Antitrust Magazine Online: What is the difference between an ordinance and an Act?
Rahat K. Hassan: An Ordinance can be promulgated by the President or a Governor of a Province, depending on whether it is Federal or Provincial. It is time-bound, i.e., it lapses after four months’ time. Initially, the Competition Ordinance along with other Ordinances had protection from lapsing by efflux of time. In 2009 this was withdrawn by the Supreme Court of Pakistan, which required for such Ordinances to continue as law, they had to be placed before the Parliament for enactment. After the 18th Amendment of the Constitution (2010), Ordinances can only be extended once.
Antitrust Magazine Online: Tell me a little bit about your own story and background. This is your second time as Chair, and you were there from the very beginning. Can you tell us what your path was to the CCP and then what your return path to the CCP looked like?
Rahat K. Hassan: If you look at my career of over 25 years, it is divided between private legal practice and public service. By now, I have spent over ten years in public service. I feel fortunate to have worked in leading law firms in Pakistan; that part has meaningfully contributed to my public service career. I came to the Commission as I had earlier worked with the first Chairman of CCP at the Securities and Exchange Commission of Pakistan (SECP), where, at that time, I was the General Counsel.
When CCP was being set up, I had resumed my corporate practice and was engaged as part of the team drafting the regulations for the Commission. Subsequently, my name came up for appointment as a Member of the Commission. I was told “it is a no-brainer”. While working on the assignment I found competition law a very exciting subject and the offer seemed challenging.
In the initial phase, there were several challenges. Apart from the constitutionality being challenged, we had to struggle for financial autonomy. We were working on a shoestring with a very limited budget and scarce resources. We worked day and night, be it enforcement or the policy interventions, or drafting guidelines. In 2010, when the first and former Chair Mr. Khalid Mirza left, he recommended my name as the Chair to the Federal Government. At that time the appointments were made through a consultation-based process. However, for the last seven years, a competitive process has been put in place for such appointments.
In my first term as Chair, from mid-2010 to mid-2013, I believe we did some quite solid good work. Apart from the transition of Law, we paced up the enforcement. We took some landmark decisions: the National Clearing House LDI Operators Order in the telecom sector, Urea Order in the fertilizer sector and the first ever and the only Leniency decision in the matter of cartelization by the manufacturers of switch gears and transformers. It is CCP’s related enquiry in this matter that led to the administrative inquiry by the World Bank into allegations of corrupt, fraudulent, collusive, and coercive practices. The said inquiry was only recently concluded (in 2021). That has unearthed the power sector ‘racket’ in Pakistan, where 23 companies have been found to have colluded on different aspects.
My request for peer review was also accepted by UNCTAD. CCP was also the youngest agency that volunteered itself for evaluation by the Global Competition Review. With all our financial constraints, we managed to establish the present office in Islamabad, providing better visibility, accessibility, and a conducive work environment.
After my first term as Chair, I resumed my private practice, which included active competition law practice. I was invited as an independent director on various boards of public listed companies, the Pakistan Stock Exchange, as a member of the Audit Oversight Board as well as on the boards of some not-for-profit organizations. Interestingly, I was the first female director on a majority of these boards.
As to what brings me back, I will be very candid. In the formative years, CCP was like my fifth baby. I have four! I felt that the work that we had done was somehow not being pushed forward. There was so much that CCP could have done, and I felt, we were not heading in the right direction, particularly on the enforcement side - there was a lull! I just thought may be, being familiar with the institutional challenges in the past, I would be able to play some role. I opted for public service as I am passionate about it—I view it as a ‘calling,’ and not merely a ‘job.’
I owe a lot to my parents, siblings, importantly, my husband, children, also my teachers, seniors, friends and all my loved ones who have provided tremendous support and encouragement through and through in this journey.
Antitrust Magazine Online: Tell me how the competitive process works.
Rahat K. Hassan: The competitive process is that the Ministry of Finance would advertise and then people would apply. There can be hundreds of candidates. As per the eligibility criteria provided in law, the candidates are shortlisted and a high-level committee at the level of Federal Ministers and Secretaries interviews the candidates. The Ministry of Finance finally recommends three individuals for each vacant post, out of which the Cabinet selects and approves one.
