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Published Date: Dec 7, 2012

Strict measures to protect consumers from the cartels

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.

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.

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.

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.

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.

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.

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

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,

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.