Let the competitive juices flow!

Competition is an essential ingredient for free markets. While some firms thrive of it, others may barely survive as a consequence of heightened competition. There is always a possibility that unscrupulous market players, and those on the verge of being competed out, may resort to unfair practices to achieve their ends. That is where a competition agency steps in, strives to flatten out the business landscape and provides the proverbial level-playing field. Since its inception, the Competition Commission of Pakistan (formerly Monopoly Control Authority) has been up-in-arms against anti-competitive behaviour of business entities and trade associations in the country. Revered and feared at home, now the Commission has captured the attention of international competition agencies and earned accolades abroad, too. This was evident in the two-day international conference on "Competition Enforcement Challenges and Consumer Welfare in Developing Countries" organised by the CCP in Islamabad last week. Representatives of various competition agencies, consumer protection forums and legal experts from across North America, Asia Pacific, Europe and Africa were in attendance. To ensure competition and consumer protection, a competition agency should be established on solid grounds, highlighted by the panelists: First, the agency has to be viewed as an institution, with due considerations for human capital, financial resources, and independence; secondly, an overarching competition policy should guide in formulation of the competition law and specify the agencys mandate; thirdly, enforcement sanctions need to be punitive as well as supportive (e.g., leniency programmes) and finally, the agency should be an advocate of competition itself, and inform and advise both the public and private sector. It was heartening to see international delegates showering praise on the CCP for its achievements and recommending its model to countries confronting business dynamics similar to Pakistan. The zeal with which CCP is pursuing its mandate is worthy of appreciation. However, there are certain areas which have (and may continue to) impede its progress. To start with, many of the accused have obtained stay orders from the courts against CCPs decisions. Hence, the charged entities continue to indulge in anti-competitive practices and a significant portion of the CCP-imposed penalties remains outstanding. The CCP chairperson underscored the need for active and speedy judicial reviews in order to move forward and set precedents. Moreover, the public procurement sector in Pakistan-which accounts for a quarter of GDP and causes financial hemorrhage of billions of dollars annually-has been a no-go-area for CCP, so far. Due to its limited mandate, there is very little CCP can do, besides issuing policy notes, if the government does not rectify the anti-competitive practices itself. In this regard, CCP officials insist, they are open to cooperation with NAB and FIA. In addition, CCPs source of funding still hangs in the balance as it awaits contributions from sector regulators. CCPs financial autonomy will go a long way in ensuring that it operates independently and is able to attract and retain the best talent available in market. It remains to be seen whether the government would make good on the funding-related assurances given to CCP during the conference. There is a need to build on this momentum. The private sector would get more competitive if CCP is facilitated by relevant authorities and sector regulators. A lot hinges on the governments actions and disposition towards letting competitive forces prevail. Towards that end, governments footprint on the economy has to be reduced and markets have to be liberalised.