Antitrust Magazine Online: Pakistan faces many challenging issues, and some might ask why competition law is a priority for Pakistan. Yet obviously it has been a priority of the government. What do you see as the main challenges in Pakistan that you are trying to solve through application of the Competition Act?
Rahat K. Hassan: The first one I would say is to make people understand the role of the Competition Commission.
There is a misconception on part of the majority of the people that the Competition Commission is a price regulator. That would be the antithesis of competition. We cannot and do not regulate prices; we regulate behavior that is anticompetitive. At certain times, we have had this conversation with the governmental agencies where we were asked as to how CCP can help control pricing issues. While the government may have its own rationale and objective; repeatedly, we have maintained that fixing and controlling prices do not help markets. It has a distortionary effect on the supply demand equation.
The benefits of competition are significant for any economy to grow and to survive. Therefore, in times of crisis, be it political or otherwise, the key is to hold on to the competition principles, i.e., fair play at all times. Stepping back would only create more distortions in the market and adversely affect the consumer as well as businesses. It may offer some short-term relief but in effect they incur economic costs along with administrative costs of enforcement. Rarely do such measures work in the long term or protect consumers.
The Commission has carved out a strategic vision 2020-2023 where enforcement remains our top priority as anticompetitive practices are a norm not an exception. Policy interventions will continue where due. The priority areas include essential commodities, public procurement, concession agreements, digital market, e-commerce SMEs, SOEs, collaboration & partnerships, sectoral studies, strengthening of legal framework and knowledge-based advocacy. These may be tailored as per situational need. In terms of our focus on the economy, it would be the measure of urgency and the proportional impact that CCP can contribute with its discretionary initiatives.
Antitrust Magazine Online: Cartel enforcement has been historically a big part of CCP’s work. Can you tell us how that is going, and where your priorities and successes have been?
Rahat K. Hassan: That is not a very easy question to answer because many people test the success of cartel busting with how large are the recoveries that have been made, whereas I don’t see it like that.
If you look at CCP’s history from 2007 until now, we have busted several cartels. Out of around 70 billion Pakistani rupees in penalties imposed since CCP was formed, the highest and the larger sums have been imposed against cartels during my terms as Chair. The question is, have they been recovered? No, because the cases have been pending in the Courts. But, this factor alone should not undermine the work done by my team with a lot of commitment and dedication.
Previously, in the telecom industry, the International Clearing House case against the long-distance international operators was one landmark decision where I believe the Commission demonstrated its autonomy both through decision making and policy intervention. The Commission’s position was vindicated as the arrangement had eventually to be recalled. The 14 LDI operators entered into an agreement to terminate all incoming international traffic on the exclusive network/platform of one telecom company on pre-agreed terms and conditions. The ICH case is also an example of effective outreach, where our policy note was relied upon by the operators in USA to seek relief from the Federal Communications Commission. CCP had to counter not only legal challenges, but political and tactical as well.
We have unveiled cartels in poultry, milk, cement, sugar, automobile—specifically tractors; these are very, very important segments. Completing those investigations was quite a challenge! Historically, we have imposed the highest fine on the sugar cartel recently. What further makes the decision unique is that it is first time the Commission had a divided view and the first ever casting vote by the Chair was exercised.
Over a dozen investigations are currently in progress. These include bid-rigging in the power sector, essential commodities—edible oil and ghee and wheat, the construction sector, such as glass and steel, the financial sector—referring to T-Bills auction, the media industry, e-commerce—food aggregators—and the automobile sector (cars).
Antitrust Magazine Online: I understand that the authority of the CCP ultimately turned on whether competition law was ultimately a proper subject matter for federal authority, as opposed to that of the provinces. Can you tell us how that unfolded? Do the provinces even have their own competition enforcement rules?
Rahat K. Hassan: No currently, there is no provincial competition authority. Most respectfully, in my understanding it cannot be. But in the Lahore High Court judgement, while the Courts unanimously recognized the federation’s legislative competence there was a dissent on the intra-provincial aspect. The majority view was that for such matters CCP had to decide the issue of jurisdiction first to establish that the activity seen as anti-competitive has an effect beyond the territorial limits of a province, which they refer to a spill-over test. In many jurisdictions where competition law is enforced or enacted, it takes some time before it gets certainty and clarity. So, it is not unique to Pakistan.
