Economic globalization has a variety of effects and one of those effects is building up new cross border commercial relationships and also attracting foreign direct investment.
With FDI there is a big concern for the policy maker that how could they maintain a healthy competition in the market?
To mitigate the monopolistic practices, the antitrust laws come into existence as the main mechanism to control unfair trade practices in the market.
Competition law, often known as antitrust law, is a body of law aimed at promoting and maintaining market competition by prohibiting monopolistic practices and agreements among businesses in a specific country.
Bangladesh's government passed the much-anticipated Competition Act of 2012.
The Competition Act of 2012's preamble runs as follows:
"In the context of the country's gradual economic development, it is expedient and necessary to make provisions to promote, ensure, and sustain a favorable environment for trade competition, as well as to prevent, control, and eradicate collusion, monopoly and oligopoly, combination or abuse of dominant position, or anti-competitive activities."
The statute's main goal was to ensure a competitive marketplace by preventing, controlling, and eliminating anti-competitive practices like price collusion, the creation of monopolies and/or oligopolies, regulating and supervising large corporation acquisitions and/or mergers, and regulating the misuse of a key market position to control the market.
Bangladesh's competition legislation history
The government of Pakistan passed the Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance of 1970 (MRTPO) in 1970 to prevent the consolidation of market power in the hands of a few West Pakistani families.
Despite the fact that the Ordinance was passed in 1970, it only went into effect on August 17, 1971.
The MRTPO established a quasi-judicial agency called the Monopoly Control Authority, similar to how the Bangladesh Competition Commission was established.
The MRTPO forbade three sorts of behavior: I undue concentrations of economic power, ii) monopolistic power increase, iii) unfair and deceptive trade practices.
It was inherited by Bangladesh after its independence, but it was never used.
Following a period in which Bangladesh experienced unprecedented levels of trade liberalization, it was realized in 1990 that the MRPTO had become antiquated and needed to be replaced with a more appropriate regime.
The Competition Act of 2012 came into effect on that note.
To restrict the unfair trade practice section 15 of The Competition Act of 2012 has defined anti-competitive agreements where it has been stated that: "No one shall enter into any stated or implicit agreement or collusion in the aspects of production, supply, distribution, storage, or acquisition that has or is likely to have a negative impact on competition or creates a monopoly or oligopoly in the market. Activities which might include; determines out-of-the-ordinary purchasing or sale prices, in all processes, including bid rigging, determines the false pricing, production, supply, markets, technical advancement, investment, and service provision are all limited or controlled in some way, splits the market into segments based on the categories of goods or services offered, the source of production or provision of services, the geographic region of the market, the number of clients in the market, or any other comparable criteria."
Membership in trade groups, as well as participation in them, is frequently a trade requirement for businesses.
It is the directors' job to guarantee that their companies are not engaging in anti-competitive behavior.
They are not allowed to go beyond what is allowed.
Punishment
If found guilty, the Commission can impose a fine of 10% of their turnover in the previous three years or triple the amount of profit made from such anti-competitive behavior, according to the Competition Act.
In our neighboring country, India, the competition regulating authority often fines firm directors for participating in cartels through trade associations, and they are forced to pay a large fee.
The same punishment is provided for the Bangladeshi competition legislation, and the Bangladesh Competition Commission has complete authority to levy such fines for non-compliance.
Bangladesh Competition Commission
Section 5 of the Act necessitates the establishment of the Bangladesh Competition Commission (BCC) to enforce the law's aforementioned goals.
The BCC, on the other hand, took four years to form and another three years to pick its first Chairman.
The true challenge, however, was not merely founding the BCC.
The major challenge was fitting the ideas set by the Competition Act of 2012 into Bangladesh's particular socio-political circumstances.
Functions and duties of the commission
The BCC's mission is to remove market practices that are harmful to competition, to promote and sustain competition, and to secure trade freedom.
The powers also include steps to investigate and prosecute additional violations of the act, as well as to create regulations, policies, notifications, or administrative directions relevant to competition, and to provide advice and assistance to the government in their implementation.
It can also supervise large corporation mergers and acquisitions, as well as some joint ventures.
In a recent case, Bangladesh's Competition Commission (BCC) issued a suo moto warning to Viqarunnisa Noon School (VNS) authorities and imposed a financial penalty of Tk79,897 on Chowdhury Enterprise for violating section 15 (1) of the Competition Act 2012 in a contract to supply uniforms to VNS students.
This clause outlaws cooperation in the purchase, sale, or manipulation of bids, among other things.
Case No. 2/2018 (cartel case brought by the Chittagong C&F Agents' Association): Pacific International Trading filed a complaint with the BCC, alleging that the Chittagong Clearing and Forwarding Agents' Association's required tender regulations are anti competitive and that they should be repealed.
The BCC ruled, among other things, that the regulations are certainly anticompetitive and constitute a cartel as defined under Section 2(e) of the Act.
Recommendations
Bangladesh must implement a strong competition policy in compliance with the legislation.
If foreign policies must be followed, they must be done so in conformity with the frameworks.
The BCC must devote a significant amount of time and effort to advancing its goal, as well as making the most of its position as lead competition regulator through lobbying, engagement, and law enforcement.
Despite significant domestic economic reforms, Bangladesh continues to have a feeble competition regime.
Fixing a good regime in this regard could be a difficult task for Bangladesh, which may require, among other things, legal and regulatory reforms, rule of law implementation, the development of a civil society cluster that protects consumers' interests, and, most importantly, more deregulation and alleviation of the domestic economy.
However, there is a risk of excessive competitiveness, which might have negative socioeconomic consequences.
The author is a student of LL.M from Sharda University, Greater Noida in India, and an associate of K&S Legal Consultancy
