Bangladesh is an inimitable country where economic theories do not work, controlling inflation is a example, a number of steps taken by the monetary policy, however high inflation exists. Yesterday I was listening to aninterview with a shopkeeper, according to him there is no dearth of supply of rice. However within a week, price of rice increased by 5-7 taka per Kg, fora marginal person who earns his bread only for buying 1-2 kg of rice every day from where he will earn the additional money. Similar is the case of all daily essentials, onion, green peeper, spices, vegetables etc, we do not know who is controlling the market, what is the role of the government. Beyond doubt, thereare somebody behind this artifice, syndicate, cartel and their chain is so strongto make the market volatile.
Bangladesh has got a Competition Act, through which a Competition Commission (CC)has been established in 2016to promote, ensure and sustain a real competition in trade and prevent control and eradicate collusion, monopoly and oligopoly, combination or abuse of dominant position or activities adverse to competition. They are allowed to establish direct control over anti-competitive activities. The commission needs to take action against evidence based information and proof of investigation to take decisions and support consumers .
Section 15 of the act under the heading of anti-competition agreement,it clearly said that no person shall, directly or indirectly, enter into any agreement or collusion, in respect to production, supply, distribution, storage or acquisition of any goods and services which causes or likely to cause an adverse effect on competition or creates monopoly or oligopoly in the market. There are different provisions in the act to address anti-competitive behaviors to control market.
In the act there is provision for application against any anti-competitive decision made by the commission, however it seems that the application has to be submitted to the commission through Ministry of Commerce and they will conduct the investigation and to give verdict. It is almost impossible for providing a rational judgement without effective investigation before takinga neutral decision.
“Draft regulation of Bangladesh has made Combination application mandatory for those who have specific amount of turnover which is beyond onehundred croretakas for a single company and for one or more companies, it is beyond three hundred crore taka and similar other categories are mentioned in the draft”
Commission has passed several years, by this time the institutional strength would need to be strong as an independent and impersonal organization. It also needs a visionary leadership with enough experience so that the actions taken by the CC is not questionable. Engagement of adequate professionals, legal experts and relevant members to strengthen its capabilities will ensure confidence in the organization.
In this situation, Commission is now going to prepare a new regulation on its section 21 named Prohibition of Combination. In other way it is also used the word merger to mean combination. A draft regulation in the name of Combination regulation 2024 has been prepared. It will give two small players to combine their efforts to act together though an established legitimate practice. The priority should be to make the commission more effective firstbeforegoing for new regulation to increase its scope of work.
Prohibition of Combination policy means, only that combination will be prohibited which actually hamper competition.The competition commission(CC)has given thepower for investigation to prove that it is not hampering the competition, and CC will not approve Combination if it does not disturb competition.There will need specific and confirm detailed data, dedicated manpower to proof any anti-competition activities. Determination of anti-competitive behavior and takingpenal action through public hearing is really a challenging job. On the other hand, enforcement of policies, analysis of merger and investigation of contract agreement needsan effective team of experts.
The draftregulation on Combination has nine provision, which includes definition, classification of combination, committee or investigation committee, their responsibilities, how they will evaluate the application for combination. Application will be made in the proposed format with a fee to the commission, application submission procedure has also been described in the regulation. There are clear instructions in the fifth chapter for selection procedure of the application.In the6th chapter, there is a policy of giving final order for combination or merger. The draft has a chapter for reconsideration if the decision of anapplication isunsuitable. There is a provision for an appeal in the 8th chapter while in the 9th chapter there is a mention that application secrets will be maintained, and some other details have been included. CC is a statutory body with power like those of civil courts in the country, full enforcement of the competition act can help the consumers who always been the target of the market manipulation. Objectives of the new regulation on Prohibition of Combinationgive the impressionfor helpfulcombination.
In Indian Act, Combination refers to merger or amalgamation amongst enterprises, or acquisition of control, shares, voting rights or assets of an enterprise by another person. If a combination causes or is likely to cause an appreciable adverse effect on competition within the relevant market in India, it can be modified/prohibited by the Commission.It is natural to presume that in the case of small size combinations there is less likelihood of appreciable adverse effects on competition in markets. The Act provides for sufficiently high thresholds in terms of assets/turnover, for mandatory notification to the Commission.The value of assets shall include the brand value, value of goodwill, or Intellectual Property Rights etc, in case of India.
Draft regulation of Bangladesh has made Combination application mandatory for those who have specific amount of turnover which is beyond onehundred croretakas for a single company and for one or more companies, it is beyond three hundred crore taka and similar other categories are mentioned in the draft. The policy is to look into the issues of the big players, and in that respect,whatever bethe threshold would need to be as per the context and the present situation prevails in the country. A strong political commitment is utmost important. In future, other relevant issues like goodwill, IPR assets may come into effect to encourage innovation and uniqueness in case of combination.
The new regulation in Bangladesh would definitely go through a number of discussion and validation and comparison with similarly placed countries. In the meantime,the Commission which is already working would need tobe fully operational. So far the commission has given its verdict in some cases, such as; Kazi firms, Viquarunnesa school etc, however it could take up cases which has huge involvement of consumers, could create awareness about such as important institution.
Some of the more common types of abuse by dominant firms such as; tied selling, predatory pricing, exclusive dealing, market restriction etc. are common in the market. Tied selling occurs where a supplier, as a condition of supplying a goods or services require a customer to acquire other goods from the supplier or his nominee.It happens to some cases that the strength of the combination is so big that they can influence policies- there might have political affiliations even.
Harmful combinations would definitely need to be addressed, for proving based on Turn over and relevant other information. In Bangladesh accurate information is inadequate, exaggerated information makes the thing more difficult. Governance issues are very important.Over and above, we believe that competition commission will achieve its trust by providing more effective services in future to earn confidence of the all classes of general people.
The writer is Chief Executive Officer, Business Initiative Leading Development (BUILD)