The Commission has also filed appeals before the Supreme Court on certain aspects in the judgements, where we have a different understanding. But overall, the three judgements by the Honourable High Courts have contributed towards the development of Constitutional Law and are of immense value to the Commission.
Antitrust Magazine Online: I have seen a great deal of coverage in the Pakistani media about the sugar decision, some being I think supportive of you, some being less so. What was that over, and how have you tried to manage that?
Rahat K. Hassan: I am very clear on this, that as a regulator you have to decide, and you have to decide on the right principles. Having done so you should leave it to the judicial review.
The criticism primarily stems from the fact that as a Chair, I should not have exercised the casting vote in a quasi-judicial matter and that the casting vote is an administrative power only. The casting vote of the Chair is provided in the Competition Act, 2010 and I had no doubts about its legality. I thought if it is a hung decision, the casting vote was not an option but a must.
Apart from the casting vote aspect, I have not seen much criticism on the merits of the case. There were 84 sugar mills participating and over a dozen lawyers and the hearings spanned over 8 months. Among others, the case focused on sharing of sensitive information on stocks. The sugar industry in Pakistan has peculiar dynamics. The crushing season of sugarcane is only for 3 months in a year, and for nine months the supply of sugar is based on stocks. Sharing of individual stock positions amongst member sugar mills allowed them to assess and co-ordinate on future sale volumes and pricing strategies, effectively distorting competition in an already regulated market. Similarly, through such sharing of stock information, the sugar mills collectively determined export quantities at the association level, which had an impact on the local supply. We found the same violative of Section 4 of the Competition Act.
Antitrust Magazine Online: Just to clarify, when you speak of a casting vote, that is the Chair’s vote to break a tie among the other commissioners?
Rahat K. Hassan: Yes. The Commission is an administrative tribunal. That is what the Lahore High Court judgment states. If you are an administrative tribunal, it is not unique for such tribunals to have this kind of power.
I think decision-making and lending clarity plays a key role in regulation. I view regulation as an art and not a science. As we regulate behavior, regulation has to be dynamic, creative and diverse to respond.
If you look at the legal framework, the law is very clear that the Chair has a casting vote that can be exercised in a meeting. The meeting can be called if the Chair considers it necessary for the performance of the functions of the Commission. The functions under law quite clearly and expressly include initiation of proceedings and making orders. I was convinced it was warranted under the circumstances, both from a public interest perspective as well as from the legal point of view. Since the matter is before the courts. I should not go any further.
Antitrust Magazine Online: I want to move to your work in the area of deceptive marketing and advertising. I wonder if you could tell us about what you have been targeting and what progress has been made.
Rahat K. Hassan: Initially, and even now, we have a compliance-oriented approach. It started with having a softer image of the Commission, and continues to advocate corrective behavior, taking a lenient view, where conduct and circumstances justify. It’s important to share that the Office of Fair Trade was inspired by the OFT in the UK. I proposed to establish this Office in 2008 when I was Member, Legal. The Commission, through this Department, aimed at redressing deceptive marketing practices, one of the salient features of the law under Section 10. The objective was consumer awareness and to bridge the gap between the Commission and the consumer and to identify potential issues which posed problems for the consumer, in this regard.
I recall the slogan that I had coined at that time; it was “show what you sell and say what you mean.” This is what we are trying to achieve through the enforcement of Section 10. Whether it is used as a tool against rivals or there is a genuine complainant—in any case, it serves the objective of bringing in correction.
There is a growing awareness of the principles being laid down and the jurisprudence that is evolving. Currently, we are working on the OFT Guidelines, which aim at summarizing the jurisprudence that has evolved so far under Section 10. I may add that keeping in view international developments, we have almost finalized guidelines for e-platforms/e-commerce businesses to provide a minimum benchmark for self-regulation, to prevent abuse of dominance, prohibited agreements and deceptive marketing.
Antitrust Magazine Online: Can you tell us a bit about how you decide whether a marketing claim is injurious?
