received from Wapda which has alleged that the cable manufacturers had formed a cartel. Thus whenever a tender is floated for supply of cable, all the companies submit exactly the same bids.
It appeared that these firms pooled their supplies of cable to Wapda. This practice, it was further contended, fructified the very object of inviting bids with a view to purchasing the said material at the cheapest possible rate.
Although the Authority had started preliminary inquiry into the allegation, it would have to await the replacement of two of its members who have retired before it may schedule a hearing, the MCA chief said.
POLYESTER FIBRE: There were four manufacturers of this fibre — Dewan Salman, ICI, Ibrahim and Rupali. All these firms raised their rate by Rs4 per kg, simultaneously last month. Thus the textile industry of Pakistan which uses this fibre has to pay Rs7 (around 12 cents) per kg more than the rate prevailing overseas.
As this would raise the production cost of textile industry and reduce the competitiveness of the local product in the export market, the MCA had taken suo moto notice of the malpractice and instituted a special inquiry to find out whether the four fibre manufacturers have formed a cartel. CARS: The MCA, its Chairman further stated, had apparently made it a practice to retain advances from the prospective buyers of cars for a long period. Often, cars are not delivered to customers even after the contracted period of delivery. In this way, these manufacturers pocketed huge amounts of interest on these deposits.
These amounts should be paid to the owners of those advances. In this connection, he said, the Authority would try to find out from the CBR whether the interest was shown as profit by the manufacturers and computed for purposes of income tax.
SHIPPING: A special inquiry has also been launched over what appeared to be formation of cartel by the numerous shipping companies.
The indication to this effect was available from the fact that these companies had raised their cartage rates by the same amount recently.
This may prove detrimental to Pakistan’s exports in that the exporters are deprived of any leeway in selecting a shipping company on the basis of differential rates and services. Firms, in a normal situation, offer varying services and fix their rates accordingly. It was not possible for all the shipping companies to offer the same level of services to their clients in order to merit equal rates.
Such a situation, Mian remarked, was also disincentive to improving technology and providing competitive services to their customers, the MCA chief remarked.
APP ADDS: CEMENT: The MCA chief said inquires into the affairs of cement manufactures and companies cartels were under serious consideration.
He said notices would be issued if the manufacturers would not curtail their prices, adding if their replies are not satisfactory hearing would also be stated against them.
“We have taken notice of the reported hike in the prices by the manufactures and companies through cartels and completed the preliminary investigations and homework in this regard,” the MCA chairman added.