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The role of regulatory bodies

Executive Summary

This paper can be an attempt to study role of CCP with reference to its coordination with other departments and regulatory body in Pakistan and an attempt is made to review the existing books and evidences about the role of CCP in performing its activities and its establishment. Successes and failures review and their fundamental reasons are recognized. Thus providing the base for recommendations and policy recommendations.

Market failures induce governments to intervene in the market segments through regulatory bodies. Governments intend to minimize the maltreatment of dominance in several sectors of overall economy. In Pakistan many regulatory bodies will work in the energy, financial, aviation, marketing and telecommunication areas. Competition Fee of Pakistan is one particular regulatory body that was helped bring into existence to replace Monopoly Control Specialist in the entire year 2007. The primary reason for the CCP is to guard the passions of the consumers along with producing healthy competition one of the players of the current economic climate.

CCP during its brief span after creation has intervened in various areas including the cement, glucose, fertilizer, aviation, education and textile sector. Performance overview of the CCP discovered that it includes succeeded in few positive interventions in the short-run. However long-run sustainability could only be ensured if it's provided with a comprehensive legal platform, research centered interrogative construction and proper infrastructure and human resources.

CHAPTER 1

Introduction

On November 2, 2007, Competition Percentage of Pakistan (CCP) was proven under the Competition Ordinance, 2007. This Ordinance's was promulgated to ensure the provision of the sound legal framework to sustain a small business environment predicated on healthy competition among the marketplace forces thus improving economic efficiency, expanding competitiveness and shielding consumers from anti-competitive practices. Prior to Competition Ordinance, 2007, anti-monopoly legislations namely 'Monopolies and Restrictive Trade Techniques (Control and Prevention) Ordinance (MRTPO) 1970' was utilized to suppress such practices plus the Monopoly Control Specialist (MCA) was sensible to carry out the procedures under this Legislation.

Market economies are theoretically, predicated on the principal of free movement of makes of demand and supply. But sometimes, to safeguard the pursuits of the common / to aid economy or even to protect the market segments from malpractices, government intervenes in the markets through different options. A recently available and prominent example of such market intervention was the acquisition of Merrill Lynch & Co. for approximately $50 billion by The Bank of America, as the credit crisis strike this Co. (Among America's oldest financial company). The Bank of America (Central lender of America) decided to pay 70 percent higher price than the genuine value of the share of the business.

In Pakistan, regulatory bodies have been institutionalized every once in awhile to effectively implement the government coverage and authority. Many of these regulatory systems have been shaped in different areas of economy including bank, electronic and print out media, energy and tariff sector and consumer cover. However many firms in the past, taking into consideration the role of regulatory physiques, have been recommending to handle impact evaluation studies to verify their effect on the current economic climate.

Before talking about the role of the regulatory systems in regularizing the functions, it's imperative to present the clear idea about the market failures / distortions that prevail in the marketplaces. From then on the concentrate will be produced on the working of your competition Commission of Pakistan (CCP) considering its successes and failures through comparative and qualitative examination.

Chapter 2 is a brief review of the theories about the prevailing market failures throughout the market. Chapter 3 includes the methodological framework and analytical construction of the analysis stating the hypothesis of the analysis and data collection techniques. Section 4 details the working of different regulatory systems in multiple areas of the current economic climate. Chapter 5 is a review of the annals and development of anti-trust laws and regulations and working of competition commissions round the world. After the global comparison, track record of CCP's development, its working, successes and failures are talked about.

CHAPTER 2

Market Failures

The normative theory of market-failure predicts that interventions on the market through legislation will be instituted to improve economic efficiency and protect social prices by implementing correcting mechanism to suppress market imperfections. Thus market failures could be viewed as scenarios where individuals' pursuits of 100 % pure self-interest lead to market inefficiencies - that can be improved after by chasing the societal point-of-view

2. 1 Types of Market Failures

Six types of market-failures can be found generally: Natural monopoly, Externalities, Community Goods, Asymmetric information, Moral hazard, Exchange costs. Anyone of the six failures legitimates regulation.

2. 1. 1 Natural Monopoly

In natural monopoly situations the monopolists will increase their costs and tariffs because they lakes incentives for efficiency and are considering the maximization of profit. A monopoly might not exactly always give beginning to inefficiencies, for example an all natural monopoly, does not necessarily follow that there is substantial economical inefficiency. A monopolist can however, create manufactured obstacles for other organizations to enter into the markets thus giving beginning to inefficiencies and also to curb the "threat" of potential competition or a monopolist might want to use a charges policy, involving set charges and a higher product price, which can earn uneconomic profits to him and cause potential damage to the consumers.

