Saturday, 6 December 2014

Staple food crops pricing: CCP takes note of suspected cartelization

Dr Joseph Wilson, Chairman Competition Commission of Pakistan (CCP) Friday disclosed that the CCP has taken notice of the suspected cartelisation in staple food crops pricing and is sharing data with the relevant ministries. On the occasion of a seminar organized by the CCP in connection with the World Competition Day-2014, he said that the commission has taken notice of the staple food items pricing and suspected cartelisation in this area. In this regard, CCP is exchanging data with the relevant ministries.

CCP Member Mueen Batlay asserted that the commission is actively looking into the food sector to check any possibility of cartelization in transaction of such commodities. On the issue of smuggling, Dr Joseph Wilson informed that the CCP is also looking into the smuggling of tea in the garb of Afghan Transit Trade. The CCP has limited mandate to check smuggling but it is investigating the issue with the powers available under the law.

In his presentation, CCP Member Mueen Batlay said that the CCP wants to ensure that all restraints, private or public, which hurt competition, were being watched. The CCP has vast powers, and it is up to us how we develop a competition policy and to ensure that the government policy is in line with competition policy.

He said that the section 29 of the Competition Act: Advocacy as a tool to respond to public restraints or regulatory barriers. CCP is empowered to review policy frameworks and to advise the government. He also gave examples of Policy Notes (Construction sector, GIDC and ICH).

He said that the exemptions were given to NLC, NCL and FWO on performance bond and security money in the construction sector. Resultantly an edge was given to these companies in terms of cash flows. Other companies were restricted to provide guarantees and bonds to the entities they were getting contracts from. This raised the cost by 20-30% for those companies not given exemptions.

About the GIDC Policy note, he said that price differential between pre and post 2001 fertilizer plants was enhanced as a result of GIDC levy. This eroded the level playing field. CCP recommended that GIDC should be levied uniformly. The matter is now sub-judice.

About the ICH Policy Note, he said that under proposed agreement, all incoming international traffic would be routed through PTCL infrastructure. The supposed basis was to curtail or eliminate grey traffic, but ICH was actually reversing development in the telecom sector. This was against the very spirit of competition as there was no incentive to improve sales or services for LDI operators. CCP recommended that ICH should be withdrawn. The ultimate victory was for the consumers. This matter is currently sub-judice, he added.
Copyright Business Recorder, 2014

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