Included in 'Global Competition Review's Annual-Rating Enforcement': CCP becomes first regulatory authority from South Asia

The Competition Commission of Pakistan (CCP) is the first regulatory authority from South Asia which has been included in the 'Global Competition Review's Annual-Rating Enforcement', appreciating the commission's actions against cartels and companies involved in anti-competitive practices during 2010-2011.
It is learnt here on Thursday that the Global Competition Review (GCR) is the world's leading anti-trust and competition law journal that is chiefly consulted by lawyers, competition authorities, economists and academics to keep abreast of the latest developments in competition law. Rating Enforcement is GCR's annual assessment of the relevant competition agencies in which they gauge the agencies' efficacy in preventing and tackling anti-competitive behaviour for the benefits of consumers. This year, the 11th edition of Rating Enforcement was published, and out of more than 100 competition agencies operational in the world, agencies from only 35 different jurisdictions were included in the survey.
The detailed report released by GCR applauded CCP's inclusion in the rating as testament to the fact that "the commission has established itself as a truly effective enforcer in 2010, earning it a place in this year's Rating Enforcement and that appearing in the survey at all is an indication that the authority (CCP) is a meaningful enforcer".
The CCP reached yet another milestone in 2011 when it became the first regulatory authority from South Asia-ahead of its counterparts in China, India and Singapore-to be included in GCR's Rating Enforcement.
According to the global review, the methodology which the survey uses is premised on a myriad of factors chief among which are the resources an agency has its disposal measured by its annual budget; the number of staff hired by the agency and the percentage composition of economists (PhDs are valued more) and lawyers in the total staff which is a natural corollary of the first criterion as the amount of resources an agency has chiefly dictated in its hiring capability; the average tenure of the agencies' employees and their experiences, the success rate of the appeals filed by the impugned undertakings against the agencies' decision in the superior judiciary; the amount of punitive fines levied by an agency as punishment for anti-competitive behaviour; the average time taken to resolve cases and the proactive approach of the agencies in preventing anti-competitive mergers.
This data is collected from diverse sources to minimise subjective bias, and both the agency and outside lawyers, academics, economists and local journalists are consulted along with GCR's own international database. These factors once utilised for making an objective comparative assessment, inevitably disadvantaged CCP, as among other things, CCP had one of the smallest budgets in all the assessed agencies at only €1.8 million which was dwarfed by the budget of other competing agencies.
Japan's and Italy's competition agencies, even though they have much smaller populations to cater to than Pakistan's, are mentioned as operating on a budget of €67.8 and €67.3 million, respectively; Poland's Office of Competition and Consumer Protection, which got the same rating in the assessment as CCP was listed as operating on a budget of €12.7 million, more than six times the budget of CCP despite the fact that Poland only has a population of 38.4 million in contrast to Pakistan's 187.3 million, it said.
The low budget of CCP also naturally limited its hiring capacity. Consequently, CCP had the highest population per member of competition staff in all the assessed agencies and the only one in its group that did not have a PhD economist/ chief economist in its ranks. The wide sphere of CCP mandate implies that competition regulation is but one of its responsibilities among others, and that meant the small number of its administrative staff was reduced even further when it came to ascertaining the amount solely dedicated to competition regulation. Also, the fact that CCP levies its punitive fines in Pak Rupees translated into its quantum of fine, though sizable in the context of its local currency, looking small in contrast with the fines imposed by agencies of more developed countries due to the high exchange rate of their currencies. Moreover, seven of the appeals filed by the undertakings against CCP's decisions still await adjudication before the High Courts of Pakistan and thus the Appeals' success criterion of the survey was largely indeterminable for CCP.