2. 1. 2 Externalities

While in negative externalities, too much is made. Negative externalities such as polluting of the environment occur when the company cannot be recharged all the costs without relating to the external cost in the calculations, the producer companies more of the good than is socially beneficial.

2. 1. 3 People Goods

A pure general population good is one whose usage by one person does not reduce its supply for others. However in circumstance of private goods, such as an apple, it may well not be available for consumption by others. Whenever a person consumes a good such as national defense or a radio broadcast, however, the amount of the good designed for consumption by others is not diminished.

An associated fundamental problem centers on the "revelation of personal preferences" for open public goods. If those who benefit from a general population good are asked to add a quantity reflecting their valuations, an individual may decide to free trip on the payments of others. If individuals could be excluded from eating the public good the revelation and free-rider problem could be resolved - at least in rule.

2. 1. 4 Asymmetric Information

If people have usage of different (private) information sources or they have been provided different information at the time they act, marketplaces may not perform effectively, and the knowledgeable players of the market, mostly the large providers, could exploit the problem. This phenomenon may possibly also occurs when retailers have imperfect information about customers. When market involvement has imperfect information and acquiring information is impossible or difficult, marketplaces might not function successfully. Such situation thus warranted the provision of information through rules.

2. 1. 5 Moral Hazard

Moral hazards make reference to the existence of incentives for individuals to act in ways that incur such costs, generally for world as a whole, which they do not have to bear. For example, a rickshaw drivers does not care for the excessive smoking and pollution because of the weak engine since he has not to cover the pollution. In case there is medical insurance, the average person may not have the proper incentive to use socially efficient precautionary procedures, since she/he knows that the cost of any disease or incident will be covered by insurance.

Regulation is one response to moral risk problems, but polices, sometimes, do posses few dangers thus reducing the efficacy of these regulations. In the controversial article[1], Peltzman argued that the automobile safety rules induced drivers to have more dangers, thus reducing the potency of mandatory safety criteria. Adoption of over-ambitious protection requirements by the EU in response to the SPS procedures is another example. The principal means of dealing with moral dangers is to structure incentives so that the induced patterns is considered. Moral hazard can even be addressed by monitoring the tendencies of people to boost the possibility that they take proper care.

2. 1. 6 Ventures Costs

Market failures can also result from costs associated with making market ventures. To the scope consumers and providers incur costs in becoming enlightened about market opportunities and completing market transactions, market segments will not perform efficiently. Rules to lessen those orders costs then can only improve efficiency. For instance, in the car industry global auto emissions standards can enhance efficiency, as car producers wouldn't normally have to create the latest models of for different states. Market segments however can handle some of these problems. For example, if consumers can sully the trustworthiness of the organization by informing other people that the organization shirked on quality, consumers won't purchase from that firm

Another situation where in fact the suppliers / suppliers could create market inefficiencies is the formation of cartels. This example occurs where in fact the conditions of oligopoly[2] is present.

2. 2 Cartels

A cartel is a formal (explicit) contract among competing organizations. It really is a formal company of providers that consent to coordinate prices, marketing and production. Companies involved with cartels reach after a mutual agreement on price mending, total industry end result, market shares, allocation of customers, allocation of territories, bet rigging, establishment of common sales organizations etc. The aim of such collusion is to increase specific members' income by lowering competition. Laws governing the market and preserving the buyer rights, forbid cartel since these would build a net cultural welfare reduction to the society as a whole. Another argument is that cartels always lead to a loss-loss situation in the economy.

A cartel is a kind of market distortion in which users of the cartels tend to maximize private gains on the cost of cultural welfare. Most cartels belong to 1 of 2 categories. Is the Price-Fixing Cartel and the other is The Market Posting Cartel.

2. 3 Legislation to Curb Market Distortions

Before talking about the methods / guidelines / measures which may have been implemented by the present day day economies, it's imperative to present a concrete idea, how different institutions of economic thought have handled this matter?

