On Tuesday, (6th March), Naveed Qamar, an opposition member in the Parliament proposed amendments in the Monopoly Control Authority law, saying that MCA, in its existing form, had not been able to check the machinations of cartels, hoarders and manufacturers.
He alleged that those indulging in such machinations, particularly in cement, sugar and steel industries, were experienced people and could easily manipulate prices. An effective role of the MCA was, therefore, necessary to control monopolistic trends.
Responding to the proposed amendments, Parliamentary Finance Secretary Omar Ayub agreed with the opposition lawmaker, adding that the government was fully aware of the need to make changes in the MCA law and in this connection proposals had already been sought to make the MCA more effective.
He gave an assurance that reasonable suggestions would be given due consideration and the government would not hesitate to make changes in the MCA law whenever required to suit the changing times.
It needs to be noted that this is not the first time that the issue of strengthening the MCA with a view to checking monopolistic trends in the country has been raised.
The people at large are unhappy about the unfettered influence of some large groups of industries, which exploit the situation at the expense of the consumers, while public authorities tend to gloss over the situation rather sheepishly.
Only a few days ago, the State Bank had to confess in its latest quarterly report "that in the presence of market collusion, the absence of effective regulatory bodies has contributed significantly to price pressures in many segments of the economy such as cement, automobiles, wheat etc" and "illegal and immoral speculative activities need to be reined in through implementation of anti-trust legislation in letter and spirit, as otherwise such activities would undermine the public support for liberalisation."
The MCA, it may be mentioned, was launched after the promulgation of the Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance 1970.
Obviously, it has failed to deliver and only fuelled discontent over its inadequacy to protect the consumers from the excesses of hoarders, profiteers and some traders and industrialists bent on taking undue advantage of the situation.
Ideally, in a free market economy, the forces of supply and demand should be allowed to play their role in price determination but in certain cases when the market functioning is not perfect and competition is not intense, short term supply bottlenecks and interruptions do provide an opportunity to unscrupulous elements in the market to collude to make undue profits.
In order to deal properly with such exigencies, stringent anti-monopoly laws have been enacted by most of the countries which have periodically invoked these laws to punish the guilty parties.
In certain cases, even mergers are disallowed to discourage monopolies and promote competition.
In Pakistan, the need for strengthening the MCA is even greater for several reasons.
The government cannot be oblivious of the social obligations in an economy where at least necessities of life have to be made available at reasonable prices to all segments of society. If the prices of items like wheat flour, edible oils, sugar and cement are allowed to be manipulated and go beyond the reach of the ordinary people, there could be social unrest and turmoil in the country.
Therefore, while accelerating development, it has to be ensured that basic human needs of all the sections of society are met.
Also, since groups likely to benefit from a weak anti-monopoly regime belong to richer classes, an indifferent behaviour of the government would further increase income inequalities in the country and make the life of poor people more miserable. Selfishness on the part of vested business groups could then derail the whole reform process.
Keeping everything in view, it would be better for the government to make necessary amendments in the relevant laws to strengthen the MCA in order to control and prevent the emergence of monopolistic tendencies in the country and get it through the parliament as soon as possible.
Fortunately, an opportunity has been provided by an influential member of the opposition to do that and the government should make full use of it.
However, it may be emphasised that amendments should be designed and implemented in a way that they do not become a deterrent to investment but serve only the purpose of price stability.