Competition Law in Pakistan

Posted on November 19, 2007

At a time when the country’s international credibility is at a low thanks to the mixed political signals being given by the government, one would have expected more to be done to allay fears of investors so that economic prospects were not hurt.

If the government cannot offer more incentives to foreign investors, it should also not take steps to make them uneasy either. But this is exactly what seems to have happened with the recent promulgation of the Competition Ordinance 2007. The ordinance seems to have been finalized and promulgated without consulting all the stakeholders or inviting their comments. In commercial matters, it is the norm to elicit feedback from industry and experts.

In the case of company law, this is the practice adopted when any changes are to be made. For the Competition Ordinance, this was not done. Foreign investors say that they see a number of anomalies in the ordinance. The law envisages wide-ranging, arbitrary powers with harsh penalties introduced without proper consultation, which pose high risks, in particular in the conduct of raids and in criminal proceedings against officials of companies. One should understand that price-fixing arrangements are seldom documented so it is difficult to understand the rationale for conducting the raids.

There are questions also about the suitability of those who have been hired to run the commission and also what the focus of the body will be.It has to be recalled that the commission was formed after an outcry from various quarters over the inaction of the government in curbing cartels and business monopolies and the inability of the Monopoly Control Authority to address these complaints. While the Competition Commission has been given more teeth, one is puzzled as to why the commission seems more intent at targeting the corporate sector instead of going after the powerful monopolies and cartels that exist. The brunt of this law will fall on the regulated and documented businesses. The unregulated and undocumented informal sector has nothing to fear despite the fact that it remains responsible for a high percentage of essential supplies to consumer whose interests the law claims to protect. It is the cartels that need to be checked first since they are robbing the people and not giving anything in return. Proper debate on the Competition Commission should be held and the bureaucrats in Islamabad should stop acting as judge and jury.

There should be a mechanism for dialogue with trade and industry which is not there. The government has to take along the corporate sector as it is in the long-term interest of the country to keep foreign investors satisfied with the overall investment climate. Foreign investment not only means earning valuable foreign exchange but also jobs and higher tax revenues for the government.

Source: http://www.thenews.com.pk/daily_detail.asp?id=81305

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