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Published Date: Dec 5, 2012

SDPI PRESS RELEASE (December 5,2012)

Observing the third ‘World Competition Day’, the speakers at a seminar demanded strict measures to protect consumers from the cartels. They also demanded independence of regulators, effective enforcement and monitoring mechanism, awareness raising and healthy business practices.

The speakers were discussing at a seminar on ‘Adverse Impact of Cartels on the Poor’ organized by Sustainable Development Policy Institute (SDPI) to contribute into international efforts to celebrate 5th of December as ‘World Competition Day’. The culture of competition is quite weak in many countries and consumers have limited understanding about the harmful effects of cartels. Thus, the World Competition Day allows a scope for greater discussions and dissemination of the beneficial effects of competition on the average consumer – either directly or indirectly. In effect, it is expected to result in greater public understanding and support on the need to crack down cartels.

Chairing the proceedings Dr Vaqar Ahmed, Head-Economic Growth Unit, SDPI maintained that consumer as a constituent has always been ignored in public policy discourse and economic growth agenda in Pakistan. He appreciated the revised ‘Competition Act 2010’, calling it a big achievement, but at the same time raised concern that markets in Pakistan are not still open and performing in a responsible manner.

He also drew the attention of competition agencies towards public entities, who in his opinion, are dominant market players in some cases and are influencing prices, production and services in the country’s economy.  Appreciating the recent Pak India trade liberalization initiatives, Dr Vaqar said that now there is greater need of synergies between ‘Competition Agencies’ in South Asia to ensure that trade within the region is inclusive, beneficial to consumers and address the common goal of poverty alleviation in the region.

Nadia Nabi, Director Enforcement, Competition Commission of Pakistan (CCP) briefed participants on various aspects of cartelisation debate and informed participants that CCP is diligently protecting the rights of consumer by ensuring that anti-competiveness business practice are controlled which mainly entails collaborative price fixation, territory/ customers division, restricting production and collusive tendering.  Citing references, she said that cartels are major drain on economy whose impacts on prices range from 10 to 20 percent.

Giving details of recent CCP actions including CNG issue, she added that the commissions inspection teams have recently conducted inspection visit on CNG stations and an enquiry committee has been formed to investigate that whether any malpractices has been done by CNG association on CNG prices . She also added that the committee would also review policy framework on the issue and a policy note would be issued in case one is required.

Earlier, she referred many factors affecting efficiency of CCP including backlog of cases in courts and lack of understanding and awareness in the society.

Waseem Hashmi from Consumer Rights Commission of Pakistan (CRCP) said that increasing influence of cartels, even in policy making circles, has made it harder to make them accountable. As a result, the consumer and new entrants to the industry have severely been affected by these malpractices, he added. He discussed various legal frameworks, and deliberated upon the abuse of dominant position by companies, deceptive marketing and various penaltiy mechanisms. He informed that Punjab has only 11 consumer courts in 36 districts under the act of 2005, whereas there is little work done in KP and Balochistan adding that there is no competition bill enacted in Sindh. He also added that people are also not aware of consumer courts as well and how to approach them. This necessitates Empowerment of consumer through Awareness and Capacity Building,

Eminent businessman and director Fazal Industries Ltd, Mian Waqas Masud narrated various examples of cartelization in automobile, cement, power and sugar industry in Pakistan. He was of the view that consumer interests are compromised because of weak enforcement, low penalties, and most importantly complex and costly complaints lodging mechanism. He commented that cartels are ripping of the consumer in collusion government officials who in most case turned a blind eye towards unethical and unlawful business practices.