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Competition Policy and Consumer Rights: Bangladesh Scenario. M. Abu Eusuf Assistant Professor, Department of Development Studies, University of Dhaka Unnayan Shamannay, 16 April 2006. Competition Policy. Intervention by public authorities for ensuring competition in the markets.
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M. Abu Eusuf
Assistant Professor, Department of Development Studies, University of Dhaka
Unnayan Shamannay, 16 April 2006
There isno effective legal provisiondesigned to protect the interest of the consumers in Bangladesh. Besides, there is no legal entity to oversee the trading practices of business firms. These tasks are complicated. On the one hand, it needs to be ensured that consumers are not cheated, and on the other hand special care should be taken so that private firms and business do not feel regulatory powers are excessive
Overseeingtrading practices also requires knowledge about market structure, product quality, and above all technical expertise
Some businesses may consider gainingunfair competitive edgeby misleading claims about their products’ value, quality, and place of origin and ingredients in order to promote sells
Civil society groups acting on behalf of the consumers are almost non-existent in Bangladesh. The existing Consumers Association of Bangladesh (CAB), has not been particularly very effective in raising the concerns of the consumers
As a result, policy makers most often seestrong lobbyingin favour of demands for protection, they hardly encounter with popular public demands for not grating those protective measures
In Bangladesh sectors such asrailways, telephone, and other public utility services have generated suchanti-competitive structuresthat not onlyinhibits modernisationof these services but also hinder private investment into these sectors
In recent times private sector has entered into the business of cellular phone, butcompetition has been restricted toa few firmsonly. Thisallowsthe state owned BTTB (or Bangladesh Telegraph and Telephone Board) to continue inefficiently
Though a regulatory commission has been set up for the telephone sector. However, it is still in infancy and yet to acquire any teeth
Nationalised commercial banks (NCBs) are burdened with bad loans and loan defaults. Largely because of these bad loans the spread between lending and deposit rate is very high in Bangladesh.
When private Banks were allowed to operate it was hoped that they would charge lower interest rates on lending as they did not have to start with bad loans. It was found that private banks’ price loans follow those of the NCBs, who act as the price leaders. Such anticompetitive behaviour was responsible for allowing the NCBs to become much bigger than the private banks and also more inefficient.
Access to government’s development fund has been restricted for the private banks. Moreover, NCBs also operate in such activities where private banking isabsent(such as agriculture and rural development projects). This also reduces the competition between the public and private sector
Setting up of an effective regime in this regard will remain a challenging task for Bangladesh, which would require amongst others:
Legal and regulatoryreforms
Implementation ofrule of law
Development ofcivil society groupprotecting the consumers’ interest
Competition Policy is not panacea for competitiveness. This depends to a significant extent on factors such as human capital, institutional infrastructure, ethical business codes and commitment to good governance. The civil society too has a role to play in raising consciousness regarding vices of anti-competitive practices. Education, media and social organizations have a role in mobilizing a society for appropriate competitive regime.
There is also adanger of excessive competition, which may have adverse socio-economic implication. There is, therefore, a need for open public debate on these issues and continuous monitoring of the impact of competition on theweaker sectionsof the economy (particularly on SMEs). Simultaneously, there is need for realistic assessment of the extent to which MNCs are following the disciplines of competition law
Indeed,government should undertake measures to significantly improve corporate (both local and multinational) governance, increase corporate transparency, prevent fraud and ensure corporate social responsibility