Cartelisation and prohibited agreements

CCP takes action against 298 undertakings

Saturday, December 15, 2012

CCP is required to ensure free competition in all spheres of commercial and economic activities

ISLAMABAD: The Competition Commission of Pakistan CCP has so far taken action against 298 undertakings for cartelisation and prohibited agreements in sectors that are of consequence to ordinary people and against persons with power and influence, the Senate was informed here on Friday.

Minister of State for Finance and Revenues Saleem H Mandviwalla during the question hour informed the House that CCP is required to ensure free competition in all spheres of commercial and economic activities to enhance economic efficiency and protect consumers from anti-competitive behaviour.

Preemptive measures taken by CCP against cartelisation: CCP since its establishment has moved very decisively against the carter. The preemptive measures taken by the CCP to prevent cartelisation include action against 298 undertakings for cartelisation and prohibited agreements in sectors that are of consequence to ordinary people and against persons with power and influence.

CCP in discharge of its statutory role under Section 29 had issued policy notes regarding any policy or law, which were in conflict with the act. CCP had launched Reward Payment to Informants Scheme. An advocacy booklet under the title ‘Information Booklet on Protection from Anti-competitive Practices’ had been printed and disseminated.

The CCP had taken following actions for protection of consumers in the country during last three years – 2009-10, 2010-11 and 2011-12.

FY 2009-2010: Fourteen orders were issued, out of which two orders were issued by the Appellate Bench, four orders related to the prohibited agreements (cartelisation), five related to abuse of dominant position and three were about deceptive marketing practices.

Three policy notes were issued like one on the Demutualisation and Integration of Stock Exchanges in Pakistan, second to the Government to Amend Bilateral Air Services Agreement of 1972, third on price fixing agreement between All Pakistan Sugar Mills Association and Ministry of Industries and Production. In addition, an opinion on exemption of regulatory duty on import of ware potatoes by international fast food chains franchises was also issued. Six inquiries covering a wide range of commercial and economic activities were conducted; wherein violations of the act had been pointed out.

FY 2010-201: Some 19 orders were issued, out of which eight orders related to the prohibited agreements (cartelisation), four related to abuse of dominant position, two were about deceptive marketing practices, two regarding the clearance of mergers and two related to the non-compliance of the orders of CCP.

Two policy notes were issued like one to the Civil Aviation Authority or entry fee at the Benazir Bhutto Airport, Islamabad and second to the Karachi Stock Exchange regarding their listing regulations.

Fifty-two show-cause notices were issued to the companies, trade associations as well as individuals for violation of the act. In total CCP had conducted 23 hearing in various matters including the abuse of dominant position, prohibited agreements (cartelisation), deceptive marketing practices and approval of mergers.

Six inquiries covering a wide range of commercial and economic activities were conducted; wherein violations of the act had been pointed out.

Three search and inspections were conducted to investigate prevalence of harmful collusive practices and to collect the evidence.

Eighty-five mergers and acquisitions in total were cleared.

Fifty-six exemption certificates in total in respect
of prohibited agreements
were granted.

FY 2011-2012: Ten orders were issued. Of these orders, two orders were related to the prohibited agreements (cartelisation), three orders to the exemption of prohibited agreements, one about leniency, and three orders related to deceptive marketing practices, and one for merger approval.

Thee policy notes were issued like one to the Securities and Exchange Commission of Pakistan to assist in developing the new framework for cost accounting information sharing, second to the local authorities for the reform of price determination practice for fresh milk and third to the government of Punjab regarding the complete ban on the establishment of new sugar mills and on the expansion in the capacity of existing sugar mills. Some 110 show-cause notices in total were issued to the companies, trade associations as well as individuals for violations of the act. At least 28 hearings were conducted in various matters including the abuse of dominant position, prohibited agreements (cartelisation), deceptive marketing practices and approval of mergers.

Nine inquiry reports covering a wide range of commercial and economic activities were conducted, wherein violations of the act had been pointed out. Four search and inspections were conducted to investigate prevalence of harmful collusive practices and to collect the evidence. Fifty-one mergers and acquisitions were cleared. One hundred and twenty-three exemption certificates were granted.

Results and achievements: CCP had achieved the results due to its enforcement actions causing direct impact on general public as given hereunder, causing deterrence through enforcement, creating awareness through advocacy, building a culture of compliance for rectifying anticompetitive behaviour, building the positive and progressive image of Pakistan in the global competition regimes, CCP actions have created and are creating deterrence for businesses.

CCP was striving to create awareness for a culture of compliance; to rectify anti-competitive behaviour. In this process, CCP had achieved various successes through compliances and commitments. In certain cases, like, the jute mill cartel, the penalty of Rs 23 million had even been recovered and deposited in
the public exchequer.

Courtesy: Daily Times

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