Most of the regulators including Securities and Exchange Commission of Pakistan (SECP), Oil and Gas Regulatory Authority (Ogra), Pakistan Telecommunication Authority (PTA), National Electric Power Regulatory Authority (Nepra) and Pakistan Electronic Media Regulatory Authority (Pemra) have refused to pay 3 percent feecharges on quarterly basis to the Competition Commission of Pakistan (CCP).
Commission Chairman Khalid A Mirza told reporters on Thursday that the government would provide Rs 220 million financing to the CCP for 2009-10. The 3 percent contribution by the regulators comes to around Rs 150-160 million. The Commission is expected to collect around Rs 30-40 million from penalties being collected from sectors involved in collusive behaviour or deceptive market practices. The financial requirements of the Commission are likely to be met through this collective amount during fiscal year (2009-10).
The World Bank funding would be around $1.5 million under Public Sector Capacity Programme. The amount is yet to be released by the government. The Ministry of Finance should immediately release this amount as it would lapse in coming November.
He regretted that the regulators are not complying with the directives of the Ministry of Finance for payment of feecharges. The regulators are resisting and adopted different delaying tactics for non-payment of fee to the Commission. One of the regulators is attempting to change its law to avoid payment of such fee.
Interestingly, the Ministry of Finance has not included State Bank of Pakistan (SBP) and Civil Aviation Authority (CAA) in the list of regulators liable to pay 3 percent feecharges to the CCP. "The SBP is a key regulatory, but it has been excluded from payment of 3 percent fee", Mirza added.
Under relevant CCP rules, the Federal Government may, in consultation with the Commission from time to time, add any other regulatory agency to the list provided.
He said that the Ministry of Finance has issued the necessary notification in this regard. The CCP has issued Competition Commission (Collection of Fees and Charges) Rules, 2009 deals with the transfer of fees and charges levied by regulatory agencies. The percentage prescribed by the Federal Government shall take effect from the financial year 2008-09. The receipts on account of fees and charges upon transfer by the regulatory agencies to the Commission shall become part of the CCP Fund.
The non-compliance by the regulators is a violation of the government law, which is not expected from the regulators. Even if the regulators are not ready to accept the Ministry of Finance notification, it is a clear-cut violation of government rules.
However, so far the regulators have not made any payment to the CCP. About the cartelisation of car manufacturers, he categorically clarified that only few companies have been engaged in production of limited quantity of cars in the country. These car manufactures are not working on full scale basis, which are not even meeting current demand. It is a squeezed market where international companies merely wanted their presence in Pakistan.
Within the CCP laws, it is difficult to intervene into the price increase. On import of auto parts at reduced rates of customs duty, these car manufactures have been engaged in assembling of the vehicles. Responding to a query, he said that the CCP has not restricted its activities to the corporate sector or business establishments. The CCP has frequently issued policy notes to the government departments for advising them on various policy issues linked with the collusive behaviour or other violations of the competition laws. The policy notes have been issued to the SECP on International Accounting Standards (IAS-39) and mutual funds, TCP on sugar sector, FBR on cigarettes issues and other policy notes were issued to different government departments wherever necessary.
The Commission has actively started sector studies in key sectors like banking, energy, CAA, sugar, fertiliser, polyester, ghee manufacturers, auto parts, automobiles and other sectors. The sector study on the banking sector is in the final stages, which would soon be finalised. The purpose of these sector studies is to analyse these sectors from competition point of view. The studies would also be helpful in monitoring of these sectors to check any collusive behaviour.
The sector studies would be completed within 5 months, as the Commission does not have readymade information on these sectors. Once the consolidated information on any sector is available, it would be helpful in carrying out investigation against the cartels, if any.
Comparing competition commission of India and Pakistan, he explained that Indian competition department is far behind in effective implementation of laws. This is evident from the fact that India took over 17 years to initiate action against the cement cartel. However, they failed to detect any other cartel or collusive behaviour in any other sector of the economy. At international forums, a number of counties have highly appreciated the CCP performance for taking action against cartelisation in minimum time and sought guideline from Pakistani department.
Meanwhile, an official of the CCP told Business Recorder that the CCP has sought government political support for initiating investigation against the alleged cartelisation by sugar mills. The CCP has submitted reports on cartelisation by sugar, cars, cement and milk cartels to the Economic Co-ordination Committee (ECC) of the Cabinet.
Overview of the state of competition in auto sector, cement sector, milk sector and sugar sector have been prepared with some recommendations for the government so that fair competition is ensured among these sector for the development of these sectors as well as their contributions in economy. Sources added that the government is closely monitoring sugar situation and its price manipulation by some key industrial players in connivance with officials of the federal government who were allegedly involved in cancellation of sugar import tenders.