Whither CCP?

The steep decline in the international price of oil, followed by the government’s decision to significantly reduce the price of petrol, should have had a deflationary impact throughout the economy. The cost of transporting goods has become much cheaper and so prices should not go up. The absence of inflation could show that people expect fuel prices to increase soon or, more sinisterly, they have decided to purposely reduce supply so that prices increase and their profit margins remain intact. The Competition Commission of Pakistan has now been tasked to find out why the prices of essential food commodities have increased. Finance Minister Ishaq Dar had already raised concerns about increases in the prices of pulses, milk, food and vegetables. Needless to say the demand for such food products is relatively inelastic since they are required for daily use. Poor households have to cut down on their purchases of other items to be able to afford them and feed themselves. At a time when food should be cheaper to transport around the country there is no good economic explanation for these inflationary prices. The suspicion is that food manufacturers or sellers have colluded to illegally and artificially raise prices.
The CCP, despite its mission to serve the interests of consumers, has often been co-opted by big business. In the past it has allowed cartels to thrive in the sugar and cement industries. Indeed, during the Musharraf era there were accusations that then prime minister Shaukat Aziz invited the cement industry to form a cartel and artificially reduce supply. Watchdog agencies in Pakistan are often neutered and there is a worry that the CCP will continue to fail in its duty since the government is perceived to be ideologically ‘pro-business’. The CCP is a relatively new body, only starting its work in 2007, and since then it has achieved very little in disrupting cartelisation and monopolistic practices. The PML-N has to share a lot of the blame for leaving the CCP as a toothless organisation since it did not even appoint a permanent head of the organisation for a year-and-a-half. The CCP did take action against the sugar and cement cartels during the PPP’s reign but even those actions were eventually neutered when the law was changed to allow its decisions to be challenged in courts. Whether the CCP can live up to its mandate and take action against those illegally increasing food prices may be its last hope for being an effective regulatory body.