The Competition Commission of Bangladesh and regulatory agency- academia nexus

In 1996, Bangladesh took the initiative of adopting a Competition Policy followed by the Singapore Ministerial Conference of the World Trade Organisation. But after the Doha Ministerial Meeting in 2001, the progress lost its track. 

After a long hiatus, in the 2008 General Election, the Awami League (AL) pledged to enact a competition law for ensuring a competitive and sustainable market environment. As the party came to power, it had to face the wrath of certain monopoly mongering business groups in the fear of losing their undue monopoly or syndicate in the market. 

On the other hand, leaving the market unchecked by not regulating prominent companies would have left the SMEs open to be prevented from market competition resulting in the impairment of the entire economy. 

Meanwhile, Bangladesh was quickly progressing towards developing country status from 2010 onwards from LDC status. Considering the prospect of the market economy and all the relevant contours, however, the AL came out successful in fulfilling its promise to pass the Competition Act 2012 (the "Act") aiming to strengthen the Government measures against market syndicates. 

The Act established and empowered the Competition Commission (the "Commission") to monitor the market situation and take steps against unscrupulous corporations and corporate organisations. The Commission was given the power to penalise any person in contempt of the Commission's order with imprisonment for one year and a fine of one lac taka per day. 

The tussle between the business groups and market-friendly government did not just stop with the enactment of the Act. It took the government another four years just to implement the Act to establish the Commission in 2016 followed by another three years to appoint the first Chairman of the Commission in 2019. 

Civil society through their western specs apprehended that the Commission would tame the sharks of the market to make the sea navigable for the small fishes like similar bodies do in the developed countries. It is true that a highly functioning competition commission enhances the rapid growth of the economy. 

But at the same time, it must be kept in mind that developing countries like Bangladesh have some unique socio-economic and political conditions. Strictly enforcing competition law without considering the distinctive nature of the market and political landscape would only adversely affect the market in the long run. 

In that regard, the central question today for Bangladesh is twofold: firstly, whether strict competition enforcement will actually enhance the economic growth of Bangladesh; and secondly, how to strike a balance between competition law enforcement and the unique socio-economic-political scenario of the country. 

Thomas Cheng in his book Competition Law in Developing Countries (Oxford University Press 2020) has answered the first question in the positive. He reasoned that the innovations and productivity constitute the backbone of economic growth. 

Thus, the margin of appreciation for developing countries like Bangladesh goes so far as competition promotes innovation and productivity growth. Hence if competition law enforcement promotes innovation and productivity of the SMEs, then spending state resources on it shall be congenial for the overall economy.  

The next important question is given the lack of state resources, does strict competition law enforcement bring about significant economic growth? If the answer is in the negative, then the best policy would be to utilise these resources in other more contributing sectors of the economy. 

In contrast, if the answer is in the positive, the prime concern would be the approach of such enforcement, i.e., imitation of the approach of the developed countries or a fine-tuned approach for Bangladesh considering the distinctiveness of the market. 

Empirical evidence from the studies of Philippe Aghion, Matias Braun & Johannes Fedderke on the South African Market overwhelmingly support the proposition that strict enforcement of competition law significantly contributes to the growth of market economy. 

Even in our neighbouring country India, competition law enforcement has been proved to be a major tool for the growth of the economy. However, the study of Dr Atiur Rahman and Mohammed Abu Eusuf titled "Citizens' Report on the State of Competition Law in the World – Bangladesh" concluded on a cautionary note that extreme competitiveness can adversely affect the socio-economic climate of a country like Bangladesh. The latest study on the need for competition law enforcement in a Developing Country setting by Thomas Cheng (2020) also came to a similar conclusion. 

Thomas Cheng argued that the Developing Countries should consider the impact of a possible competition law prior to such decisions. Thus, if a decision of the competition law enforcement results in consequential harm to the working segment of the community, the state should be rather slow to intervene. 

But if such intervention makes the overall business environment of the country better, then the competition commission must push for strict enforcement. Hence the margin of appreciation for Bangladesh lies where the employment scenario and business climate of the country stays at equilibrium level. 

However, it is the role of the legal academia to further investigate and find out an optimum situation for the competition and stability of the economy. 

Although the competition law of the country was enacted in 2012, in reality the Commission has been fully functioning only since 2020 with the appointment of all the members of the Commission. The organogram of the Commission requires 73 officials to fully operate the Commission. 

Despite such approval, according to the 2020 yearly report of the Commission, only 30 persons are working in the Commission. So far it has pronounced five decisions against sole dress makers of educational institutions, food distributors of community centres to Chattogram C&F Agents Association and digital platform Evaly. 

While it is understandable that given its relatively young age and inadequate workforce, the proactiveness of the Commission is not noteworthy, it is not clear why the advocacy and awareness building programme of the commission is not properly functioning. 

The Commission has so far organised essay competitions among high school and university students without making any real effort to introduce this new branch of law in Bangladesh to, at the least, all the law and business faculties of the Bangladeshi universities. 

It has not organised any academic conferences, symposiums where the mainstream legal fraternity participated. While the necessity of such apparently academic function might be viewed with a sceptic eye, it must be remembered that without making the legal and business fraternity aware about the existence, applicability and breadth of the law, the commission will not be able to maintain a congenial market environment in the country. 

The awareness must be built within these two communities first. Collaboration of the Commission with higher education institutions shall facilitate the development of an autochthonous jurisprudence of competition law considering our unique socio-economic-political landscape and increase the visibility of the Commission in the public domain as well. 

Md Azhar Uddin Bhuiyan is a Lecturer at the Department of Law, Bangladesh University of Professionals. He can be reached at [email protected].

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the opinions and views of The Business Standard.