Mr. Khalid A. Mirza's opening remarks - SDPI

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SAES-V: COMPETITION LAW & POLICY IN SOUTH ASIA (OPENING SPEECH
AS CHAIRMAN) (September 12, 2012)
First of all, I would like to thank SDPI for the honor and privilege of chairing this
panel discussion on “Competition Law and Policy in South Asia”.
For me, competition law and policy is a most fascinating subject. I have worked
in this area while at the World Bank; I have been the last Chairman of Pakistan’s
Monopoly Control Authority and the first Chairman of Pakistan’s modern
Competition Commission; I have been a consultant on competition issues and I
am now a Member of the newly formed Competition Appellate Tribunal. I find
that on this panel, other than me, there is at least one person who is passionately
committed to this subject, and that is my friend, Mr. Pradeep Mehta, the founder
of CUTS International. He will be the first speaker to be followed by Mr. Iqbal
Tabish, the Secretary-General of the SAARC Chamber of Commerce, who I
expect will express the views of the private sector on this subject --- their hopes,
fears and expectations; and what value, if any, the private sector attaches to
Competition Law Authority. Thereafter, three eminent speakers --- Mr
Mohammad Abdullah Rehan from Bangladesh, Mr Paras Kharel of Nepal, and
my former colleague and friend, Dr Joseph Wilson from Pakistan’s Competition
Commission --- will present their perspectives on the subject.
Before I request Mr. Mehta to take the floor, I would like to give, by way of
background, a brief synopsis of the importance of competition enforcement, the

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challenges in this connection faced in South Asia, the progress made and current
status, and what needs to be done to take the matter forward.
If we are to rely on the private sector as the engine for achieving growth and
prosperity, it is necessary to ensure that markets function efficaciously, that they
are not dysfunctional and that they facilitate free, fair and transparent
contestability among all economic agents on a level playing field --- this is
widely regarded as essential to the achievement economic efficiency.
Competition naturally results in improved productive technologies, enhanced
quality of product, and greater production volumes on a more cost efficient basis -
-- thus a crucial element of competitiveness is competition i.e. economic agents
freely vying with each other, and in rivalry with each other, for greater market
share or relative market supremacy.
Competition is at the core of the market system: without contestability and rivalry
among economic agents on a level playing field, productivity is bound to suffer --
- and so is the consumer. Competition is embedded in markets that function well,
that allow the smooth entry and exit of economic agents, and that, therefore,
naturally encourage entrepreneurship, an essential element of market-led
economic growth. Along with sector-specific regulation, as needed, instituting a
modern competition law and its due enforcement is key to ensuring that markets
function efficiently, entrepreneurship flourishes at all levels, and the economy
grows and prospers. An important element of modern economic management is
the institution of polices that harness the process of competition and eschew those
seeking to subvert this process.

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It is noteworthy that while the “consumer protection” aspect of competition law
and policy has caught the public imagination and is widely recognized, what is
hidden from view is the fact that modern competition laws are really designed to
promote and facilitate businesses and the main beneficiaries are business
enterprises. One often forgets that competition laws protect all consumers, not
merely the lay or individual consumer at the retail level. Actually, business houses
sit on both sides of the demand-supply equation --- they are producers and
suppliers as well as consumers.
It is clear that the relevant Government authorities in South Asia now recognize
the need for, and importance of, competition law enforcement though the progress
made in this respect varies widely from country to country. The competition
regimes in South Asia are neither homogenous nor at a similar stage of
development. Previously, since the late sixties and early seventies, India,
Pakistan, and Bangladesh had in place old style, moribund, normative,
prescriptive and somewhat ineffective anti-monopoly laws.
India was the first to introduce modern competition legislation in 2002. However,
this got bogged down by legal challenges and wrangles, but after necessary
amendments --- required by the Indian Supreme Court and eventually legislated
by Parliament -- the Indian Competition Commission and the Indian Competition
Appellate Tribunal were duly constituted and are now in full swing.

