Lesson in economics: CCP wants to eliminate sugar lobby in Punjab

Body issues a policy note to govt of Punjab to lift the barriers to entry.

ISLAMABAD:

The Competition Commission of Pakistan (CCP) has issued a policy note to the Government of Punjab to repeal the ban on establishment of new sugar mills and expansion of existing ones to enable fair competition in the industry. The CCP enforced the law in December 2006 to erect competition barriers in the sector.      

The commission while dealing with the complaint filed by Sheikh Abdul Razzaq, took notice of the ban imposed by the provincial government, said a press statement issued on Monday. In the policy note, it was observed that under the Competition Act, 2010, it is CCP’s mandate to promote competition norms through advocacy and persuading economic agents including government agencies and regulators to operate in accordance with the statute.

The policy note sent to the chief secretary of Punjab and secretary of industries of Punjab, said that in a free market an entrepreneur must be allowed to decide whether the opportunity to set up any business enterprise, including a sugar mill, was worth availing. The CCP noted that legal, statutory and regulatory barriers to entry usually resulted in lobbying by existing players.

The note added that in economics and especially in the theory of competition, barriers to entry are obstacles to the path of an undertaking which wants to enter a given market. It may be any factor that makes it difficult for a new undertaking to enter a market.

It has been observed by the CCP that the more robust competition policies and better enforcement of law, the higher the chances of achieving economic efficiency. The consumers stand to gain the most from greater competition.

Competitive markets encourage more trade, boost quality, drive prices down; provide greater choice to the consumer and more employment. Let market forces of demand and supply prevail which will ensure competition.

This will encourage manufacturers and service providers to be more efficient, to better respond to the needs of consumers, to innovate, to initiate and to venture, and consumers will benefit from better prices, quality goods and more choices,” the note concluded.

Published In The Express Tribune, June 13^th, 2012.