Introduce an effective Competition Policy

Publish: 8:57 PM, June 3, 2021 | Update: 8:57:PM, June 3, 2021

It is not only enough to claim the functioning of a market economy and to feel content that competition expected to be created within such a market economy among different producers of goods and providers of services, would automatically lead to advantages for the consumers in all areas such as quality, price and choice.

For even within a declared market economy such as the one in Bangladesh, the competition may not be automatic. There are restrictive trade practices, monopolies, syndicated activities and other ills hidden under the garb of the so called market economy. The only way to ensure that competition does happen, unfailingly in all areas of the economy, requires that laws to that effect exist and are operated vigorously. A Competition Act was adopted some years ago but an all important Competition Commission under the Act is still to be set up. Thus there is hardly any enforceable Competition Policy in Bangladesh not to speak of its operation.

Not only laws but their applications and the existence of institutional mechanisms are also required to create actual competition as an unavoidable factor. But the starting point of all these things is a competition policy which Bangladesh seems to be lacking at the moment. Thus, the importance of having such a policy was strongly recommended in a seminar that was organized sometime ago by the IFC, an affiliate body of the World Bank and the Bangladesh Enterprise Institute (BEI).

The consumers in Bangladesh, generally, are a very harassed lot at the moment . The absence of comprehensive consumer protection laws is linked to their suffering. Comprehensive consumer protection laws, therefore, need to be introduced at the fastest. But the same would need to be reinforced by a proper competition policy so that consumers can benefit from the gains derived simultaneously from a legal environment protecting their interests as well as from the fruits of competition compulsorily generated by such a policy.

Government in Bangladesh can learn from how other countries operate their competition policies. For example, in the UK, there is the Office of Fair Trading. This public organization is responsible for seeing that the government’s policy on monopolies and competition is carried out. UK laws do not completely prohibit monopolies because the same in exclusive cases can extend greater benefits than disadvantages to consumers but generally the creation of monopolies is discouraged because of the concentration of market power in them that enable them to dictate any prices of goods and services sold by them in a situation of their complete dominance over the market . The Office of Fair Trading collects information on the ways in which companies and trade associations conduct their businesses and recommends actions when it appears that firms are doing things which are against the public interest.

There is also another publicly operated organization, the Monopolies and Mergers Commission (MMC) in the UK. The task of the MMC is to investigate monopolies and to publish reports on their findings. In these reports, the MMC sets out any changes it would like to see in the organization of the industry, the way in which goods and services are marketed, the way in which prices are fixed, and so on. After considering such a report, the government decides what actions should be taken. It may advise or, if necessary, order firms to maker changes in the way they are running their businesses. The MMC can also be asked to investigate and report on the likely effect of proposed mergers. A merger can be vetoed by the government if it thinks it will lead to an unsatisfactory monopoly situation.

A branch of the High Court, the Restrictive Practice Court, also operates in the UK. The task of this court is to examine whether a restrictive practice should be made illegal because it is ‘restricting competition’ that enables a firm or firms to keep prices higher than they would be without the practice. The court examines also whether a practice is preventing other firms from entering the industry and whether practices restrict consumers’ freedom of choice.

The establishment of similar institutions backed up by the introduction of a proper competition policy, need to be considered in the context of Bangladesh at the earliest for the economy and the consumers to get the benefits of the same.