Syndicate culture, a serious impediment to fair market practices, has become a matter of constant headache for Bangladesh. The negative effect of its dominance has led to severe price inflation, limited choice of goods, and instability in Bangladeshi marketplaces. The Competition Act 2012 (CA 2012), a law that was implemented to prevent market monopoly and oligopoly, has grossly failed to serve its purpose. Which raises the inevitable question—what led to such an occurrence? Let’s explore the law to find the answer.
A syndicate is a collaboration of traders working together in order to set prices and control the supply chains at the expense of the customers. According to the Bangladesh Competition Commission (BCC), there are over 1500 syndicates in a variety of economic sectors in Bangladesh, including the markets for daily necessities that impact people’s lives. For instance, with syndicate dominance, rice prices have risen by Tk 6–8/kg, broiler chicken by Tk 30–40/kg, and eggs cost Tk 58–60 for four, which is a significant price hike in the last 2 months.
A fair and competitive environment within Bangladesh’s economic sectors is governed by the CA 2012. The law was passed with the intention to maintain fair competition in business and trade. It was also implemented to prevent anti-competitive activities related to collusion, monopoly or oligopoly status, alliances, and abuse of dominant positions. Keeping such intentions in mind, s. 5 of the CA 2012 establishes BCC as a statutory body to regulate these sectors. The Act further addresses the key issues that serve as foundational elements for syndicate culture in Bangladeshi markets. For example, s.15 of the CA 2012 prohibits monopoly and oligopoly in marketplaces by placing an embargo upon any agreement or collusion in relation to the manufacture, supply, distribution, warehousing, or acquisition of any goods or services that adversely affect or increase competition in marketplaces, also known as an anti-competitive agreement. Similarly, s. 16 prohibits abuse of dominant position in various manners, such as imposing unfair or discriminatory conditions, limiting or impeding production, and so forth. Moreover, s. 21 of the CA 2012 prohibits combinations that adversely affect the market. Hence, the Act covers the key issues that serve as contributory elements to formulate a syndicate culture.
However, it is a well accepted fact that the CA 2012 is proven to be inadequate to combat syndicate formation in Bangladeshi marketplaces. The shortcomings within the sections of this Act serve as a core element in that regard. For instance, in the aforementioned s.15, the legal standard for anti-competitive agreements has not been adequately set. Meaning, it is rather ambiguous as to what constitutes a benchmark or criteria to determine if the agreement is anti-competitive. Lack of examples and sufficient explanations create confusion for all of the parties concerned. The exact same issue is noticed in s. 16 of the Act, where a legal standard has not been set to determine an abuse of dominant position. Lack of certain benchmarks, along with the absence of a non-exhaustive list of examples and explanations, impedes the achievement of objectives outlined within the section. Moreover, s. 21 of the Act, while prohibiting a combination that adversely affects the market, fails to impose a mandatory requirement to notify the BCC for any activity related to a combination. A timeframe for the BCC to review any combination is similarly necessary, which is absent in the section. Similarly, it is necessary to include a provision that also obliges BCC to ensure regular audits within the marketplaces to determine whether syndicate culture is affecting that particular sector. In addition to these issues, the procedural aspects of the CA 2012 also create ambiguity, which is an obstacle towards transparency. Such as s.17 of the Act obliges the BCC to grant “reasonable time” to the parties concerned with alleged violation of the law by anti-competitive agreements, abuse of dominant positions, or creating a combination that adversely affects the market. The absence of a specific timeframe creates legal uncertainty among the parties, along with the exposure of the market towards such alleged violations. The BCC does not have a specific procedure that ensures fair business practices by implementing business models and pricing strategies, and ensuring fair competition in general proves to be a significant barrier towards breaking the syndicate culture through CA 2012. In addition to these issues, criticisms have been made regarding the weak enforcement mechanism of the BCC, the political influence within the markets, the lack of funds for regulatory authorities, and so forth.
In the post-revolution era of Bangladesh, where reformation commissions are being created to identify issues and amend several functionaries within the country’s governance structure, it has become essential to draw attention towards amending the laws that regulate the marketplaces. Syndicate culture has become increasingly persistent in Bangladesh, and its people have been the long-suffering victims of it. It is high time for the authorities concerned with the law to address the shortcomings within the Competition Act 2012. Solutions must be found for such shortcomings; additional regulatory measures must be taken. With a proper legal framework and a functioning executive mechanism in place, Bangladesh can make a strong response to the syndicate domination of its marketplaces.
About the author :
Nafis Chowdhury, LLM-Professional Student at Bangladesh University of Professionals(BUP) and Apprentice Lawyer, District and Session Judge’s Court, Dhaka.