2. 3. 1 Classical perspective

Under the doctrine of laissez-faire, antitrust is seen as pointless as competition can be regarded as a long-term powerful process where businesses compete against the other person for market dominance. In a few markets a company may successfully dominate, but credited to superior skill or innovativeness. However, matching to laissez-faire theorists, when it attempts to raise prices to adopt benefit of its monopoly position, it creates profitable opportunities for others to contend. An activity of creative destruction commences which erodes the monopoly. Therefore, government should not make an effort to split up monopoly but should permit the market to work.

The classical perspective on competition was that one agreements and business techniques could be an unreasonable restraint on the average person liberty of investments and people to hold on the livelihoods.

2. 3. 2 Neo-classical synthesis

Neo-Classicals advocated the federal government based antitrust regulations to modify the free market device. A simple neo-classical model of free markets holds that creation and syndication of goods and services in competitive free market segments maximizes communal welfare. This model assumes that new companies can freely enter markets and compete with existing firms, or to use legal vocabulary, there are no obstacles to access. By this term economists indicate something very specific, that competitive free market segments deliver allocative, beneficial and active efficiency.

2. 4 What makes cartels bad?

Cartels inhibit competition since there is certainly little if any incentive to lower prices or provide better quality goods or services through operating efficiently or buying technology and innovative processes. Because of this, consumers are hurt and there may very well be injury to the market as well. In particular, cartels cause injury in the following ways[3]:

(a) Businesses pay higher prices which lead to higher business costs. These higher costs are eventually passed on to consumers by using higher retail prices.

(b) Cartel customers have less incentive to innovate or produce better quality goods or services.

Cartels can also have an effect on the economy all together. Apart from consumers, downstream organizations may, due to higher costs or reliance on local products that are not as ground breaking as those in other countries, be less internationally competitive. Competition not only spurs lower prices and better quality of goods or services; it also helps raise production as consumers may be inclined to buy more at lower prices.

2. 5 How exactly to position a cartel?

Although cartels might occur in almost any industry and can involve goods or services, certain market segments may become more susceptible to cartels because of the nature with their industry framework and just how they operate.

Markets having few competition working in products with more or less similar characteristics which will give rise to cartels provided that high obstacles to entry for other potential entrants is present and have established communication stations.

CHAPTER 3

Methodology

The study is a review study to check on the validity of research hypothesis given below

3. 1 Research Hypothesis

H0: Regularity body especially your competition Commission payment of Pakistan hasn't performed according to their selected portfolio

H1: Regularity body especially the Competition Payment of Pakistan has performed as per their designated collection.

3. 2 Methodological Framework

Since enough time series data series analysis involves a more substantial dataset for econometric / statistical research to generate unbiased / efficient quotes but no time series data comes in circumstance of Competition Commission rate of Pakistan, assessment of the performance will be based on researcher's view regarding the annual performance of CCP keeping in view the well established judgmental guidelines of examination. Researcher will bottom his conclusions / tips on the personal interviews, overview of literature, circumstance studies and supplementary data available through different resources.

Anti-trust laws usually interfere in the existing prices of the precise essential commodities. So the effectiveness of these physiques could be judged by the amount of the costs for the commodities which could be supervised under the anti-trust laws.

3. 3 Analytical Framework

The review has centered on the historical development of the competitive regulations locally and internationally, existing anti-cartel / anti-competition techniques, major interventions made by the CCP and their impacts. Conclusions and advice have been made based on the reviews of the relevant literature.

3. 4 Sources of Data / Information

To review the literature / reports to examine global encounters on competition laws and regulations, historical development of CCP, kind of market interventions, CCP has made in the recent times and other relevant information, different supplementary sources were applied including online information / information / journals and printed materials available the CCP library.

To investigate into the bottlenecks of the existing system combined with the problems, principal as well as supplementary data resources were used. To gather primary data, officers of the CCP were interviewed using well structured questionnaire.

CHAPTER 4

Market Regulations in Pakistan

In Pakistan, regulatory specialists have been institutionalized every once in awhile to effectively execute the government coverage and authority, Many of these regulatory physiques have been produced in different regions of life including banking, electronic and print out marketing, and energy and tariff sector and consumer coverage. A brief information of few important regulatory bodies working in Pakistan is really as under;

4. 1 Pakistan Electronic Press Regulatory Authority (PEMRA)

PEMRA was proven in 2002 under the famous PEMRA ordinance. Main goal to formulate the specialist was to assist in the working of private electric media and was given with facilitating and regulating the establishment and operation of all transmit media and distribution services in Pakistan set up for the intended purpose of international, nationwide, provincial, region, and local or special focus on audiences.

