Monopoly trade practices law being revamped

KARACHI (April 28 2004): The Monopoly Control Authority (MCA) has begun the process of reviewing the Monopolies and Restrictive Trade Practices (Control and Preventive) Ordinance (MRTPO), 1970 and revamping of the institutional framework.

The MCA appointed a German consultant, expert in competition law, Horst Nolkensmeier, and former member of the Central Board of Revenue (CBR) Ahmed Khan to bring about improvements in the law. They are at present reviewing the present legal and institutional framework.

The consultants have initiated a dialogue with the stakeholders, including trade bodies, to discuss the relevant competition matters to the trade, investment and competition policy and law in the context of existing socio-economic environment and the problems/difficulties faced by the enterprises in terms of their investment decisions carrying business, regulatory requirements, submission of the information and other related matters.

They would also discuss the specific issues relating to the required changes in the MRTPO, 1970 and the MCA operations and sections of the law related to the monetary ceilings of the companies in terms of assets to fall within the scope of MRTPO operation.

The question of acquisitions and mergers of the undertakings, impact of such mergers and effects of the selective law, reasons for cartel formations and discouraging the same through law, extent of competition policy and law in meeting the objectives of public interest, the level of the administrative interventions are also the references, which the consultants want to settle through dialogue and consultation with the stakeholders.

The Vice-President of Federation of Pakistan Chambers of Commerce and Industry (FPCCI), Engr. M. A. Jabbar, during the meeting held last week in the FPCCI, told them that the apex trade body had a lot of reservations on introduction of any new regulatory framework for further controlling the business governance in the country.

He said that before activating the MCA, tangible arguments to result in the growth of the business and healthy competition must become the basis for activating the operation and amending the law.

The law made in 1970 had to see many changes as present and future doing of business was, more or less, relevant to the international trading laws, which were becoming national laws due to required harmonisation within the framework of the World Trade Organisation (WTO), he said.

He said that presently the Security Exchange Commission of Pakistan (SECP) had also assumed a role by which it was controlling many aspects of the business, management integrity, conduct of the auditors, business transfers from one company of the same group and many other issues, which the SECP was already attending to in the name of ensuring fair competition.

Jabbar said that before activating the MCA, a sharp divide line should be made between the functions of the SECP and MCA, as both as regulators should not overlap and besides the hidden objects of the MCA could not be declaimed for its becoming likely to be second regulator for the business governance in the name of competition and fair business.

He reminded the consultants that when the government conceded that doing business was the job of private sector, then public sector should also be brought under the MCA operating scope, if the law had to be activated for reasons to be well established.

He said that regulators like (Nepra) were often working under the dictates of the government and in such case what should be the position of decisions made by the MCA in terms of its own relevant governance.

He said that the law should not exempt the government-owned companies because monopolies were created by the highly protected companies of the government by government itself and the law of 1970 was a good example in this context.

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