EDITORIAL: The Competition Commission of Pakistan (CCP) recently released a report on the cement sector which concluded that there was collusion by the cement manufacturers through use of the platform of All Pakistan Cement Manufacturers Association (APCMA). This is an example of timely work carried out by the CCP - timely because it was released before a hue and cry by the general public on the windfall profits earned by the cement manufacturers which, in turn, may have compelled the government to set up a special inquiry committee as in the case of wheat, sugar and oil sectors.
It is the CCP's mandate to ensure that competition is assured, a mandate that had been compromised since the Pakistan Tehrik-i-Insaaf (PTI) took over the country's administration - a failing sourced to the previous chairperson of the CCP appointed by Ishaq Dar and replaced in July this year. However, it is relevant to note that apart from complaints filed the CCP in December 2020, took notice of the violation of Section 4 of the Competition Act 2010 by Pakistan Flour Mills Association (PFMA) which as per its website is premised on international best practices, while considering the current economic realities and correcting the deficiencies of the Monopolies and Restrictive Trade Practices Ordinance of 1970 related to definitional aspects, coverage, penalties, and other procedural matters and covers all sectors of the economy, regardless of their public or private ownership; and imposed a penalty of 75 million rupees on PFMA.
Other enquiry reports in 2020 included: (i) violation of competition Act 2010 by APCMA (December 2020), (ii) anti-competitive services in the sugar industry (October 2020, and (iii) bid rigging in tenders issued by power distribution companies for procurement of line hardware material; as well as policy recommendations to the government (federal and/or provincial as appropriate) on a range of issues with a potential to impair competition including on wheat policy and reinstatement of requirement of cost audit under companies act 2017.
The issues facing CCP Chairpersons have been three-fold. First, the powerful entities with massive available resources on whose members a penalty is imposed by the CCP take stay orders and delay the hearings for long periods of time. The government therefore needs to formulate a mechanism that would speed up the legal process.
Secondly, the policy notes, with the objective of forestalling the emergence of unfair competition, need to be debated vigorously in parliaments - federal and/or provincial. Disturbingly successive governments have shown an inclination towards disregarding the recommendations contained in the policy notes.
And finally, previously the CCP operated under severe cash flow constraints as it was not paid the 3 percent fee by the five regulatory authorities - Securities and Exchange Commission of Pakistan, Oil and Gas Regulatory Authority, Pakistan Telecommunications Authority, National Electric and Power Regulatory Authority, and Pakistan Electronic Media Regulatory Authority. However, on 24 November 2020, the Khan-led cabinet took a landmark decision and approved the issuance of an SRO of payment of 3 percent fee charges from 2009-10 onwards with the Ministry of Finance issuing the SRO on 27 November 2020 for gazette notification. This would no doubt strengthen the CCP's capacity to engage in proactive litigation to vacate stay orders.
It is important to note that the CCP undertakes a valuable service especially in Pakistan with Prime Minister Imran Khan repeatedly stating that the country has a flourishing 'mafia' (read collusion by financially flush and politically influential subsectors/associations) which is responsible for inflation and pushing people below the poverty line. It is time to further strengthen CCP to ensure that its directives/recommendations are speedily followed up.
Copyright Business Recorder, 2020
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