In its broadest sense Market Economy can be explained as an economy where individuals own and collect the resources which are allocated through voluntary market dealing of supply and demand chain. In market, on the voluntary basis monetary resources are exchanged by people for gaining other resources such as goods and services. The worth of resources which are traded depends upon the demand in the market thereof. If the chain of demand and supply is distorted, the value of resource fluctuates i.e. if the demand is high but supply low; the value of resource would be high and vice versa. The success and development of the economic growth in a market economy is highly determinative of relative risks and rewards that are presented to individuals through particular economic activities. If the graph of risks is high and that of rewards is low then those certain specific activities might not be pursued. In other words, economic decisions and pricing of goods and services are guided solely by aggregate interactions of country’s citizens and businesses with minimum government intervention or central planning.
Competition laws globally address the aforementioned behaviors which eventually reduce, restrict, prevent or distort competition. In the absence of Competition law, businesses may engage in anti-competitive and unfair practices to oust their competitors rather than competing on a legitimate basis which includes quality improvements in their products as well. It is also a healthy activity for consumers in terms of price checks.
Consumer protection in Pakistan was not the agenda of Government before 1970s. It emerged in late 70s in the form of Monopolies and Restrictive Trade Practices Act 1970 and later in 2007 when Competition Ordinance, 2007 was issued which later became The Competition Act of 2010 due to the need of a codified law in the emerging global competitive markets. Since 2010 some major changes and practices have been witnessed in the business and commerce front. Several rules have been made under Section 57 of the Act, with the purpose of implementing the Act. For the execution of the said Act an independent regulatory body was formed which came to be known as the Competition Commission of Pakistan (CCP). The CCP is a quasi-regulatory and quasi-judicial body which ensures that consumers are protected from anti-competitive behavior and that competitive forces in market are un-restricted in all areas of commercial and economic activities so that overall economic efficiency of the market is enhanced and to protect consumers from anti-competitive practices throughout Pakistan.
The general idea of the objectives of competition policy in a country indicate that the main goals are to maintain and boost the process of competition in order to encourage efficient usage of assets whereas keeping the freedom of economic actions of various participants of the market in control. Competition policies are generally viewed to attain various other purposes as well: like pluralism, de-centralization of financial decision making, preventing the economic power abuse, encouraging small businesses, fairness and equality and various other social and political values. It has been observed that these “additional” objectives or purposes tend to differ across dominions and time. These objectives also reflect the shifting nature and malleability of competition policy because of which one is able to address modern concerns of society while remaining committed to the core objectives. Competition brings benefits to buyers in terms of choice and lower prices but market economies are susceptible to anti-competitive attitude because of market dominance and restrictive malpractices. To avoid competition from being weakened, many countries have adopted laws that aim at restricting such behavior and practices.[1]
The basic objective of competition policy of a country is promotion and the fortification of the competitive processes. Competition policies introduce “equal opportunity field” for all market players that will help marketplaces to stay competitive. The introduction of a CL of Pakistan provides the market with a set of “guidelines to play in the market” that protects the competition process itself, rather than contestants in the market. By this way, the quest for fair and effective competition contributes to economic efficiency, growth, consumer welfare and development. The CL of Pakistan is based on the doctrine of ‘restraint of trade’ which has roots in English Common Law. The Act caters to each market issue separately. For example, the anti-competitive market agreements or cartels are addressed in Sec 4 of the said Act. A cartel is the product of an agreement amongst competitor firms to make enormous profits by assisting each other rather than competing with one another in market. These cartel members jointly concede on production grades, prices including all the other requirements related to supply in market. Section 4 of the Act prohibits such agreements by clearly stating that:
“No undertaking or association of undertakings shall enter into any agreement or, in the case of an association of undertakings, shall make a decision in respect of the production, supply, distribution, acquisition or control of goods or the provision of services which have the object or effect of preventing, restricting or reducing or distorting competition within the relevant market unless exempted under section 5 of this Ordinance.”[2]
This is one such example of how the Act is empowered to ensure free competition and to maintain and enhance economic efficiency
For efficient enforcement of the Act, the Commission has been granted certain powers. These powers, inter alia, include:
- Call for data from any venture, person, firm, company, etc.
- Look for the support of any individual, authority figure, or federal agency for the discharge of its duties and functions.
- Enter and examine premises and seize any proof or exhibit of anti-competitive exercises or practice.
- Inflict a fine or penalty of around 10 per cent of the former financial year’s turnover or approximately 75 million Rupees. In case of defiance of orders of the Commission, a penalty of up to one million Rupees may be imposed.
- The commission may suggest or give any proper direction to revive competition in the market.
In brief, this law forbids those actions which amount to reduce the competition in market such as Market dominance, Agreements that confine or restrict dominance, and deceptive marketing exercises or practices. Further the law also states policies or methods in relation to review of mergers and acquisitions, enquiries, imposition of penalties, grant of leniency and other essential aspects of law enforcement.[3]
[1] The note also draws, in a relatively minor way, upon the material in the recent Secretariat note prepared for the Roundtable on the Substantive Test in Merger Review, DAFFE/COMP/WD/2002)96 (2 Dec. 2002).
[2] The Competition Act 2010, Section 4
[3] The Competition Act 2010
A good article covering different aspects of CL. *thumbs up*
The organization is in place since 1970 more than 4 decades with different names, since then many amendments in the law but hardly any examplory performance where consumers right were protected or more competition was brought in particular sector to bring prices down n service up. The present scenario where KE is the sole supplier of power to mega city Karachi & its performance is nothing hidden from even a laymen what to talk about the way they have ruthlessly n technically raped consumers with installing fast running meters which increased their profits manifold without improving their service rather their has gone down from bad to worst, all this because they are enjoying the monopoly. Same is the case with landline telephone where PTCL is the single source earning huge profits, the worst part is that both these companies are foreign entities hence they repatriate all the earnings. Where are the laws and what has Monopoly authority done to safe guards consumers interest. The basic problem in our Country is not about laws it is about governance, laws are their to protect consumers but the will to do is missing. These companies it’s employees and offices must be costing the National Exequrer but providing no remorse to general public.