Sources said that the CCP's assessment by GCR starts with an acknowledgement of the various problems CCP has been facing since its origin due to the prevalent political climate in the country and limited economic resources. The CCP's inception had been based on an ordinance which had to be repeatedly extended lest it should lapse, and that made CCP a target for many powerful lobbies and influential interests that initiated a plethora of constitutional cases against CCP as well as trying their best to stall the passing of a Competition Act in the parliament that granted CCP adequate enforcement powers. This also gave a rise to uncertainty within the agency as it was functioning on a temporary mandate; however, a Competition Act was finally approved by the parliament in October last year (2010) and GCR notes that it was chiefly due to the efficacious and persevering enforcement of CCP that it was done so with the minimal of substantive amendments.
Despite all the methodological handicaps that put CCP at a marked comparative disadvantage, CCP came out of the assessment with being the only new entrant to be granted a rating of two-and-a-half stars out of a total of five, and to be ranked alongside well established competition commissions like Greece's (established in 1977) and Irelands' (established in 1991); the European Commission and US Department of Justice's anti-trust division (Budgets €90.8 and €109.7 million, respectively) were two of the only three agencies accorded five stars by the assessment. The assessment noted that despite its recent inception, CCP has thrown itself into its work, achieving much in a short time.
Moreover, CCP had the lowest average investigation time among all the assessed agencies at only 5 months (in contrast to Brazil's 48 months), and while some may construe this to be reflective of the fact that anti-competitive behaviour in Pakistan, due to the recent origin of the enforcement drive against it, is so flagrant that it is relatively easy to spot and penalise, it is also undoubtedly partially indicative of CCP's commitment to efficacious enforcement, in welcome contrast to the slow bureaucratic nature of other institutions in Pakistan.
The GCR also applauded CCP's cognisance of the fact that in a country like Pakistan, its role is just not enforcement related but also educational, and cited a commentator saying that CCP has 'world-class office of public affairs' which has 'focused on getting the word out'. It also observed that due to positive headway CCP has made in such a short duration in tackling anti-consumer interests, 'the media has embraced the commission as a driven and effective enforcer in a country where the population feels big business and vested interests often trump ordinary peoples' needs'.
The assessment noted that due to its limited budget, CCP is aware that it needs to prioritise issues that most detrimentally affect the consumer. This prioritisation is reflected in the Commission's decisions as two of the three companies CCP fined last year were cartels in the food industry, 'which reflect the priority the commission gives to tackling inflated food prices, a significant problem in the country'. The commission has also focused its attention on bid rigging in public procurement as Pakistan spends about 25-30 percent of its GDP on public procurement and according to one estimate by Pakistan's Public Procurement Regulatory Authority, Pakistan can save US $8 billion a year by curbing anti-competitive and corrupt practices in the area. The Sectoral priorities which CCP had set for itself in 2011 continue to demonstrate a marked empathy on part of the commission with the consumer as precisely those areas are targeted in which the consumers get marginalised the most.
The 'Rating Enforcement' also points out that one of the key achievements of CCP has been that in recognition of its limited budget and tremendous responsibility, it has made efficient use of resources one of its main aims and pursuant to that has 'reduced costs by 20 percent since 2009, and is reaching a 40 percent reduction this year'. The assessment commends this efficiency and observes that it 'shows the authority is managing to up the pace of enforcement while reducing costs'. The assessment also observed that initial fears about the change of leadership from Khalid Mirza (head of the agency since its inception) to Ms Rahat Kaunain Hassan had proved 'unfounded' as she, 'highly qualified' had stepped to the 'forefront' and ensured the continuation of the 'prolific news coverage that followed the development of the commission', it said.
At the end, the assessment lauds CCP as 'proof that developmental and political problems need not hamper the creation of a dynamic competition agency in developing countries, as long as they are able to secure autonomy and they are staffed by driven, independent people', which concurs with the assessment done by the US Federal Trade Commissioner William Kovacic that the chairperson of CCP, Ms Rahat Kaunain Hassan, cited in self-assessing the agency as he termed CCP to be 'one of the best performing newly established agencies in the developing world', it added.