PEMRA's mandate is to

  • Improve the expectations and circulation of information, education and entertainment ;
  • Expand the choices available to the people in the multimedia for nationwide and international news, current affairs, precise religious knowledge and much more including technology, economical and sociable sector concerns;
  • Facilitate the devolution of responsibility and capacity to the grass root base;
  • Ensure accountability, transparency and good governance.

4. 2 Country wide Electronic and Vitality Regulatory Authority (NEPRA)

NEPRA was established through an action, called Regulation of Generation, Transmission and Syndication of Electric Power Function, 1997. Its basic target was to build up and go after a regulatory platform which could ensure provision of safe, reliable, efficient and affordable electricity to the consumers. Your body is certified with the task of perseverance of tariffs for various types of consumers and preparing terms and conditions for them to buy electricity, transmitting and syndication companies, and to present their recommendations to the federal government for notification and possible execution.

As due to the conditions imposed by the international finance institutions to accelerate the process of privatization, WAPDA was split into eight circulation companies (Discos) last year, again carrying out a decision considered by NEPRA. These companies received administrative and also to some extent financial forces.

4. 3 Coal and oil Regulatory Authority (OGRA)

Oil and Gas Regulatory Specialist (OGRA) has been create under the Oil and Gas Regulatory Specialist Ordinance dated 28th March 2002 to encourage competition, increased private investment and ownership rights on the market, protect the general public interest while respecting specific rights and offer effective and productive regulations.

Consequent after the establishment of OGRA on 28th March, 2002 the Natural Gas Regulatory Power (NGRA) was subsumed by the OGRA. All properties and works done by the NGRA were transferred to and secured under the OGRA Ordinance. OGRA was, therefore, in a position to start its functions in respect to natural gas immediately upon its establishment.

4. 4 Securities and Exchange Commission payment of Pakistan (SECP)

The Securities and Exchange Commission rate of Pakistan (SECP) was set up in pursuance of the Securities and Exchange Payment of Pakistan Function, 1997. The SECP became functional in January 1999. It was initially worried about the rules of commercial sector and capital market. As time passes, its mandate has extended to include supervision and regulation of insurance firms, non-banking boat loan companies and private pensions.

SECP is entrusted with the responsibilities of the introduction of modern and reliable corporate sector and capital market, predicated on sound regulatory guidelines, that provides impetus for high monetary progress and foster cultural harmony in the country.

Another activity is to build up an efficient and strong regulatory body that fosters concepts of good governance in the organization sector, ensures proper risk management techniques in the capital market, and protects investors through reactive policy steps and effective enforcement routines.

4. 5 Pakistan Telecommunication Authority (PTA)

The Pakistan Telecommunication Ordinance 1994, established the principal regulatory construction for the telecommunication industry including the establishment of any expert. Thereafter, Telecommunication (Re-Organization) Act no XVII was promulgated in 1996 that directed to reorganize the telecom sector of Pakistan.

PTA's functions are, to modify the establishment, procedure and maintenance of telecommunication systems and provision of telecommunication services in Pakistan and to promote and protect the pursuits of users of telecommunication services in Pakistan. To market swift modernization of telecommunication systems and telecommunication services and also to make recommendations to the government on policies regarding international telecommunications.

In working out its functions and power under the Take action, the expert shall ensure that rights of licensees are duly covered and all of its decisions and determinations are made promptly, in an open up equitable, non discriminatory, consistent and transparent manner. PTA will also ensure that the individuals damaged by its decisions or perseverance are given a due notice thereof and provided with an opportunity to be heard.

4. 6 Stat Loan company of Pakistan (SBP)

Before independence on 14 August 1947, the Reserve Lender of India (Central Loan company of India) was the central loan provider for what is now Pakistan. In May, 1948 Quaid-a-Azam had taken steps to establish the State Bank or investment company of Pakistan immediately. We were holding applied in June 1948, and the state of hawaii Bank of Pakistan commenced procedure on July 1, 1948.

Under their state Bank of Pakistan Order 1948, their state bank of Pakistan was charged with the work to "regulate the problem of bank records and keeping of reserves with a view to obtaining monetary stability in Pakistan and generally to use the money and credit system of the country to its advantage".