Rahat K. Hassan: We look at both aspects: whether it is harmful for the consumer and also capable of harming the competitor. These are not necessarily the same. It is not the actual harm that needs to be established, but even the potential harm is relevant, and so far as the marketing is deceptive in being ‘false and/or misleading’, the contravention is made out.
It would be interesting to share how we have defined a “consumer.” Our test in this regard is at variance from the EU and US jurisprudence. There is no caveat for the consumer to be ‘average’ or ‘reasonable’. In Zong/Ufone Order the Commission held that it is the ‘ordinary consumer’, who is the usual, common, or foreseeable user or buyer of the product and need not necessarily be restricted to the end user. There is no requirement for this ‘ordinary consumer’ to be ‘prudent’ as required under contract law. The Commission construes the term most liberally and in its widest amplitude. Since the Law is for the protection of the consumer from anti-competitive behavior, the onus should remain on the undertakings and not to be shifted on the consumer. Otherwise, it may dilute its effectiveness.
Antitrust Magazine Online: I would like to turn to merger enforcement. What progress you have made there and are there important developments you would want to share?
Rahat K. Hassan: I would say there were three or four challenges in this regard, when I took up as Chair this time. We needed to expedite the review period; this has been done.
Detection of mergers has been improved and, in this regard, the Securities and Exchange Commission of Pakistan has been very supportive. We have signed an MoU for collaboration in this regard. We would also like to improve the online merger filing facility, this is being worked upon. Importantly, the notification thresholds I believe are on the lower side and were deliberately kept so initially. These call for revision. The scope of exempted transactions seems narrow and needs to be re-examined.
I think in 2021 we have processed ninety-four mergers, but only one Phase II review. We must not unnecessarily add to the cost of doing business, so the revision in thresholds is called for and is being worked upon.
Antitrust Magazine Online: We are recording this interview during the Spring Meeting in April of this year, and we are hearing a great deal about the continuing relevancy of the consumer welfare standard or whether we should consider other factors in judging what is anticompetitive and what is not. Does that debate have any relevancy in Pakistan?
Rahat K. Hassan: The first thing is that we are very clear that merely reducing prices is not something that will test whether something is procompetitive or anticompetitive. We will look at other aspects as well.
Currently, as the Law is framed, there is no such debate. Personally, in my view, broadly speaking, promoting competition, or enforcing competition principles invariably results in consumer welfare. Vice versa may not always be true, i.e., enforcing Law with the focus of protecting consumers or small businesses may not always necessarily entail enforcing competition principles. All relevant factors, therefore, ought to be considered. Yet, we remain open and keen to listen and learn as to what is happening around in world.
Antitrust Magazine Online: I would be curious to know whether you see a linkage between competition and the battle against corruption. Do you see competition as being in some ways an antidote to corruption?
Rahat K. Hassan: There is a likelihood of linkage, yet I believe that the domains need to remain distinct. Particularly it would not work in our country. When you go for corruption and accountability, businesses feel intimidated.
I believe that when we have a framework whereby there are penalties for the offence of cartelization, we need to address it within that framework. However, in cartelization cases, you may find instances of kickbacks and bribery, but it is best to keep them separate. Promoting and achieving competition surely can act as an antidote to corruption, however, the moment you mingle them, there will be a lot of confusion and businesses may feel harassed. The corruption aspect has already marred the economic agenda and may only further derail our processes.
Antitrust Magazine Online: How is the institution itself doing? Many new competition agencies struggle for resources, but has the CCP perhaps turned a corner in that regard.
Rahat K. Hassan: Yes. It was a long-drawn battle with five other regulatory bodies. I am very delighted to share that in my second term as Chair, our struggle finally paid off. We had the support of Ministry of Finance and finally the Cabinet approved. We can talk about administrative autonomy, but there is no autonomy without financial autonomy. The five regulatory bodies are required to contribute 3% of the fee and charges levied by them to the CCP Fund. This was due since 2008/2009. The tedious correspondence and meetings on the legal objections seemed unending. Finally, all regulatory bodies have started paying—this is no ordinary feat! Though with some, we still have to settle the arrears. After transition of Law, I hold this as one of the major milestones—critical to Commission’s sustainability.
Antitrust Magazine Online: When you say the “five agencies,” what do you mean?
