Monopoly Control Authority told to enhance penalty limits

ISLAMABAD (September 08 2003) : For creating competitive environment in the country, the government has directed the Monopoly Control Authority (MCA) to considerably enhance the limits of penalty to effectively control increasing monopolistic trends.

Sources here said on Sunday that Economic Co-ordination Committee (ECC) of the Cabinet has recently asked the MCA to amend the law for raising existing one-time penalty of Rs 100,000, and Rs 10,000 per day penalty in case of non-compliance by the concerned unit.

The decision will check undue concentration of economic power in one unit and reduce unreasonably restrictive trade practices.

They said that the reason behind increasing the amount of penalty is to deal with the growing complaints against different monopolistic cartels like cement etc.

The violator of Monopoly Control Act is liable to penalty of Rs 100,000 and Rs 10,000 per day in case of failure to implement the decision.

ECC has told MCA that the existing penalty is not enough to discourage the cartels and monopolies.

At present, the law only applies to private monopolies, and state monopolies are not covered.

Single-firm monopolies are also not covered in the substantive provisions of the law.

It has also been realised that the penalties which MCA can impose in case of non-compliance are very low ie, a one-time penalty of up to Rs 100,000 and Rs 10,000 per day in case of continuous default, with the result that businesses find it easy to pay the low penalties and to continue with their abusive practices.

They pointed out that complete review of the law is required to make it effective, since globalisation and liberalisation is adding newer and complex aspects to the definition of market structure, concentration, etc.

Awareness is growing at the international level to develop rules for controlling anti-competitive conduct of firms and measures by government that could adversely affect competition.

Consequently, elements of competitive policy are introduced in the multilateral and bilateral trade negotiations.

Monopoly Control Authority recently made a comprehensive presentation to ECC on its performance since its establishment in 1971.

The ECC encouraged the Authority to promote measures to fight cartels and promote free competition.

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