Time to let the Competition Commission crack down on syndicates

Price fixing of essential commodities has long been a problem in Bangladesh. Although the supply is more or less sufficient, consumers continue to suffer from artificially induced shortages and, as a result, high product prices. No one can deny the existence of syndicates—groups of companies that manipulate the market—and their role in inflating prices. Although specific data on price fixing or market syndication is difficult to obtain, the impact of such activities is quite evident, reflected in exorbitant prices for essential goods such as eggs, onion, rice or potato. In addition to the agricultural sector, unscrupulous businessmen similarly manipulated other sectors to obtain illegal profits. The question is who should be responsible for curbing these syndicates? The most logical answer is Bangladesh Competition Commission (BCC).

Market syndication is not uncommon in the world, and various countries try to fight it through their competition commissions or antitrust authorities using different mechanismssuch as administrative fines, civil enforcement, criminal prosecution, private enforcement, etc. However, the best enforcement mechanism is one that fits the context of the country where it is implemented. In Bangladesh, the Competition Act 2012 empowers the BCC to impose significant administrative fines on cartels, defined in the Act as “any person or association of persons who, by express or implied agreement, restricts or controls or attempts to restrict or control the production, distribution, sale, price or transactions with goods or services with the aim of establishing a monopoly”.

The BCC can initiate investigations into alleged cartels on its own or based on complaints. However, proving such crimes remains difficult due to the difficulty of gathering evidence, as well as the lack of incentives for whistleblowers or information providers.

Therefore, the law should contain provisions that can solve these problems and encourage the exchange of information. One of the widely used approaches in this regard is “leniency mechanism“, which offers incentives to cartel members who provide information leading to a successful investigation. More than 60 jurisdictions in the world use this mechanism. The leniency program allows authorities to collect all kinds of information, documents and communications from one or more cartel members. The process of gathering evidence is usually cost-effective and reliable. Through this mechanism, any member of a cartel or syndicate can disclose information to the competition authority, which, if it leads to the disruption of the cartel, may receive whistleblower incentives or full or partial immunity from sanctions, as provided by the law of the land.

For example, we recently heard that some corporate speculators have formed a market syndicate to control the price of eggs in the country. Supposedly they are control the egg market from the capital by sending a short text or social media message to all wholesalers and traders informing them of the price they have set for the eggs. There are claims that they make additional profits by fixing prices on the pretext of supply shortages. So, if an insider comes forward with information that can expose this conspiracy, it could allow the BCC to take down the syndicate. In return, the whistleblower may receive incentives such as full or partial immunity from administrative fines imposed by the BCC. This kind of leniency can be included in Bangladesh’s competition law, and guidelines for reducing fines can be adopted based on the standards of international organizations such as OECD, ICN, UNCTAD and ASEAN as well as best practices followed by countries around the world.

Another timely action that can be taken by the SSC is the conducting of “light raids” by investigative teams. This approach would allow the BCC to enter any premises without warning to look for evidence of anti-competitive practices. Many countries around the world use this strategy to conduct unannounced inspections of suspicious locations or organizations.

We therefore urgently need to amend the Competition Act 2012 and introduce measures such as the ‘leniency mechanism’ and ‘educational raids” to strengthen anti-cartel measures and protect consumers from the consequences of price manipulation. The BCC should also ensure that guidelines or policies are implemented that are appropriate to the Bangladeshi context. As it reports to the Ministry of Commerce, the latter should monitor the process of these reforms. In addition, the BCC should seek the views and advice of experts, judges, administrative bodies and other stakeholders to ensure effective policy-making and advocacy.

Ultimately, we must strengthen the powers of our competition commission to help break up market syndicates, monopolies and cartels. Modern anti-cartel mechanisms are needed and must be implemented without delay to provide much-needed relief to our consumers and ensure fair market practices across the economy.

Shuvadeep Paul is an Attached Officer (Senior Associate Judge) at the Ministry of Justice in Bangladesh and a MEXT (YLP) Fellow at Kyushu University in Japan, specializing in competition law. He can be contacted at (email protected).

The views expressed in this article are those of the authors.

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