VZCZCXRO0155
RR RUEHLH RUEHPW
DE RUEHIL #0007/01 0041253
ZNR UUUUU ZZH
R 041253Z JAN 10
FM AMEMBASSY ISLAMABAD
TO RUEHC/SECSTATE WASHDC 6695
INFO RUEHNE/AMEMBASSY NEW DELHI 5939
RUEHBUL/AMEMBASSY KABUL 1350
RUEHLO/AMEMBASSY LONDON 2100
RUEHKP/AMCONSUL KARACHI 2746
RUEHLH/AMCONSUL LAHORE 8346
RUEHPW/AMCONSUL PESHAWAR 7408
RHEHNSC/NSC WASHINGTON DC
RUEAIIA/CIA WASHDC
RUEHRC/DEPT OF AGRICULTURE WASHDC
RUEAUSA/DEPT OF HHS WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUMICEA/USCENTCOM INTEL CEN MACDILL AFB FL
RHMFISS/CDR USCENTCOM MACDILL AFB FL
RUEKJCS/SECDEF WASHINGTON DC

UNCLAS SECTION 01 OF 02 ISLAMABAD 000007 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958:  N/A 
TAGS: ECON ETRD EAID PGOV PK
SUBJECT: COMPETITION COMISSION LIVES ON-AT LEAST FOR NOW 
 
REFs: A. ISLAMABAD 1784 
      ¶B. ISLAMABAD 2973 
 
¶1. (SBU) Summary: Since its inception in 2007 by Presidential 
decree, the Competition Commission of Pakistan (CCP) has fought 
collusive behavior, promoted a competitive environment in Pakistan 
and made a number of enemies in the process.  A law to provide a 
permanent legal framework for the CCP is currently being held up in 
the National Assembly, sparking rumors that powerful cartels are 
trying to influence the National Assembly's decision.  As with 
several other ordinances, President Zardari re-promulgated the 
Competition Ordinance on November 27, allowing the CCP to continue 
operating until the National Assembly decides its fate.  CCP staff 
is confident that the bill will eventually pass, but fear that 
politically-tied businessmen may sway the National Assembly to 
reduce the CCP's regulatory authority.  Federal Trade Commission 
(FTC) support would lend tacit political support to the CCP while 
providing needed technical assistance.  End Summary. 
 
----------------------- 
Pakistan's Trust Buster 
----------------------- 
 
¶2. (SBU) Led by a "diligent and politically fearless chairman", 
Khalid Mirza, the Competition Commission of Pakistan has over the 
past two years developed a positive track record of going after 
powerful cartels, winning kudos from the press and public.  The 
Competition Ordinance of 2007 was enacted by former President 
Musharraf as part of the GOP's competitive policy framework to 
improve the local investment climate and promote economic 
development.  The ordinance was set to expire on November 28 as a 
part of the Supreme Court decision of July 31 (ref A).  The CCP is 
an independent structure designed to encourage economic competition 
and protect consumer interests by regulating monopolies and 
combating collusive practices.  Since its creation, the CCP has 
filed 76 cases against local businesses, including alleged cartels 
in the sugar, LPG, banking and cement industries. 
 
¶3. (SBU) The CCP's most recent high profile case involved the 
Jamshoro Joint Venture Limited (JJVL), the country's largest LPG 
producer, and the Liquefied Petroleum Gas Association of Pakistan 
(LPGAP), the largest association of local LPG marketing companies. 
According to the CCP's investigation, JJVL and LPGAP were involved 
in price fixing, intentionally manipulating the supply and the price 
of locally produced LPG in order to push LPG importers, such as 
Progas, out of the market.  CCP fined the companies $3.7 million for 
their actions.  JJVL and LPGAP are currently contesting the CCP's 
ruling with the Supreme Court. 
 
--------------- 
New Law Stalled 
--------------- 
 
¶4. (SBU) The National Assembly Standing Committee on Finance 
approved the Competition Bill 2009, the law that will provide the 
legal framework for the CCP, with no amendments, but the bill 
subsequently stalled in the National Assembly.  For weeks, local 
print media speculated that the bill would not pass because of 
"interference on the part of powerful business owners with strong 
political clout."  As he did with the Anti-Money Laundering 
Ordinance (ref B) President Zardari stepped in at the last minute, 
re-promulgating the Competition Ordinance on November 27, one day 
before it was to lapse keeping the CCP alive. 
 
¶5. (SBU) While confident that the National Assembly would pass the 
Competition Bill, CPP board member Rahat Kaunain said her biggest 
concern was that the bill "would be amended to render the 
organization toothless."  Currently, the maximum penalty that the 
CCP can impose on a company found guilty of anticompetitive 
practices is 15 percent of the business' latest turnover.  According 
to Kaunain, one of the proposed changes to the bill includes the 
criminalization of cartels; this would entail the enforcement of 
jail-time for guilty parties, but would remove the CCP's ability to 
levy any monetary fines on these companies.  Kaunain indicated that 
such changes would defeat the purpose of the bill, bogging 
anti-trust cases in the courts and rendering the CCP ineffective. 
 
 
ISLAMABAD 00000007  002 OF 002 
 
 
-------------------------- 
Need for Technical Support 
-------------------------- 
 
¶6. (SBU) CCP Chairman Khalid Mirza told Econoff that the lack of 
adequate local training for CCP staff was hindering its 
effectiveness.  According to Mirza, "senior board members have to 
train employees themselves; this is putting a strain on the 
organization's resources."  The Federal Trade Commission (FTC) 
recently contacted Post, and Mirza, with its interest in providing 
technical assistance to CCP beginning with an initial, on-the-ground 
needs assessment of its operations to identify possible areas of 
intervention.  One of the proposed programs would provide the CCP 
with a full-time resident adviser from FTC to facilitate staff 
training.  Mirza said that he welcomed the idea, adding that the CCP 
ordinance was modeled on U.S. law, making it especially suited for 
Federal Trade Commission training on anti-trust standards and best 
practices. 
 
----------------- 
The Future of CCP 
----------------- 
 
¶7. (SBU) Comment: The CCP has a compelling track record of taking on 
anti-competitive practices that stymie Pakistan's economy.  Much of 
the CCP's success is attributed to the work of its chairman.  With 
Mirza slated to leave the chairmanship in June 2010, the CCP's 
ability to continue operating effectively will not only depend on 
whether or not its powers are watered down by the National Assembly, 
but on the institutional capacity of the organization Mirza leaves 
behind.  Post supports building on CCP's established linkages to the 
FTC, whose suggested program is a practical, relatively low-cost 
means to lend both technical and political support to Pakistan's 
market economy.  End Comment. 
 
PATTERSON