A large section of the state bank's obligations were widened when the State Bank or investment company of Pakistan Take action 1956 was introduced. It required their state loan provider to "regulate the economic and credit system of Pakistan and to foster its expansion in the best countrywide interest with a view to protecting monetary stableness and fuller usage of the country's profitable resources". In Feb 1994, their state Bank was presented with full autonomy, through the financial sector reforms.

On January 21, 1997, this autonomy was further strengthened when the government issued three Amendment Ordinances (that have been approved by the Parliament in May 1997). Those included were the State Lender of Pakistan Take action, 1956, Bank Companies Ordinance, 1962 and Banks Nationalization Function, 1974. These changes offered full and exclusive specialist to the State Bank to regulate the banking sector, to execute an independent monetary policy and also to place limit on authorities borrowings from the State Loan provider of Pakistan.

Further, THEIR STATE Standard bank of Pakistan performs both traditional and developmental functions to attain macroeconomic goals. The original functions, may be labeled into two teams:

  1. The key functions including issue of notes, legislation and guidance of the financial system, bankers' loan company, lender of the final resort, banker to Authorities, and carry out of monetary plan.
  2. The extra functions like the firm functions like management of general population arrears, management of foreign exchange, etc. , and other functions like advising the federal government on policy things and keeping close human relationships with international finance institutions.

The non-traditional or promotional functions, performed by their state Loan provider include development of financial framework, institutionalization of savings and investment, provision of training facilities to bankers, and provision of credit to concern sectors. THE STATE OF HAWAII Bank also offers been playing an active part along the way of islamisation of the bank operating system.

CHAPTER 5

Review of your competition Regulation Authorities

In the first part of the chapter, a worldwide review of the concepts and accomplishments of the competition regulatory government bodies is provided. Second part of this chapter is focused on the performance overview of the Competition Commission rate of Pakistan (CCP) like the background, accomplishments and failures.

5. 1 Overview of the Global Experience:

Laws regulating competition are located in over two millennia of background. Roman Emperors and Medieval monarchs as well used tariffs to stabilize prices or support local development.

Modern competition law begins with the United States legislation of the Sherman Function of 1890 and the Clayton Take action of 1914. While other, especially European, countries also had some type of legislation on monopolies and cartels, the US codification of the common law position on restraint of trade had a widespread influence on subsequent competition legislation development.

A general summary of the variations between American and Western european monopolization laws uncovered that North american courts have taken a relatively conventional way toward monopolization law, in the sense of showing reluctance to penalize a company due to its monopoly position, and of allowing large range, at least at the amount of clean legal doctrine, for efficiency defenses to be asserted. Europe, in comparison, has taken an interventionist way.

Global Reviews of Empirical Evidences of Perceived Benefits

  1. In Australia[4], a report conducted by OECD, believed a rise of AS 7000 per annum in the average house carry income due to the imposition of competition laws and regulations. Another study, in 2005 believed a gain around 5. 5 percent of the GDP due to the laws.
  2. In New Zealand and U. K, it has been claimed in several studies that an average increase of 2. 5 percent in the job rate could be related to the efficient execution of anti-trust laws during the period of 1978-98.
  3. In USA, through the 10 years of 90's, believed benefits from decentralization of cartels and large industries had led to about 4 percent per annum upsurge in the productivity of these industries.

5. 2 Competition Commission rate of Pakistan (CCP)

Competition Fee of Pakistan (CCP) was established on 2nd October, 2007 under the Competition Ordinance, 2007. Major goal of this Ordinance is to provide for a legal construction to make a business environment based on healthy competition towards increasing economic efficiency, expanding competitiveness and protecting consumers from anti-competitive tactics.

Monopolies and Restrictive Trade Procedures (Control and Protection) Ordinance' (MRTPO) 1970

Prior to Competition Ordinance, 2007, Pakistan acquired an anti-monopoly law particularly 'Monopolies and Restrictive Trade Tactics (Control and Reduction) Ordinance' (MRTPO) 1970. The Monopoly Control Authority (MCA) was the business to administer this Law.

5. 2. 1 Reasons for the Establishment of CCP

Upto the year 2006, Monopoly Control Authority was performing its functions under the auspicious of the MRTPO, 1970. But in the quickly changing global and nationwide economic environment, government and policy designers started noticing that the MRTPO, 1970 was inadequate to handle competition issues effectively. Many reasons have been quoted in the books regarding the incapability of MPTRO to take care of the new cases of economical fronts. Few of them were

i) the 1970's laws was out of date for a modernizing and speedily transforming market economy;

ii) due to many limitations to check horizontal cartelization in the law, the MCA was not able to meet the anticipations of businesses and the consumers at large;

iii) first technology reforms that liberalized the economy and unleashed the energy of the private sector required a competition insurance plan framework which could promote and protect competition and creativity.

