A study conducted by the Competition Commission of Pakistan (CCP) has highlighted possible competition concerns in the e-commerce/online platforms market.
The study, “Competition and Trade Practices Regulation in the Era of E-Commerce, Big Tech and Data Sciences”, was presented during the 23rd meeting of the Competition Consultative Group (CCG).
The study on e-commerce highlights possible competition concerns in the e-commerce/online platforms market, which may fall under Section 3 (abusive conduct by dominant platforms) and Section 10 (deceptive marketing practices) of the Competition Act, 2010, and analyzes regulation strategies in more developed countries across the globe as well as other countries in the region.
Chairperson CCP Rahat Kaunain Hassan, who chaired the meeting, clarified that CCP did not aim to become a data protection agency or over-regulate, a view which PSX and SECP senior officials endorsed along with applauding the said initiative. Instead, she said, the study aimed to provide guidelines serving as a minimum benchmark of basic disclosures companies should adhere to, to avoid deceptive marketing practices. The ultimate aim is to facilitate businesses and create a competitive, innovative, and fair marketplace for online businesses in Pakistan in order to promote growth and allow them to compete with other businesses globally, she said.
In this connection, the chairperson also stressed that stakeholders needed to come forward to assist CCP. She cited the initiative of e-commerce where CCP had sought comments from 35 e-commerce businesses, out of which, only eight responded.
During the meeting, the participants were also briefed on the CCP’s advocacy and policy initiatives in e-commerce and small and medium enterprises (SME) sectors, the developments on legal fronts, and the recent enforcement actions.
Briefing the participants, the chairperson stated that CCP accelerated the pace of enforcement with the imposition of the highest-ever penalty of around Rs. 40 billion in the sugar sector. She said CCP completed 28 inquiries, conducted 17 search inspections, and passed 12 orders during the last single year, adding that CCP also overcame challenges and had started receiving three percent of the fee and charges collected by various regulators (Pakistan Telecommunication Authority, Securities & Exchange Commission of Pakistan, National Electric Power Regulatory Authority, Oil & Gas Regulatory Authority, and Pakistan Electronic Media Regulatory Authority). Several important inquiries in various significant sectors are ongoing, she added. Moreover, she said, the Competition Appellate Tribunal is now functional, which will assist in clearing the backlog of cases.
She also mentioned the general difficulty in concluding proceedings due to the parties continuously seeking injunctive relief from courts even at nascent stages of an inquiry, such as calls for information and search and inspections.
Other industry participants stressed the need to maintain a balance where the onus of compliance should remain on the seller. It was also highlighted that startups should generally be granted a grace period from compliance with the said proposed guidelines in order to enable them to effectively enter the market.
Another study, “Improving Economic Efficiency in Small-and-Medium Enterprises in Pakistan”, was also presented during the meeting.
The study reviews the SME Policy Framework in Pakistan and is based on two surveys concerning demand-side constraints and supply-side issues in SMEs’ growth and challenges in SMEs’ financing. It offers recommendations to the government and other concerned entities focusing on competition aspects, i.e., to ensure a level-playing field for SMEs to compete, which will lead to the growth of the SME sector. In this regard, a representative from the Banks Association highlighted that banking companies and SBP had collaborated to create an SME Asaan Finance Scheme (SAAF) to help provide financing to SMEs, and PSX had also initiated the GEM Board, which had more lenient listing requirements and a lower listing fee for SMEs.
During the CCG meeting, certain other competition concerns were also highlighted relating to the polyester yarn industry, the membership mechanism of PASHA, milk prices, and the steel industry in relation to the cost of raw materials for the construction sector.
The chairperson concluded the session by emphasizing that the role of the competition regulator was that of an umpire, and whenever it would call for policy intervention, the commission would voice concerns as per its mandate. She said that it would act without fear and favor against anti-competitive practices and market distortions. She said that the commission strongly believed in an effective enforcement which was globally viewed as best advocacy.
The meeting was attended by CCP Members Shaista Bano, Bushra Naz Malik, Mujtaba Ahmad Lodhi, and other senior officials along with the representatives from regulatory bodies, corporate sector, SMEs, online trading platforms, Pakistan Stock Exchange (PSX), chambers of commerce, and consumer associations.
CCG is an informal think tank set up by CCP in 2008 and recently revived to solicit feedback and suggestions on competition-related issues, policies, and enforcement from public and private sector representatives, the legal community, academia, media, and the government.
