Pakistan enacts anti-trust law

President Asif Ali Zardari signs the anti-trust bill for cracking down on business cartels.

ISLAMABAD: President Asif Ali Zardari on Wednesday signed the anti-trust bill for cracking down on business cartels, formalising it as an act of the parliament. The endorsement of the Competition Act of 2010 will provide legal cover to the Competition Commission of Pakistan (CCP), the legal existence of which had ceased after the lapse of the CCP ordinance on August 16.

The move also marks a start to the countdown for the establishment of the competition appellate tribunal within thirty days. Earlier on, the National Assembly had unanimously approved the act in order to legalise an institution to control the cartelisation of industries.

“The act seeks to ensure free competition for commercial and economic activities and aims at protecting consumers from monopolisation, cartelisation and other harmful practices,” said the presidential spokesman, Farhatullah Babar.

The CCP, among other tasks, is entrusted with the responsibility of prohibiting commercial enterprises from unfairly using their dominant position in the market through unethical practices such as limiting production, price discrimination and so on. The CCP was initially established by former president Pervez Musharraf in 2007.

The commission earned fame for the action it took against powerful industrialists with close political ties, especially in the poultry, cement, sugar, energy and banking sectors.  These actions made the CCP highly controversial, resulting in an unnecessary delay in the passage of the mentioned bill from the parliament.

“We will be back in action and expedite cases against manipulators and cartels,” said Rahat Kaunain, the CCP Chairperson. She highlighted that the immediate challenge at hand was the establishment of the competition appellate tribunal within thirty days. The three-member tribunal will be headed by a retired judge of the Supreme Court or a retired chief justice from a High Court.

In order to remove the bottlenecks in granting expeditious justice, the Senate’s standing committee on finance and revenue had recommended setting up of the competition appellate tribunal. Previously, the National Assembly’s standing committee had proposed allowing parties to appeal in high courts against the commission’s judgments – a move strongly opposed by the CCP.

Meanwhile, important cases against cartels are still pending in the high courts and the government will also have to decide whether it will retain these cases in the current courts or transfer them to the competition appellate tribunal.

The cases include decisions regarding fines to be imposed on the cement and liquefied petroleum gas sector. The CCP has also given its judgment in the case of the cartelisation in the sugar industry but the Sindh High Court has disallowed it from making its findings public.

Under the Competition Act, if a party is dissatisfied with the Appellate Tribunal’s judgment, an appeal can be made in the Supreme Court. The law also makes it mandatory for the tribunal to pass its judgment within six months.

According to the law, the CCP can impose a penalty of up to Rs75 million, or 10 per cent, of the annual turnover of the company (whichever is higher) once a party is convicted for abusing their dominant position in the market.

The CCP chairperson noted that the commission required financial autonomy for which all regulators were required to pay three per cent of their fees and penalties to the commission, as the act demands.

Nonetheless, other regulators including the National Electric Power Regulatory Authority, the National Telecommunication Company and the Securities and Exchange Commission of Pakistan have not been paying their dues since 2007.

Published in The Express Tribune, October 7^th, 2010.