 While the advantages of an effective competition regime in a market economy are enormous, there should be a level playing field for all concerned. It is increasingly recognized that a sound business climate is a springboard for economic growth and poverty reduction. In such an environment, investors face relatively low entry and exit barriers and are protected against the risk of expropriation and abuse, while consumers are protected against business malpractices. For this purpose the enactment of competition law and its enforcement by specialized agencies is a key component.
The major aim of competition laws is to provide for a legal framework to create a business environment based on healthy competition towards improving economic efficiency, developing competitiveness and protecting consumers from anti-competitive practices. This result in equity among producers, reduces rent-seeking behavior, complements the implementation of national economic policies and leads to employment and economic benefits for all segments of society. However, in recent times, many countries in South Asia have had to suffer in case of ineffective competition laws or their reluctance to act on proper grounds altogether. In most cases, a weak political will and strong cartel networks have hindered the smooth enactment of the law.
Lately the business environment in counties like India and Pakistan was taken hostage by interest groups who made huge illegal profits by hoarding basic food items like sugar and wheat. Business cartels went to extremes and practiced complete autonomy on manipulating shortages and fixing prices. As a result, both the countries faced acute shortage of wheat and exorbitant sugar prices which resulted in societal chaos. In many instances, sugar prices shot up to Rs. 90 per kilogram as compared to a regular price of Rs. 35. The high price led to long queues outside government utility stores in Pakistan where people fought over wheat bags and many lost their lives in the chaos that followed.
Economists blame cartelization to be the main reason behind these high prices. This occurs when enterprises collude to fix prices, indulge in bid rigging, or share customers, etc. Cartelization is a global menace and a serious violation of the competition law worldwide. Hence many a times the shortage of items is faked, which are hoarded to be sold on mutually agreed prices in the market. It greatly affects not only the economy of a country but also results in depriving the general population from basic items like sugar, wheat, milk, vegetables and meat.
Another menace that many countries in South Asia face is cross-border cartelization. It is always very easy for the powerful lobbies and influential groups engaged in cartelization to pressurize governments through political support. And when it comes to practicing their powers, there is more ‘scope' in practicing it across borders.
Experts therefore stress on cross-border jurisdiction of the competition agencies as being necessary to take action against the international cartels. In this regard, they also propose establishment of a South Asian competition network in order to provide a platform to the regional countries for enforcement of competition laws.
South Asia is a fast growing economic zone and the growth in trade may invite cartelization. Domestic competition agencies, they fear, do not have the required skills to check cross-border cartelization. They therefore suggest coordination between countries of the region along with simultaneously conducting inspections and search in cases of organized international cartels.
The role of a SAARC forum is also stressed in this regard. Former chairman Competition Commission of India (CCI) Vinod Dhall stresses that SAARC Law Forum should have a separate chapter on competition law in order to ensure exchange of information among the regional states.
Importance of competition laws is evident from the fact that the WTO agreement has also promoted measures to ensure free competition at the global level. It permits that if anti-competitive behavior of one country affects another country, the former should have the jurisdiction to take action against the involved undertakings in that country. The agreement also stresses that every country signing free trade agreements must have an effective competition law for providing level playing fields to all undertakings.
Stressing upon the need of cooperation among different competition agencies, economists say that cooperation among agencies would ensure proper investigation against the international cartels. They agree on provision in the international competition laws to approach the concerned country, whose companies have been involved in forming cartels in different countries. The argument that competition law should ensure transparency in hearing appeals against the competition agencies holds strong.
Unfortunately, the South Asian economy has a history of cartelization, including operation of public sector entities in a monopolistic environment. Here political and economic powers go hand in hand. A number of industries characterized by cartelization are owned or controlled by powerful politicians or their cronies, which has always made it difficult for the state to act against cartels. It was those powerful cartels which got the chairman of the Competition Commission removed in Pakistan. Thus despite putting in place a powerful legal regime, competition cannot be ensured unless strong political will exists.
Such an environment prevails in the region even when a good number of businesses are in private hands. It is high time that these business communities overcame self-interest and collectively worked towards the progress of the respective countries and of the region with a positive mindset. After all, foreign investors like to invest in countries where pro-competition laws and a favorable security environment exist. 
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