Rahat K. Hassan: These are Oil and Gas Regulatory Authority, the SECP, the Pakistan Telecommunications Authority, the Pakistan Electronic Media Regulatory Authority, and the National Energy & Power Regulatory Authority.
Antitrust Magazine Online: They were supposed to pay that to support the budget of the Commission?
Rahat K. Hassan: Yes. I think this was a very creative thing provided in the Law because our fee earning is not that much and our penalties do not go in the Commission’s fund. This time we got more than 400 million Pakistani rupees from these five regulatory bodies in addition to the grant from the Government. There are substantial arrears still to recover.
Antitrust Magazine Online: Has this helped you in being able to attract and retain the kind of people that you need?
Rahat K. Hassan: Yes. The financial autonomy has helped the Commission in many ways. We can pay a better fee to our counsel(s) and we have hired independent consultants and sectoral specialists. In fact, this is the first time ever that Commission was able to give a 25 percent disparity allowance to its employees of Grade 1 to 7. We have also been able to allow an ad hoc relief allowance of 10 percent of the basic pay to combat the inflationary impact to all employees, including employees of Grade 8 and 9. We are working on establishing regional offices at Lahore and Karachi and are keenly working to establish an in-house data resource center to further strengthen our research and enforcement capability. Capacity building through international trainings is another important area of focus. There is still a lot to do.
Antitrust Magazine Online: Can you tell us about the role of competition advocacy by CCP?
Rahat K. Hassan: Advocacy is our statutory obligation and I also believe that enforcement is the best advocacy. The Commission engages in advocacy through media, press releases, issuing policy notes and holding public hearings. All our decisions, enquiries and policy notes are required by law to be placed on the website.
After a gap of seven years, we resumed holding Competition Consultative Group meetings, which is an informal ‘think-tank’ with stakeholders from public and private sectors and governmental bodies.
We have recently taken a new initiative, whereby we intend to maximize dissemination of our work through infographics. We have started doing it for all our decisions, all our policy notes, and we will gradually do the enquiries as well. An in-house dedicated team is working on this project. The objective is to disseminate the Commission’s work through different modes on different platforms to improve the understanding of our mandate and the work done.
As in the past, we continue with our sessions with the Chambers of Commerce and business councils. Taking up sessions of advocacy with several business associations is in the pipeline as they are invariably at the forefront of cartels conspiracy.
We have held several advocacy sessions with small and medium size enterprises (SMEs), which is an important segment of our economy and is part of the CCP’s strategic vision 2020-2023. The recent SME policy was issued by the government, and we are working on our policy recommendations as to how the Government may further actually enhance competition by removing barriers to entry, providing access to financing, and helping in creating a level playing field.
Antitrust Magazine Online: So, these are tools to help SMEs better participate in the economy?
Rahat K. Hassan: Better participate and help them to better perform to enhance economic efficiency.
Antitrust Magazine Online: Do you feel that the role of the CCP is being well accepted by the rest of government and important stakeholders?
Rahat K. Hassan: It’s very difficult to speak on their behalf, but the way we are placed and the way our comments are solicited I feel we have earned an important position. If I may say, CCP has registered its presence to the relevant stakeholders. Such presence must not only stay but continue to be consolidated. The stakeholders are in the process of accepting and recognizing it. Yet, I will be candid and would add that, because of the nominal recovery of penalties, owing to the pendency of the cases, CCP’s efficacy to a common man is not visible.
It is the judicial review that plays a major role in making the impact of competition law enforcement visible. Enforcing the law and imposing the penalty is distinct from recovering the penalty and creating actual deterrence. There is a whole judicial process for that, and CCP cannot offer any shortcuts in this regard. Nonetheless, I view enforcement is an important factor in contributing towards competition culture and creating awareness.
Antitrust Magazine Online: You have alluded a couple of times to the role of the judiciary in reviewing CCP’s decisions and enforcing them. What can you tell us about the relationship between the CCP and the judiciary, and are there improvements which could be made or should be made?
Rahat K. Hassan: I don’t think Pakistan is at odds when it comes to the pendency of cases because of the huge backlog.
I think matters of economic importance need to be prioritized. At our end, we make sure that we are there to assist and clarify. Interim injunctions when granted by the Courts at the stage of mere enquiry, call for information and/or show cause notices, cause delay, and disrupt the process. I only wish if there could be a mechanism whereby a specified timeline could be followed in such eventualities.
