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The Financial Express

Competition Commission: Emerging challenges

| Updated: October 20, 2017 06:19:22


Competition Commission: Emerging challenges

As the world commemorated the World Competition Day on December 05, 2016, it is critical to note that four years after the enactment of the Competition Act-2012, the country has finally got its implementing agency, the Competition Commission. A chairman of the commission has already been appointed. Nevertheless, the commission is yet to start functioning fully due to dearth of adequate logistics and other supports.
A recent meeting at the ministry of commerce, however, stressed on the functioning of the commission in full swing soon. The relevant rule to implement the competition law has been developed. This is crucial for smooth functioning of the commission.
While the process of functioning is on the roll, emerging challenges at the global scale will put the commission under additional pressure. Beside the challenge to determine the level of anti-competitive behaviour in the economy, intellectual property right (IPR) and virtual competition have emerged as two major challenges.   
DISTORTION OF COMPETITION: There is no doubt that anti-competitive behaviour is widespread across the country and as a result, both consumers and businesses are suffering. Though there is no perfect competition in the real world, there are rules and regulations to regulate competition.
Consumer Unity and Trusts Society (CUTS) International, a Joipur-based multi-research organisation, has long been working on competition policy and law. The organisation has developed a 'competition impact assessment toolkit.' The document argues that the law is the framework of rules and regulations designed to foster a competitive environment and curb anti-competitive practices. Anti-competitive practices or behaviours include: cartelisation, price fixation, abuse of dominant position, anti-competitive mergers or takeovers that cause or have potential to cause adverse effect on competition in the market.
The toolkit document also mentions that competition can be distorted both by anti-competitive behaviour or practices of enterprises and by policies and regulations of national or local government.
Thus, it is important to understand and define the origin or sources of anti-competitive practices or behaviour.  Both the private and public sectors may adopt such practices to distort market and indulge in profiteering. Competition commission has to determine the level of anti-competitive behaviour with substantial evidences or proves. These are difficult tasks indeed.
Distortion of competition is a situation where businesses or companies are not competing under equal condition posed by several factors characterised by the anti-competitive behaviour of firms and some competition distorting government policies and regulations.
Moreover, competition policy as a broad concept seeks to harmonise all government policies like foreign direct investment (FDI) policy, trade policy, industrial policy etc).
IPR AND COMPETITION: This year the theme of the world competition day was 'Interface between competition and intellectual property rights (IPRs).' This indicates a rise of significant complexity in the domain of competition across the world.  
To put it simply, both competition policy and IPRs are about enhancing competition. While competition policy focuses on streamlining competition with rules and regulations, IPRs promote creative competition among the businesses and firms. IPRs actually 'encourage dynamic innovation by offering inventors and creators temporary exclusive rights to produce, license, and distribute their new products and technologies' while competition policy 'aims to limit the unwarranted exercise of market power by preventing firms from engaging in anticompetitive behaviour.'
But, there may be an element of conflict among the objectives of the two. IPRs, in many cases, may become anti-competitive. For instance, patents and copyrights may restrict competition among firms in some cases.
So, the interfacing between these two regulatory regimes is a complex thing. Developing countries like Bangladesh will find it difficult to deal with as its IPR regime is not very strong. For example, the total number of new patent applications stood at 340 last year which was 293 in 2014. Of the total patent application last year, only 40 applications came from local or resident sources while the remaining 300 from foreign or non-resident sources. Again, the total number of approved patent applications declined to 101 last year from 121 in 2014. Of the total approved applications, only 11 were local while the rest 90 were non-resident.
RISE OF VIRTUAL COMPETITION: The digitalisation of the global economy turns the twin issues of competition policy and consumer protection more complex than ever.
With the growth of price comparison websites, dynamic pricing, web-promotions and mobile phone apps, the virtual world seems to deliver in lowering prices, improving qualities, widening the selection of goods and services, and hastening innovation.  Shoppers having internet access and bargaining impulse can find a universe of products at their fingertips.  
In their latest book 'Virtual Competition: The Promise and Perils of the Algorithm Driven Economy', Ariel Ezrachi and Maurice E Stucke have argued that the new environment of competition is gradually changing the nature and character of competition. By looking carefully at the online world, one can now find that this change is in the companies' behaviour in general leading to a transformation of the process of competition. The book was released two months ago in Geneva, at a conference of the UNCTAD's Inter-Governmental Group of Experts (IGGE) on Consumer Protection Law and Policy.
During the conference, experts and participants observed that consumer protection is not only a moral imperative but also good economics. They argued that countries have to coordinate if the rights of consumers are to be safe from harmful goods and services. Some countries need legislation and institutional reforms, some need to strengthen their monitoring mechanism, while others need to increase cooperation with their counterparts. Some experts also cautioned that due to digitalisation, a relatively small number of companies have made remarkable outreach. Thus, many consumers increasingly rely on a small number of large digital companies. This combination of technology and size give them huge power as it is becoming increasingly difficult for consumers to walk away even if they are not happy with the product/s.
CHALLENGE FOR BANGLADESH: Virtual competition is rising in Bangladesh thanks to the rise in e-commerce. While e-commerce brings some comfort to the consumers, it also enhances the risk of consumer deprivation. Moreover, small and medium-scale firms and businesses are likely to find it difficult to compete with big ones in the virtual world.
The newly-formed competition commission has to consider the rising virtual competition as one of its areas of attention in near future. It also has to look into the IPR regimes in the long-run. No doubt, the commission is kicking off at a critical juncture of the complex world of competition.  
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