ISLAMABAD, 02 MAY 2012: The Competition Commission of Pakistan (CCP) hosted its 14th quarterly meeting of Competition Consultative Group (CCG), a body set up by CCP to seek feedback and suggestions on competition related issues and policies from public and private sector representatives, legal community, academia, media and the government.
The meeting was presided over by the Chairperson CCP, Rahat Kaunain Hassan, and attended by Mr. Abdul Ghaffar, CCP Member Cartel, Monopolies and Trade Abuses, Dr. Joseph Wilson, Member Mergers & Acquisitions, and International Affairs, Ms. Vadiyya Khalil, Member Advocacy and IT, Mr. Mueen Batlay, Member Competition Policy and Research and Dr. Shahzad Ansar, Member Office of Fair Trading and Budgetary Affairs.
The meeting was attended by representatives of State Bank of Pakistan, Pakistan Electronic Media Regulatory Authority (PEMRA), Intellectual Property Organization (IPO), Consumer Association of Pakistan, Consumer Forum, The News, Institute of Chartered Accountants of Pakistan (ICAP), Nestle Pakistan Limited, Indus Motors Company Limited, Engro Polymer & Chemicals Limited, Overseas Investors Chamber of Commerce & Industry (OICCI), ICI Pakistan Ltd, Federation of Pakistan Chamber of Commerce & Industry (FPCCI), Forman Christian College, Glaxo SmithKlyne, Sidat Hyder Murshed Associates and participants from legal community.
Elaborating the achievements and developments in the last quarter, The Chairperson informed the participants that the Competition Commission of Pakistan (CCP) was the first regulatory authority from South Asia to be nominated by the Global Competition Review (GCR) for the Enforcement Award in the category of ‘Agency of the Year – Asia-Pacific, Middle East and Africa’ for 2012. The nomination shows the level of priority given to enforcement actions undertaken by the Commission in 2011. She further explained that the award is based on different factors, such as the creative, strategic and innovative aspect of enforcement techniques used by the agencies.
Talking about the 3G auction process and the reports published in some of the newspapers, she clarified that It is not in the mandate of CCP to certify auction processes; however, CCP is watchful of the provisions that may have competition concern in such matters and briefed the Standing Committee on Information Technology and Telecommunications regarding the key factors that are instrumental to promote new entry and effective competition in the telecom sector.
The Chairperson said that we have achieved immense success in unearthing the cartels through our search and inspection weapons provided to us by the Competition Law. She said out of 14 search and inspections carried out by the CCP since its inception against the cartels, all except a few including cement never challenged our powers in this regard. She stated that the Ministry of Industry seems to have been misguided when it advised the CCP to restrict itself to advisory role instead of acting like a constable.
While discussing the issue of leniency, the Chairperson said that there are two types of tools that are used to break cartels, first is search and inspection and the other one is to offer leniency to any of the players. She explained that it is in the law that only one company in a cartel can avail the clause of leniency. CCP investigated and prepared a comprehensive report on a cartel formed by electrical power equipment manufacturers and issued a show cause notice to the companies involved. Siemens Pakistan was the first one to file for leniency, not only admitting contravention, but providing critical evidence of the alleged cartel, conduct accomplices and committing to abandon such behavior in future.
In accordance with the leniency regulations, CCP granted immunity to Siemens Pakistan to the extent that the entire financial penalty for the company was waived off. She lauded the media for reporting the leniency case and depicting the grant of leniency in its true spirit. She further added that leniency is not only about reduction or immunity from penalty, in fact it creates more deterrence for all other players, strengthening sanctioning helps break the cartels with the help of an insider. Equally important is enhancement of quality and value of evidence. It is only sensible to encourage insiders to bring evidence which not only makes the evidence more decisive but also gives an insight into the sector/industry/relevant market, thereby giving more data, useful information and most importantly the cartels working and operating practices.
She added that it is indeed true that the better cartels are understood, the more effective we can be in designing policy against them. One must recognize that apart from creating deterrence for cartels and anticompetitive practices, the role of competition law enforcement agency is to bring about corrective behavior. She further said that the fact that a leniency application was filed only after two years after the enactment of Competition Act 2010, highlights the efficiency of the CCP as a regulatory body. Even in developed countries like US and EU, leniency application took much longer time.
While discussing the challenges still faced by the Commission, the CCP Chairperson said that the payment of three percent of fee charges of five regulatory institutions to the CCP and the appeals against the Commission’s orders pending in different courts were among the few outstanding issues. She said, CCP is currently surviving on Rs200 million grant by the Ministry of Finance which is not enough as it is hardly one third of the actual budget proposed by CCP. The regulatory bodies owe CCP over Rs943 million as per law approved by the parliament i.e SECP according to rough estimates owes Rs109 million, PTA Rs738 million, OGRA Rs23 million and PEMRA Rs43 million.
CCP Member-Mergers, Acquisitions and International Affairs, Dr. Joseph Wilson gave a detailed presentation on "State Owned Companies and Challenges to Competition Agencies" and Mr. Shehzad Ansar- Member, Office of Fair Trading and Budgetary Affairs gave a presentation on “Deceptive Marketing practices by Certain Educational Institutions” for Professional (non- accredited) Programs.
Towards the end, the CCP Chairperson responded to various queries of the participants regarding the Leniency issue. The participants appreciated the presentations of the CCP Members and performance and actions taken by CCP and gave some important suggestions regarding its enforcement and advocacy strategies .