Action plan for tackling cartelization, abusive business practices


ISLAMABAD: A report submitted by the Competition Commission of Pakistan (CCP) to Dr Ishrat Hussain, Advisor to the Prime Minister for Institutional Reforms and Austerity, has set out a dynamic action plan for the CCP to be implemented between 2020-2023 for tackling cartelization and abusive business practices in the economy.

Dr Ishrat Hussain, in his report, has also recommended to the federal

government to advise the provincial governments to act upon the policy notes of the Competition Commission of Pakistan after stakeholder consultation.

Dr Hussain in his report on the “Restructuring and Strengthening of Competition Commission of Pakistan” submitted to the federal cabinet, has discussed a host of issues facing the anti-trust watchdog and recommended solid measures to give teeth to the CCP.

The CCP’s report states that in the past, the CCP has worked on abusive

conduct in the automobile, aviation, and telecom sectors. It is expected that complaints of abuse of dominance in these sectors will continue, requiring further analysis and action by the CCP.

It is expected that more cases pertaining to concession agreements, right of way issues, resale price maintenance (RPM) and vertical restraints will be processed.

Various concession agreements involving long-term infrastructure

projects have come under the commission’s scrutiny.

Whereas high costs associated with such projects necessitates long-term agreements, to allow for recoupment of investments, the way some of these agreements are structured raises questions of compliance with the competition laws.

As Pakistan moves towards online economic transactions, driven by mobile applications and e-Commerce, the role of platforms will grow in importance.

There has been growing concentration in e-Commerce sector with the

acquisition of DARAZ by ALIBABA and the CCP has processed a merger

application between UBER and CAREEM, which will result in a dominant

position of the joint entity in ride-sharing services.

This will be an area of focus for matters pertaining to abusive conduct.

Similarly, the report states that tackling cartels will always be a priority

enforcement area for competition agencies.

But detection is difficult. The CCP’s search-and-inspection powers have been useful in acting against cartels, but companies have become wise in concealing and protecting incriminating information.

As key decision-making and information-sharing moves online,

the CCP will need to augment its capacity to detect evidence of collusion facilitated by technology and coordinated by software such as algorithms.

As part of this capacity, the CCP has established a digital forensic laboratory to help collect information from electronic devices.

Public procurement in Pakistan is conservatively valued at around 15%-20% of GDP.

At this volume, it is crucial to protect against possible collusive behaviour taking place to get best value from public money. Bid-rigging in public procurement requires companies to have an interface with procurement agencies in the form of technical documents and financial statements.

This information is, thus, available in the public domain and can be analysed carefully for signs of collusion.

Recognising this, Pakistan has taken some key steps to improve the process of public procurement in the country.

A MoU with the Procurement Regulator was signed in January 2017 to share information regarding the bidding process, to help alleviate the problem of data availability.

The CCP’s plan for effective enforcement against collusive bidding include developing Internal Capacity of the CCP’s officers; and developing capacity of Partners and Stakeholders – the PPRA and the various public procurement agencies (PPAs) – to detect and report anti- competitive practices.

Public procurement agencies need to be further sensitised to the competition law so that they can ensure transparency and stop the anti-competitive practices of bid rigging and collusion in public procurement.

A national-level campaign shall be initiated to help procuring agencies understand signs of bid rigging.

Similarly, developing a National Electronic Database on Public Procurement, to help record and analyse all bid activity. With the World Bank’s help, the commission will be linked to the e-Procurement database, allowing it to access bidding information for analytics, for which purpose it has designed a special software.

Moreover, reviewing the Legal Framework for Public Procurement to identify the gaps and suggest policy changes to curb anti-competitive practices.

A tri-partite MOU, i.e., adding the National Accountability Bureau as a partner to the MOU with PPRA is proposed.