Feeble CCP’s cry falls on deaf ears

LAHORE: Watchdog Competition Commission of Pakistan (CCP) is struggling to implement its penalty orders on anti-competition moves across Pakistan as the provincial claim on this subject puts the implementation on hold, officials said on Wednesday.

Asfandyar Khattak, a spokesman of CCP said a majority of the commission’s verdicts have been pending before the courts for the past many years. The CCP issues policy advice notes to the federal as well provincial governments. But, the advices are not usually followed on the ground that competition is a provincial subject.

“Legally, the government can reject CCP policy notes but generally it takes such notes seriously,” Khattak said. The CCP was established in October 2007 under the Competition Ordinance, 2007. Later, the Competition Act 2010 gives the CCP legal and investigative instruments and powers to engender free competition. The commission is an independent quasi-regulatory and quasi-judicial body for ensuring healthy competition. Frequently, the CCP fines private sector for collusive behaviour and deceptive marketing practices. Fair competition ensures that private sector makes better products that are available to more people at suitable prices. Market abuse increases when few companies become too powerful in exploiting the consumers, particularly the poorest and most vulnerable.

A decade ago, the CCP unearthed cartel in the cement sector. It slapped multibillion rupees in fines on the sector association and its individual members. However, the order was challenged in a court. Though the legal ambiguities were removed a few years later, yet the action remains suspended. 

In late 1990’s, Pakistan’s cement production capacity was 9.91 million tonnes. Currently, it is around 45 million tonnes. Today, total number of cement mills is less than in 1998. This means that the control lies in few hands.

The CCP detected anti-competitive practices in other sectors of the economy as well and almost all have opted to challenge its decrees. The court proceedings are too slow that the cases linger on for multiple years.  Companies form cartels to regulate production and determine the prices. Restrictive business practices can have a serious impact on prices as well as on social and economic developments. Cartels decrease production on an average 15 percent and overcharge 20 percent, said a study by a United Nations (UN) body.

Market abuse increases when a few companies become too powerful and so the consumer, especially the poorest and most vulnerable, ends up paying for the lack of competition. Fair competition follows strong watchdog with an ability to get its decisions implemented. The UN found that some 10 percent of public companies around the world generate 80 percent of all profits, while firms with more than one billion dollar in annual revenues account for 60 percent of total global revenues.

The UN said healthier competition can help a country achieve the sustainable development goals. Reducing the price of food staples by only 10 percent can lift nearly half a million people out of poverty in Kenya, South Africa, and Zambia alone, saving consumers more than $700 million a year.