Courts may have their own view or challenges, yet in my understanding, so far, when the Commission issues orders, be it with or without penalty, it is not to be viewed as a coercive measure. In my understanding, coercive measures perhaps are associated with recovery of penalties. Therefore, it may be far more beneficial for all if the Commission is allowed to conclude its proceedings. Enforcement of penalty, of course, can be kept subject to the final decision of the Courts. This may help in managing the flow as well as concluding investigations timely.
In some cases, we have seen Courts keen to lay down the jurisprudence. In a recent edible oil case, while we lost the case at the High Court level, we had success in the Supreme Court. The caveat to CCP powers placed by the High Court was that, instead of possibility of contravention, the plausibility had to be addressed prior to the Commission deciding to initiate an enquiry. The Supreme Court has set aside the same with the observation that it was a bit of an overstepping of powers by the High Court. We are still awaiting the detailed judgment to clarify as to the scope and extent of our powers in this regard.
We also had a major success on the administrative side in an involuntary severance case of a former senior employee before the High Court. It reinforced our administrative autonomy. Currently, the appeal is pending before the Supreme Court. The outcome may determine the scope of CCP’s restructuring.
Since the Competition Appellate Tribunal has also become fully functional after a lapse of almost two years, this may also expedite judicial review.
I think it is a very good idea to have training for the judges to be conducted by international experts and judges. That would be extremely helpful, and we will have to see and explore options to that end. We will pursue and look for international support and opportunities in this regard.
Antitrust Magazine Online: Pakistan seems to be a very male-dominated society. As a woman, have you found your leadership to be well accepted? Are you able to use being a woman it in your favor?
Rahat K. Hassan: I will be very candid. I always had a gender-blind vision. I think it is because of that I have reached where I am.
I believe I do not hold this office simply because I am a woman, but to me, the more important question is what can I do in this position? In my career path, I was fortunate to have all the support, but I had to ask my seniors. Having benefitted personally, the least I can do is pass it on.
In my previous term at the Commission, we established a daycare facility and ensured flexi timings for working mothers. The current office was also set up in 2010 and it feels good to hear it has a woman’s touch. I recall one article stating our office to have “a definite touch of good feng shui, i.e., open, bright and clean.”
We are now providing mothers mobile access to monitor their child in the daycare from their desks. Recently, the Commission has also approved a gender-mainstreaming policy. However, I must clarify that our hiring and performance review remains merit based.
We celebrated Women’s Day with much more vigor this year. In this regard, the Advocacy Department made a 15-minute documentary (all in-house) highlighting the experiences of our female staff. It was very well received. We invited senior officials from different regulatory bodies and had over 100 participants on the last Women’s Day 2022. The topic was; “policy and regulation through a gender-lens.” This has also led to CCP forming a regulatory task force. I think these are small, small things, that may go a long way in creating an enabling environment.
Interestingly, until recently, three out of four Members were females, and we have 50% females in the Cartel and Trade Abuse Department, who actively participate in search and inspections or forcible entries. I can say that we have a female-empowered Commission. I believe, if one wants to break stereo-types about Pakistani women, CCP is a great place to start!
Antitrust Magazine Online: If you were to meet a young woman lawyer interested in a career in competition law in Pakistan, what advice would you give her?
Rahat K. Hassan: I would tell her to leave her gender card home—never to use it or allow anyone to abuse it—all one needs is to focus as a professional. I feel it is far more satisfying to have the recognition as a competent professional. Curiosity and preparedness would go a long way in helping any professional to succeed. At CCP, it’s heartening to work with my team, which includes many young committed female professionals. I wish and foresee a bright future for all of them!
Antitrust Magazine Online: One last question: is there anything you wish I had asked you that I haven’t?
Rahat K. Hassan: I do feel that the performance evaluation of all competition agencies cannot be done on the same parameters, unless you understand what the internal and peculiar challenges are. One cut can not fit all. These challenges keep changing for each agency and may not even be visible to many. I must thank you and the team at American Bar Association for providing me this opportunity on this platform, which has a valuable outreach.
Antitrust Magazine Online: Thank you very much.