The Competition Commission of Pakistan (CCP) on Wednesday informed the Senate Standing Committee on Finance that the existence of five large players (banks) operating with 80 percent of the assets in the banking sector, is not necessarily an anti-competitive configuration.
In a presentation to the committee, CCP officials said that with the replacement of the Monopoly Control Authority (MCA) with the Competition Commission of Pakistan (CCP) in 2007, there was a change in how monopolies and dominant companies would be dealt with in line with the changing approach around the world. In the case of banking, CCP has taken an action whenever there has been any evidence that competition is being hurt.
The existence of 5 large players operating with 80% of the assets in the banking system is not necessarily an anti-competitive configuration. If there is good competition operating in the market, five players are sufficient to give competitively priced services. "Please note the competitive pricing and service diversity available in the Mobile Telecom sector, where five players operate, and which has good competitive dynamics," CCP said.
Responding to a query, CCP Chairman said the commission has not received any complaint pertaining to bank loans. About a question on dominance in dairy sector, CCP officials said that dairy sector has been dominated by 1 to 2 large players as far as packaged milk is concerned. The CCP conducts 'Competition Assessments' of various sectors of the economy, which thoroughly examine the above mentioned 'risk factors'. The Commission has so far concluded studies on sugar, cement, fertilizer, polyester staple fiber, cooking oil and ghee, automobile, aviation, banking, private sector healthcare and schooling. These reports serve as a 'diagnostic tool' to identify anti-competitive practices including cartels. These also provide an opportunity to the Commission to recommend pro-competition policy reforms to the government.