Considering these, Federal government of Pakistan launched an application to build up Competition Insurance plan as a key "second generation reform" effort. Towards this end, the Ministry of Financing and the MCA worked with the World Lender and the Department for International Development (DFID), UK. Due to these work, Competition Ordinance, 2007 substituted the MRTPO.

Competition Ordinance, 2007 considers the existing economic realities as well as corrects the deficiencies of the MRTPO related to definitional aspects, coverage, fines, and other procedural things. The law seeks to prohibit abuse of market dominance, certain types of anti-competitive contracts, deceptive market methods, and mergers of undertakings that substantially reduce competition. That is combined with major emphasis on advocacy role of the Commission rate to promote voluntary compliance and give a 'competition face' to micro and macro-economic procedures.

An important aspect of the new laws was the use of 'carrot and adhere" strategy that made it at par with the modern competition regimes. Regulations provides for higher fines combined with imprisonment for non-compliance; on the other hands, sophisticated leniency provisions that may eventually lead to no fines and imprisonment, subject to certain conditions. To keep high standard of evidence for unearthing top secret cartels, the Competition Payment has legal power to conduct searches and inspections'.

Promulgation of Competition Ordinance, 2007 and establishment of any credible Competition Commission rate will go quite a distance to develop, competition culture and conducive environment for business activity in Pakistan.

5. 3 Successes / failures of CCP

It may be recalled that the commission has in the less than last 2 yrs of its lifetime relocated against cartelization in a variety of areas, collusive tendering, misuse of dominance, undesirable concentrations, and deceptive marketing practices. The parties affected include several lenders, cement companies, the greatest refinery, the stock exchanges, cellular companies, a respected business university, a administration sponsored trust, several papers, a professional relationship, and two fertilizer companies presented by an military trust and sugars mills. Fee has been performing competition impact diagnosis of 15 leading industries of economy.

The laws governing the regulations and workings of CCP enable it to proceed on methodological basis against the sector to check on the possibilities of collusion. The areas so for under analysis included fertilizer, sweets, civil aviation, banking, vegetable ghee, vehicle parts manufacturing, automobile, wheat, cement, drinking water, educational institutes and textile areas.

Although CCP has been participating in a pro-active role in looking into the mistreatment of dominance position by market market leaders in almost all sectors of the current economic climate, the inquiry studies and interventions created by the CCP in the cement and fertilizer manufacturing sector, civil aviation could be mentioned as the major interventions attempted by CCP in handling the cartels and abusing the dominance.

The Global Competition Report 2008-09 has rated Pakistan along with India and Bangladesh in the list of countries which are not having economies of level industries. Rather the report states that there might been around few diseconomies of range operating in large level industries.

In the 2008, CCP has handled 20 cases that have been at the mercy of the Mergers, Prohibited Contracts and Exemptions, Restrictive Techniques, Refusal to provide, Restricting Consumer Choice, Price Mending, Tying of Products, Bilateral Collusion and Collusive Tendering.

While inspecting the initiatives of CCP, it's been observed that these could not be fruitful in the short-run, since these didn't address and show the dominance issues as the maltreatment of the dominance as mentioned by the decisions and effects of the interventions in the cement industry. CCP began investigating the concerns associated with the concrete sector from the year 2007 and failed to prove any such market failure before Sept 2009 when it imposed a charges of Rs 6. 312 billion - or 7. 5 percent of the turnover - on 20 concrete manufacturers for inflating cement prices within an agreement between manufacturing models.

Another major sector that was being intervened by the CCP was the fertilizer industry. End result of the inquiry exposed that inefficiencies been around in the industry due to the insufficient competition conditions so CCP advised the federal government to intervene and improve the express of competition in the fertilizer sector[5]. Fertilizer manufacturers are the latest addition to CCP list of ongoing investigations. Lately fertilizer traders have filed a problem with CCP based on alleged link in sales of urea and phosphate based fertilizer. The CCP has recently issued show cause notice to urea producers to help clarify the problem. Allegations pertain to bundling of sales to help bolster revenues by fertilizer manufacturers as well sale thrust through by exercise of dominance over supply. The interventions of CCP in the fertilizer sector could be viewed as a incomplete success in curtailing the dominance of fertilizer manufacturers and importers because the market accounts were displaying a drop of Urea and DAP prices in the weeks of September-November 2009.

