Turning Competition Commission into a quasi-judicial body

Dhaka,  Mon,  25 September 2017
Published : 11 Aug 2017, 19:30:02

Turning Competition Commission into a quasi-judicial body

Udai S Mehta and Parveer S Ghuman
With a reported annual average growth rate of 6.0 per cent, Bangladesh's economy has shown great promise and the country has emerged as one of the top performers in the Asian region in the last decade. The country has rightly been touted as the new "Asian Tiger" due to its rising economic growth and rapidly expanding exports.

However, there have been several impediments to Bangladesh's economic growth in the past, which continue to make their presence felt even today. These include regulatory and political barriers to investment in the form of inadequate infrastructure, limited financing capabilities and government funding, bureaucratic delays and corruption. Furthermore, the economy has suffered owing to the presence of a number of market distortions such as cartels, arbitrary rise in prices of essential goods and services, abusive and exclusionary practices by dominant entities, etc. This has resulted in substantial harm to the consumers and has endangered market efficiency.

Keeping regulatory and market-led distortions to competition in mind, Bangladesh enacted the Competition Act in June, 2012 in a bid to "prevent, control and eradicate collusion, monopoly and oligopoly, abuse of dominant position in the market and other anti-competitive practices." Before the enactment of this statute, the Government of Bangladesh in 2011 formed the "Bangladesh Competition Commission" (BCC) under the aegis of the Ministry of Commerce. The BCC is designed to maintain healthy competition in the market. Its role is to ensure the enforcement and implementation of the Competition Act which primarily prohibits anti-competitive activities, such as abuse of dominance and anti-competitive collusive practices. 

THE CURRENT CHALLENGES: Bangladesh represents one of the most incipient competition law jurisdictions of the South Asian region. Despite the enactment of the Competition Act, 2012 (the Act) and the formulation of the Bangladesh Competition Commission (BCC), consumers in Bangladesh are still suffering due to the ominous presence of anti-competitive practices and unregulated monopolies. Notably, emergence of uncontrolled monopolies and lack of fair competition have become common threads across key sectors, such as banking, power, energy, trade, etc. In addition to market practices, governmental policies have incessantly distorted the level playing field across sectors, thereby adversely affecting the business environment for both public and private organisations.

Although it has been almost six years since the formation of BCC, it has still not started functioning properly and all this while, competition-related issues were being handled by the World Trade Organisation (WTO) cell of the Ministry of Commerce (the Ministry). Moreover, the fact that BCC structurally remains within the shadow of the Ministry raises foundational questions about its structural efficiency, operational autonomy and financial independence. If Bangladesh seeks to tackle market and policy-led distortions to fair competition, it has to enforce its redundant competition law by empowering the Commission with strong administrative and judicial powers and simultaneously infusing key components of institutional independence and autonomy within its legal structure.

WAY FORWARD: It is important to note that effective implementation of competition law principles depends on existence of a robust enforcement mechanism which is supported by strong and pro-active competition policy institutions. There is an urgent need to optimise the design of BCC, which should ideally precede its effective implementation. Numerous opportunities are available in this context.

Firstly, several changes need to be brought in vis-à-vis the Commission's present de jure structure and design. To ensure transparency and functional independence, the arbitrary government-led selection procedure needs to be replaced with a fair and objective selection process for prospective members of the Commission. India's experience of establishing a statutory Selection Committee could be replicated. Moreover, considering Bangladesh's volatile political environment, dependence on the government in terms of appointment, allowances and other factors directly affecting the Members could impact the Commission's autonomous functioning and could also influence the focus of its enforcement actions. This calls for transforming the Commission into an independent quasi-judicial body in order to strengthen its adjudicatory powers and also to keep its political relevance intact.

Secondly, with resources constrained and the immense need to build capacity, it could be beneficial for BCC to concentrate its efforts on competition advocacy. It is important to note that advocacy requires building internal capacities first, and BCC can take the help of civil society organisations based in Bangladesh or India, or even contact neighbouring competition authorities. The Commission need not wholly rely on the government in this regard and will have to make extra efforts to start generating momentum in favour of competition reforms. This would also help in building stakeholder (especially consumer) appetite and will aid in putting pressure on the government to discourage monopoly behaviour and promote competition-friendly policymaking. During this process, the Commission would be able to identify anti-competitive practices in core sectors, which are currently hurting the consumer and also enable the Commission to build collaborations (both industry and regulatory) so as to leverage support from other institutions. 

At this stage, there is immense potential for the Commission to build an inherent system which avoids (as much as possible) the omnipresent gale of political actors and tries to build a support system for competition which is bottom-top in nature. Such a system would (a) help tackle regulatory and political barriers to investment; (b) aid in making Bangladesh's businesses globally competitive; (c) help tackle anti-competitive practices in key sectors and empower the consumer through competitive prices and increased choice; and (d) aid in building a robust "competition culture" leading to socio-economic growth. Considering these benefits in mind, it is essential for Bangladesh to immediately ensure the efficient enforcement of competition law and policy by adopting the rules and regulation and thus, provide teeth to the Competition Commission of Bangladesh. 

Udai S Mehta is Deputy Executive Director and Parveer S Ghuman is Senior Research Associate, CUTS International


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