Enforcing competition laws in Bangladeshi markets

As a developing nation, adequate implementation of competition laws is critical for the economic growth of Bangladesh. Successfully mitigating unequal and unfair competition in the market is bound to result in the influx of local and foreign investments, increasing the quality of products and services. Such laws would disallow any parties or syndicates from manipulating the market price and therefore, causing suffering for the consumers.

In 2012, the Government of Bangladesh promulgated the keenly anticipated Competition Act, 2012. The key objective of the statute was to ensure a competitive marketplace by preventing, controlling, and eliminating anti-competitive practices such as collusion between parties to control the price, creation of monopolies and/or oligopolies, regulating and supervising acquisitions and/or mergers of large corporations, and regulating the abuse of the key market position to manipulate the market.

By adhering to this framework, a certain level of healthy competition would be generated among the engaging parties which were subsequently expected to ascertain the best possible rates and the best possible quality of products or services in the market to be accessed by end-users.

The Preamble of the Competition Act, 2012, reads as follows,

"In the context of gradual economic development of the country, it is expedient and necessary to make provisions to promote, ensure and sustain congenial atmosphere for the competition in trade, and to prevent, control and eradicate collusion, monopoly and oligopoly, combination or abuse of dominant position or activities adverse to the competition."

Illustration: TBS

Section 5 of the Act thereby mandates the establishment of the Bangladesh Competition Commission (BCC) to enforce the aforementioned objectives of this law.

History of the competition law in Bangladesh

Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance of 1970 (MRTPO) was promulgated in 1970 by the government of Pakistan to curb the concentration of market power in the hands of a handful of West Pakistani families. Although the Ordinance was promulgated in 1970, it came into force on 17 August 1971.

3 types of conduct were prohibited by the MRTPO, i) undue concentration of economic power, ii) growth of monopoly power, and iii) unreasonable and deceitful trade practices.

Much like the establishment of the Bangladesh Competition Commission, the MRTPO provided for the formation of a quasi-judicial body named the Monopoly Control Authority.

Following the liberation of Bangladesh on 16 December 1971, MRTPO was inherited by Bangladesh but remained unused. In 1990, following a period that saw unprecedented levels of trade liberalisation in Bangladesh, it was realised that the MRPTO had become obsolete and should be replaced by a more appropriate regime. On that note, the Competition Act, of 2012, was brought into effect.

The formation of the Bangladesh Competition Commission (BCC)

As stated earlier, Section 5 of the Competition Act, 2012, enables the establishment of the Bangladesh Competition Commission.  However, it took 4 more years to establish the BCC and a further 3 years to appoint its first Chairman.

Nevertheless, simply establishing the BCC was not the real challenge. The real challenge was to accommodate the principles established by the Competition Act, 2012, within the unique socio-political situation of Bangladesh. Enforcing competition law without adapting to the political, as well as, consumer market landscape could certainly prove adversarial.

Duties and functions of BCC

The functions of the BCC are to eliminate practices having an adverse effect on competition in the market, to promote and sustain competition and to ensure freedom of trade; to inquire into, either on receipt of any complaint or on its own initiative against all anti-competition agreements, dominant position and practice of the enterprises.

The functions also include measures to inquire into other offences specified under this act and to sue and conduct them accordingly; to make rules, policy, instructions of notifications or administrative directions relating to competition, and to give advice and to assist the Government for implementation thereof; to take the necessary plan of actions for developing awareness among the people about the matters relating to competition by way of dissemination, publication and any other means.

It further mentions how to develop mass awareness by way of conducting research, seminar, symposium, workshop and other similar means about the anti-competition agreement and activities and to publish and disseminate the result of such research and to give recommendations to the Government for their effective implementation; to implement, follow or consider any matter relating to competition sent by the Government; and to review the actions taken under any other law for consumer rights protection and implementation.

Following are some of the cases where the BCC was put into action:

Competition Case no 1/2018 (The RAOWA case on anti-competition agreement): The BCC received a written complaint alleging uncompetitive practice by RAOWA. The allegation was that RAOWA has several convention halls which they regularly rent out to clients but the clients are obliged to render service from a singular catering company, Iqbal Hossain Catering Services Limited, as opposed to having the liberty to choose a catering service of their preference. The BCC identified two legal issues – i) whether the complaint fell within the jurisdiction of the Act & ii) whether any provision of the law was breached. For the first issue, the Commission found that the complaint indeed does fall within the ambit of this law and in the case of the second issue, the agreement between RAOWA & Iqbal Catering is in clear violation of provisions of the Act. 

Competition Case No 2/2018 (Chittagong C&F Agents' Association case on cartel): Pacific International Trading filed a complaint with the BCC challenging the mandatory tender rules established by Chittagong Clearing and Forwarding Agents' Association to be uncompetitive and sought for it to be abolished. Among other issues, the BCC found in regards to the aforementioned issue that the rules are indeed uncompetitive and constitute a cartel as described in Section 2(e) of the Act.  

How the BCC can more effectively perform its duties

The BCC must focus on the recruitment of specialised personnel with expertise in the complex matters it handles. Currently, members are appointed from the Civil Service and Judicial Service. However, most of them often lack the necessary technical know-how, theoretical knowledge, or any formal training in the legal and economic aspects of regulating competition.

In addition, to ensure the enforcement of competition law, collusion between corrupt politicians and business leaders trying to create oligopolies must be dealt with decisively, as even slight influence from the government may make the BCC's task even more arduous.

The BCC must focus extensively on promoting its target as well as make maximum use of its position as chief competition regulator through advocacy, engagement and enforcement of the law.

Section 2 of the Act, which stipulates definitions, should be amended with immediate effect and definitions of words such as cartel, contract, and collusion need to be made irrefutable.

Maintaining focus on the basic commodities market should be treated with utmost priority for the BCC as the spike in prices is causing immense distress to the middle and working-class people of Bangladesh.

Although the GoB is blaming monopolistic practices of business enterprises for the unforeseen instability in the commodities market, it can be ascertained that the BCC has not yet been successful in its objective of enforcing healthy competition as well as breaking up the oligopolies that dominate the basic commodities market.

Wasif Jamal Khan is the Co-founder of Bangladesh Forum for Legal and Humanitarian Affairs (BFLHA).

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