Analysis of interventions in banking sector and sugar industry has also unveiled the inefficiency of the fee in handling the talk about of dominance and abuse of dominance by these industries. CCP granted immunity from cartel like patterns charges to the 35 slated banks due to their non-implementation of ESA (Enhanced Saving Accounts) Scheme although it charged 7 bankers including Habib Bank Ltd, Allied Loan company Ltd, MCB Standard bank Ltd, United Bank Ltd, Saudi Pak Lender Ltd, Atlas Bank Ltd and National Lender Ltd by Rs 25 million each. The penalty enforced on PBA (Pakistan Banking Connection) is Rs 30 million. CCP has released its decision after completion of most proceedings. This decision was regarding the suo-moto notice taken by CCP in response to the ad to present the ESA created by the PBA on behalf of its members bankers, which indicated collusive or cartel like habit. However this action by CCP has been criticized by the financial experts and termed it as involvement in the regulatory role of SBP.

A major insufficiency appeared in the research area of the payment. Commission specialists also indicated having less coordination by other federal government functionaries and division in the positioning effective and successful investigations to probe in to the true situation.

But the cases of the cartels / dominance mistreatment for PIA and Civil Aviation could be provided as the significant accomplishments of the CCP. It offers saved the customers plenty of money as declared just lately by the CCP.

Conclusion

The research from the available literature and interview of some officials of CCP has discovered that, Competition Commission rate of Pakistan is following a interventionist approach predicated on the European model of competition laws. However the pre-requisites for adoption of such procedure are yet to be attained in letter and heart. Such pre-requisites involve comprehensive legal platform, strong administrative and financial control buttons and very skilled manpower, the few to name. Albeit there is some type of legal framework work available in the form of ordinance (CCP Ordinance) but hiatus is accessible when the administrative and financial settings as well as skilled manpower are concerned.

While learning the Modus Operandi of CCP for interventions in several sectors, it was tracked that the process is based on the media accounts / complaints registered by different stakeholders. Apparently there is absolutely no established mechanism used by the CCP to keep a normal check on different sectors which will violate the laws of CCP.

Independent research mechanism to analyze the market conditions was found to be at rudimentary level. Overview of the international mechanism revealed the importance of research along the way of curbing marketing failures.

CCP, being nascent organization, is lacking to handle impact assessment research at this stage, however initial overview of the available evidences unveiled that in spite of certain bottlenecks and discrepancies in the working of the commission, it offers made few good interventions like your choice about the hajj air fares of PIA to guard the rights of the consumers.

Pro-active role of CCP, like disturbance in the workings of other regulatory physiques is also an area of concern. Proper coordination and movement of information across the organizations is missing among these physiques.

Recommendations

  1. All the legislation back-up to the CCP continues to be based on the presidential ordinance (reissued in November 2009). Competition work is still pending with Country wide Assembly. It is need of the time that the act should be carried out at the earliest.
  2. Different regulatory bodies working in different sectors must have a close liaison with one another and with the study institutes so that comprehensive tactical planning could be enacted predicated on the latest research.
  3. CCP should choose a built-in-mechanism for continuous monitoring of the condition of competition within the overall economy. It should provide guiding principles to different industries of economy from time to time so that mistreatment of dominance might not exactly take place.
  4. The biggest menace to the business is from the government itself. Worries is that at any critical involvement of CCP, the federal government pushed upon political grounds may minimize the role, thus getting a halt to the effective working of the group. Therefore it's firmly recommended that company may be provided all legal and constitutional ranges without further wait and protecting the existence and working of this organization

Bibliography

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  1. Peltzman, Sam, 1976. "Toward a far more Standard Theory of Legislation, " Journal of Laws & Economics, College or university of Chicago Press, vol. 19(2), internet pages 211-40
  2. It is a situation when a market or industry is dominated by a small number of retailers (oligopolists). Because there are few sellers, each oligopolist is likely to be aware of the actions of the others
  3. Perloff, J. M. 2006. "Cartels". Available at www. bepress. com/cgi/viewcontent. cgi?filename=8&article
  4. Dhall, V. 2006. Competition law and coverage in India. Presentation at Competition Fee of Singapore
  5. Competition Fee of Pakistan Annual Report 2008
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