ISLAMABAD:
The Supreme Court has urged the Competition Commission of Pakistan (CCP) to advise the government on policies aimed at promoting economic efficiency and reducing the cost of doing business, saying competition advocacy should be used as a preventive tool rather than relying primarily on penalties.
The observations came in a nine-page judgment authored by Justice Jamal Khan Mandokhail while deciding an appeal filed by the Pakistan Vanaspati Manufacturers Association (PVMA) against a Rs50 million penalty imposed over violation of the Competition Act, 2010.
The division bench observed that Article 38 of the Constitution places an obligation on the government to promote the economic and social well-being of the people.
It noted that appropriate government policies could create incentives to reduce the cost of doing business and, consequently, the cost of producing and supplying goods, helping facilitate lower prices for consumers.
“The commission may also advise the government in this regard,” the judgment said, adding that competition advocacy could bring positive behavioural changes among manufacturers, consumers and suppliers.
The court observed that where the CCP notices a practice or proposed conduct that could raise concerns under the Competition Act, it can first bring the matter to the attention of the undertaking or association concerned and, where appropriate, advise it that the proposed action is inconsistent with the law, rules or orders issued under it.
“It is preferable to prevent an undertaking or an association of undertakings from entering into an agreement or making a decision having the object or effect of preventing, restricting, or reducing competition within the relevant market,” the court said.
The judgment stressed that the CCP must create awareness and exercise its advocacy role before a violation occurs. Enforcement, it said, is only one part of the commission’s mandate and should be exercised consistently with the broader objective of promoting economic efficiency and preventing anti-competitive behaviour, rather than merely imposing penalties.
The court said the power to impose penalties was an important component of the CCP’s mandate but constituted a measure of last resort when efforts to promote a culture of competition and secure compliance with the law had failed.
However, it clarified that the commission was not required in every case to exhaust its advisory or advocacy functions before initiating enforcement proceedings.
“Where the material discloses a clear contravention of any provision of the Act, it must exercise its enforcement jurisdiction in accordance with law,” the judgment said.