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Pakistan’s new competition law --- which is based on the principles embodied in
the Treaty of Rome and has striking similarities as well as dissimilarities as
compared with the Indian legislation --- was initially promulgated as a
Presidential Ordinance in 2007, and later, after being re-promulgated twice, it
was, as directed by the Supreme Court, duly enacted by Parliament in October,
2010. During its first five years, Pakistan’s Competition Commission has been
able to vigorously enforce and implement all aspects of the law and is widely
acknowledged to have operated at close to globally accepted standards of agency
effectiveness. Also, a Competition Appellate Tribunal has also been constituted
as stipulated in the law.
Bangladesh has only this year enacted a modern competition law. Sri Lanka’s
previous, long-standing, fair trade legislation was replaced in 2003 by a new law
with a strong consumer orientation but without significant elements like, for
instance, merger control. And Nepal has had a law to promote and enforce
competition since 2007 and the Nepalese Competition Board has engaged in
efforts to implement this law.
Broadly speaking, from what I have observed, the challenges entailed in
introducing and implementing a modern competition regime in South Asia are
firstly, cultural, and secondly, socio-political. As regards the cultural aspect, the
entire outlook and approach in South Asia is remarkably feudal despite the fact
that large swathes of South Asia have either been socialist for considerable
periods of time or have flirted shamelessly with socialism. Asians are not fazed

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by abuse of dominance, collusive behavior, exploitation etc albeit they would
consider it shocking if those with wealth and power were not charitable towards
the needy and the dispossessed. This is the way the cookie crumbles in South
Asia; this is the Asian paradigm. It is worth noting that South Asians cannot
distinguish between “profits” and “profiteering” --- it is all the same to them!
Thus, Robber Barons are generally-speaking acceptable in South Asia as long as
they are the giving sort!
Most people in South Asia appear to take anti-competitive behavior and
exploitative conduct in their stride and consider it a part of life. Thus
competition or anti-trust enforcement does not come naturally to Asians.
Now, as regards the socio-political dimension:
- firstly, South Asian Governments find it hard to truly and genuinely
accept a competition agency’s independence and the agency is constantly
fighting a rearguard battle to remain independent;
- secondly, the political will to support a competition agency discharge its
responsibilities is weak and indeterminate, and is often undermined by
other, perhaps, conflicting priorities, cronyism etc.;
- thirdly, competition agencies are without access to tied and secure sources
of funding and are thus unable to implement credible enforcement and
advocacy programs;

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- fourthly, the judicial system just does not work thereby hampering the
competition agency’s ability to enforce. Unpredictability, inordinate delays,
over emphasis on procedure over substance, total apathy, and rank
ineptitude are the hallmarks of the judiciary in many South Asian countries
adversely affecting the work of competition agencies;
- fifthly, sector-specific regulators and other Government agencies often
violate the competition law in letter or in spirit posing an enormous hurdle
for the competition agency; and
- sixthly, building and sustaining an agency with credible capacity to
deliver is largely constrained by the scarcity of much-needed skilled and
competent professionals such as micro-economists, forensic accountants,
lawyers, financial analysts, IT experts, and PR people.
You will appreciate that in such a formidable environment, a competition agency
operates from the back foot, and does not have the luxury of adopting any kind of
a holistic “integrated compliance strategy” or an over-arching, problem-solving
approach based on identified concentrations, vulnerabilities, patterns of noncompliance.
Of necessity, at present most Asian competition agencies would
have to take a reactive approach and deal with whatever comes through the door.
Later, with a little more sophistication, an agency may graduate just one step to
“picking important problems and fixing them”.
Clearly, most competition agencies in the region need a lot of capacity building to
achieve optimal levels of agency effectiveness. This is apart from the need to

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ensure that these agencies are endowed with competent, bold and gutsy leadership
fully capable of attracting, motivating and stimulating professional staff to higher
and higher levels of performance.
Further, now that concerted efforts are being made to increase the volume of trade
and investments, and other forms of economic interaction within the SAARC
region, it would not only make sense for competition authorities to co-operate
with each other in their efforts to enforce competition norms at the operational
level but also SAARC Governments must develop viable mechanisms to
calibrate their policy actions, in particular with regard to State aid or support
provided to national enterprises, so as to achieve the goal of a level playing field
for all economic agents across the region.
As a first step in the direction of regional co-operation, I had suggested in
January, 2010, the setting up of a South Asia Competition Network which would
be a forum for exchange of views on matters of mutual interest, and to determine
ways of co-operating and supporting each other in order to enhance operational
effectiveness at the regional level. It would also
highlight the peculiar issues
and sensibilities of this region so that these aspects are fully taken into
consideration in the determination of global standards for enforcement of
competition norms. The upcoming World Competition Day on December 5 th ,
conceived and strongly promoted by Pradep Mehta against all odds, would be
propitious occasion to kick-start the South Asia Competition Network in Delhi.
Thank you