Why a competition policy

THE market economy does not automatically promote fair competition among different producers of goods and providers of services. Nor does it automatically lead to advantages for the consumers in their purchases in respect of quality, price and choice. There may exist restrictive trade practices, monopolies, syndicated activities and other ills hidden under the garb of the market economy to undercut its purpose. The only way to ensure that competition does happen, unfailingly in all areas of the economy, requires that laws to that effect exist and are enforced vigorously. Not only laws but their applications and the existence of institutional mechanisms are also required to create actual competition with the main aim of public good. But the starting point of all these things is a competition policy which Bangladesh lacks at the moment. Thus, the importance of having such a policy was strongly emphasised by the participants in a recent seminar in the capital city.
The consumers in Bangladesh, generally, are a very harassed lot at the market. The absence of comprehensive consumer protection laws is linked to their suffering. Such laws, therefore, need to be introduced at the fastest to give shape to a proper competition policy so that consumers can benefit from the gains derived simultaneously from a legal environment protecting their interests as well as from the fruits of competition compulsorily generated by such a policy. The government can learn from how other countries operate their competition policies. For example, in the UK, there is the Office of Fair Trading (OFT). This public organisation is responsible for enforcing legislated laws against practices, like retail price maintenance, exclusive dealings and refusal to supply. The UK does not completely prohibit monopolies because the same in some exclusive cases, like postal service, can extend greater benefits than disadvantages to consumers but generally the creation of monopolies is discouraged via monopoly legislation to preclude concentration of market power that enables dictating prices of goods and services in a situation of complete dominance over the market.
The OFT in the UK collects information on the ways in which companies and trade associations conduct their businesses and recommends actions when it appears that firms are doing things which are against the public interest. The Monopolies and Mergers Commission (MMC) in that country, on the other hand, investigates monopolies and publishes reports on its findings. In these reports, the MMC sets out any changes essential in the structure of industries or behaviour of firms in regard to marketing of goods and services, including fixation of prices and so on. After considering such a report, the government decides what actions should be taken. It may advise or, if necessary, order firms to make changes in the way they are running their businesses. The MMC can also be asked by the government to investigate and report on the likely effect of proposed mergers. A merger can be vetoed by the government if it thinks it will lead to an unsatisfactory monopoly situation.
A High Court branch of the UK, the Restrictive Practice Court, examines whether a business practice should be declared illegal for restricting competition that enables a firm or firms to keep prices higher than they would be, without the practice. It also examines whether a practice is preventing other firms from entering the industry and whether practices restrict consumers' freedom of choice. The establishment of similar institutions in Bangladesh backed up by a proper competition policy, need to be considered at the earliest for the economy to grow fairly and the consumers to get the optimum benefits of the market economy.