Competition promotion board fails to curb cartels

- Rajesh Khanal, Kathmandu

Apr 9, 2018-

Inaction on the part of the Competition Promotion and Market Promotion Board has allowed syndicates and cartels to flourish, officials said. The public has suffered because the board, which was formed more than a decade ago, has not been implementing competition laws effectively.

Two recent instances of cartels have been blamed on the weak implementation of government laws. In the first case, the Nepal Bankers Association forced NIC Asia Bank to revise interest rates on deposits.

In the second case, bus services operating on Araniko Highway staged a protest against the government for providing a route permit to a new company Mayur Yatayat and breaking up their monopoly.

The government enacted the Competition Promotion and Market Protection Act in 2007 with the aim of discouraging unfair competition.

“No person or enterprise that produces or distributes any goods or services shall, with an intention to limit or control competition, enter into, or cause to be entered into individually or collectively, any agreement with any other person or enterprise that produces the identical or similar goods or services,” states the act.

As per the act, no individual or collective firms can directly or indirectly

determine the purchase or sale price of any goods or services, limit or control production, distribution or markets of any goods or services or limit or control investment, limit or control the overall quantity of the production or distribution of any goods or services or reduce the retail consumption quantity of such goods or quality thereof or restrain the sale and distribution of such goods or services.

Based on the provision of the act, the government formed a separate board that is mandated to assess the lists of enterprises which produce or distribute various goods or services and hold a dominant position.

The 11-member board is led by the supplies secretary and includes representatives from the Industry and Commerce ministries and consumer rights groups. The director general of the Department of Commerce is the member secretary. However, the board has remained inactive for almost a decade.

Mukunda Prasad Poudel, joint secretary at the Ministry of Industry, Commerce and Supplies, said the board structure and related bylaws were in place.

“However, the board has remained inactive for a long time,” said Poudel, adding that the ministry conducted a board meeting only last year. According to Poudel, the ministry has started work to revise the structure in order to make it effective for market regulation.

The ministry has started a study of similar practices in foreign countries. “Based on a preliminary study, we have seen the need for a high level commission to make it effective and have aimed to prepare a draft within three months.”

Ministry officials said the board had remained inactive for a long time due to the weak portfolio of the Supplies Ministry which was a separate government entity before the federal government recently merged three ministries with separate portfolios including industry, commerce and supplies.

“The board has been mandated to regulate influential large firms and unions which is not possible for a secretary-level chairman to do,” a source said under condition of anonymity. “Intervention by political parties and large firms has forced the board to keep a low profile.”

Tilak Bikram Pandey, an advocate at Pioneer Law Associates, said the defunct board led to a proliferation of syndicates and cartels in various businesses. “The left alliance government now has to revitalise the board that was envisioned to protect and promote local markets,” Pandey said.

Published: 09-04-2018 09:18

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