Enforcement of Competition Laws in Bangladeshi Markets

Applying competition law without adapting to the political landscape and the consumer market landscape could be counterproductive

Wasif Jamal Khan

April 19, 2022, 1:10 p.m.

Last modification: April 19, 2022, 1:12 p.m.

Sketch: TBS


Sketch: TBS

As a developing country, proper enforcement of competition laws is essential for Bangladesh’s economic growth. Successfully mitigating unequal and unfair competition in the market will inevitably lead to an influx of local and foreign investment, increasing the quality of products and services. Such laws would prohibit any party or syndicate from manipulating the market price and thereby causing suffering to consumers.

In 2012, the government of Bangladesh enacted the long-awaited Competition Act 2012. The main objective of this law was to ensure a competitive market by preventing, controlling and eliminating anti-competitive practices such as collusion between parties to control the price, the creation of monopolies and/or oligopolies, regulating and supervising acquisitions and/or mergers of large companies, and regulating the abuse of key market position to manipulate the market.

By adhering to this framework, a certain level of healthy competition would be generated between the engaging parties who then had to determine the best possible rates and the best possible quality of products or services in the market to which the end users would have access.

The preamble to the Competition Act 2012 reads as follows:

“In the context of the country’s progressive economic development, it is expedient and necessary to take steps to promote, ensure and maintain an atmosphere conducive to competition in trade, and to prevent, control and eradicate collusion, monopoly and corruption. ‘oligopoly, the combination or abuse of dominant position or anti-competitive activities.’

Illustration: TBS

Illustration: TBS

Illustration: TBS

Section 5 of the Act thus prescribes the establishment of the Bangladesh Competition Commission (BCC) to enforce the above-mentioned purposes of this Act.

History of competition law in Bangladesh

The Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970 (MRTPO) was enacted in 1970 by the Pakistani government to curb the concentration of market power in the hands of a handful of Western Pakistani families. Although the ordinance was enacted in 1970, it went into effect on August 17, 1971.

3 types of behavior were prohibited by the MRTPO, i) undue concentration of economic power, ii) growth of monopoly power and iii) unreasonable and deceptive business practices.

Like the creation of the Bangladesh Competition Commission, the MRTPO provided for the formation of a quasi-judicial body called the Monopoly Control Authority.

After the liberation of Bangladesh on December 16, 1971, the MRTPO was inherited by Bangladesh but remained unused. In 1990, after a period of unprecedented trade liberalization in Bangladesh, it was realized that the MRPTO had become obsolete and needed to be replaced by a more appropriate regime. On that note, the Competition Act 2012 came into effect.

The formation of the Bangladesh Competition Commission (BCC)

As mentioned earlier, Section 5 of the Competition Act 2012 authorizes the establishment of the Bangladesh Competition Commission. However, it took 4 more years to establish the BCC and 3 more years to appoint its first president.

However, simply creating the BCC was not the real challenge. The real challenge was to adapt the principles established by the Competition Act 2012 to the unique socio-political situation of Bangladesh. Applying competition law without adapting to the political landscape as well as the consumer market landscape could certainly prove to be divisive.

Duties and Functions of BCC

The functions of the BCC are to eliminate practices having an adverse effect on competition in the market, to promote and support competition and to ensure freedom of trade; to investigate, either upon receipt of any complaint or on its own initiative against all anti-competitive agreements, dominance and corporate practice.

The duties also include measures to investigate other offenses specified under this Act and to prosecute and conduct them accordingly; establish rules, policies, notification instructions or administrative instructions relating to competition, and advise and assist the government in their implementation; take the necessary action plan to raise public awareness of competition issues through dissemination, publication and any other means.

It further mentions how to develop mass awareness through the conduct of research, seminars, symposiums, workshops and other similar means on the anticompetitive agreement and activities and how to publish and disseminate the outcome of these research and make recommendations to the government for their effective implementation; implement, monitor or review any competition-related matter referred by the Government; and to review measures taken under any other law for the protection and enforcement of consumer rights.

Here are some of the cases where the BCC has been put into action:

Competition case n° 1/2018 (The RAOWA case on the anti-competitive agreement): The BCC has received a written complaint alleging anti-competitive practice by RAOWA. The allegation was that RAOWA has several convention halls which they regularly rent out to customers, but customers are forced to provide the services of a single catering company, Iqbal Hossain Catering Services Limited, instead of having the freedom to choose a catering service of their preference. . The CWB identified two legal issues – (i) whether the complaint fell within the jurisdiction of the law and (ii) whether a provision of the law had been violated. For the first question, the Commission concluded that the complaint did indeed fall within the scope of this law and in the case of the second question, the agreement between RAOWA and Iqbal Catering clearly violated the provisions of the law.

Competition Case No. 2/2018 (Chittagong C&F Agents’ Association cartel case): Pacific International Trading filed a complaint with the BCC challenging that the mandatory bidding rules established by the Chittagong Clearing and Forwarding Agents’ Association are uncompetitive and called for their abolition. Among other issues, the BCC found, with respect to the aforementioned issue, that the Rules are indeed non-competitive and constitute a cartel as described in Section 2(e) of the Act.

How can the BCC perform its functions more effectively

The BCC must rely on the recruitment of specialized personnel with expertise in the complex files it handles. Currently, members are appointed from the civil service and the judiciary. However, most of them often lack the necessary technical know-how, theoretical knowledge or any formal training in the legal and economic aspects of competition regulation.

Furthermore, to ensure the enforcement of competition law, collusion between corrupt politicians and business leaders trying to create oligopolies must be dealt with decisively, as even a slight government influence can make the task of the BCC even more strenuous.

The BCC should focus extensively on promoting its target audience and making the most of its position as the lead competition regulator through advocacy, engagement and enforcement.

Section 2 of the law, which provides definitions, should be amended with immediate effect and definitions of words such as cartel, contract and collusion should be made irrefutable.

Maintaining a focus on the commodity market should be treated with the highest priority for the BCC, as soaring prices are causing immense distress to the middle and working classes of Bangladesh.

Although the GoB blames the monopolistic practices of trading companies for the unforeseen instability in the commodity market, it can be seen that the BCC has not yet succeeded in its objective of imposing healthy competition and breaking the oligopolies that commodities dominate. market.

Wasif Jamal Khan is the co-founder of the Bangladesh Forum for Legal and Humanitarian Affairs (BFLHA).

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.