INTERVIEW: KHALID MIRZA CHAIRMAN CCP

FINANCIAL SUPPORT NEEDED TO ENFORCE NEW REGULATORY REGIME

SHAMIM AHMED RIZVI
Jan 21 - 27, 2008

The Competition Commission of Pakistan (CCP), the new competition law regime that has been introduced recently, is feeling handicapped financially, the chairman of the commission Mr. Khalid Mirza told PAGE in an exclusive interview last week. The government has not been providing adequate financial support to the CCP to enable effective implementation of new regulatory regime designed to promote non-manipulative and fair trading practices in the country, he added.

The CCP came into being through an ordinance issued by the President in October 2007 replacing the Monopoly Control Authority Monopoly Control Authority (MCA) was set up in 1970 under the Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance (MRTPO) 1970 as a market regulator to control and manage monopolies, cartels and unfair trade practices. The basic objective of this law is to regulate economic activities of private enterprises to ensure that they do not acquire undue concentration of economic power or unreasonable monopoly power or resort to unreasonable restrictive trade practice. The CCP is envisaged to perform practically all functions, which were within the jurisdiction of MCA.

Explaining the rationale of the new law, Mr. Khalid Mirza who is well-known in Pakistan as a strong regulator as the first chairman of the Securities and Exchange Commission of Pakistan (SECP), said the new competition law regime that has been introduced in Pakistan through the promulgation of the Competition Ordinance, 2007 is inspired by the principles embodied in the Treaty of Rome and global best practices. It seeks to be nondiscriminatory, to protect competition and not competitors, to facilitate business growth, to achieve coordination with other agencies and the public, and to maintain integrity in applying the law. As opposed to the normative or prescriptive nature of the previous law, the new law requires the Competition Commission to take a reasoned approach; to carry out studies aimed at promoting competition; and to engage in advocacy through various means in order to create an awareness of competition issues and to promote a culture of competition. Besides, the law has endowed the commission with adequate investigative and penal authority, and has also empowered the commission to hold open hearings on any matter affecting the state of competition in Pakistan and to issue publicly a non-binding opinion or edict in this respect.

The task of the competition Commission is to protect competition and facilitate business growth. It will only be regarded as well structured and organized if it actually fulfills this function effectively. A lot of detailed work has been done in this connection with expert assistance secured through the World Bank and DFID of the UK. There is also now a road map for operationalizing the commission, as well as its capacity building over a three year period to the point where it achieves effectiveness of near-global standards.

Continuing the chairman CCP said that the commission is backed by a good piece of legislation which provides equal opportunities to all the stakeholders, protect rights of consumers by ensuring quality, choice and availability of goods. It gives powers to the commission to keep an eye on cartels and take action against them with a view to discouraging manipulation in business and eliminating restricted trade practices. "I have been able to find and engage four outstanding professionals as members of the commission to make a CCP as a professionally effective organization. But the Law has not so far been implemented in its true letter and spirit because of inadequate financial funding". Although he had no doubt about the government's political will to enforce this law, he underlined the need to have ear-marked funds to take this matter forward, which, he was confident, cold ensure good business practices leaving no place for cartelization.

"We have been provided only Rs 50 million against a demand of Rs 10 million and are hearing whispers about a cut even in that as well" he said, adding "without funding the law would not be implemented assertively".

Giving details that how the CCP would be different from MCA, he said they would have a team including forensic accountant, micro economists and good lawyers to take any inquiry of complaint to its logical conclusion. He said that the CCA has not been designed against the business; all it wants is that it should act in a rational and commercial manner, encourage growth and provide a level playing field to all. "The role of this institution is extremely important because of increased reliance being placed on the private sector as the main engine for growth. As part of policy change, the government has also decided to shift gear towards improving its competition polices, since market based policies do little to improve economic growth and efficiency if abuse by dominant firms and unfair trade practices are allowed to flourish," he added.

He, however, said that all depends on how much financial autonomy is given to the CCA as there might be everything else in place but still has a weak competition regime due to inadequate implementation resources. Even with a fairly generous budget, he said that new enforcement agency would be required to set up its priorities as initially less complicated cases would be taken up. He said that in such cases benefits could accrue to consumers, for instance, through breaking up cartels and introducing competition. He said it is a misperception that CCA would control pricing, as prices are just an indicator, but the commission is concerned with good business conduct with proactive intentions.