Monopolies and Restrictive Trade Practices

By Saeed, Khawaja Amjad | Economic Review, April 1993 | Go to article overview
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Monopolies and Restrictive Trade Practices

Saeed, Khawaja Amjad, Economic Review


It is heartening to note that the Monopoly Control Authority in Pakistan is keen to solicit suggestions to improve the regulatory framework. This is a welcome step. Amendments in Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970 can only be made through the National Assembly. However, the Monopoly Control Authority can make changes in the Monopoly Control Authority Rules, 1971. Therefore, steps can be initiated accordingly. The crying need to develop an enlightened legislation to meet the spirit of preamble to the above Ordinance. The earlier this is done, the better.

The Preamble

The preamble recognises the following acts to be injurious to the economic well being, growth and development of Pakistan:

1. Undue concentration of economic power.

2. Growth of unreasonable monopoly power, and

3. Unreasonably restrictive trade practices.

Moreover, the Federal Government is gravely concerned with the national interest of Pakistan in relation to economic and financial stability and these facts have also been included in the preamble.

The preamble is a well written one but does not recognise lack of social stability to be a threat to the national interest of Pakistan. This needs to be included in the Preamble.


During the Federal Finance Minister's speech on Federal Budget for 1963-64, Anti Cartel Laws Study Group was set up. It is said to have completed its work and submitted its report in April 1964. It is interesting to note that the legislation governing the monopolies and restrictive trade practices was made on February 26, 1970 and enforced on August 17, 1971 and made to operate in 1972 when rules were notified and undertakings. individuals and agreements which attracted the provisions of registration we re asked to get themselves registered with the Monopoly Control Authority by January 15, 1972 or within 15 days of the date when such understandings, individuals or agreements become registrable under the law.

The belated legislation had also done the damage which resulted in social and economic chaos-resulting into breaking away of former East Pakistan, now called Bangladesh. Besides, disruptions also took place in the then West Pakistan due to economic concentration in few hands.

Constituents of Legal Framework

Legal aspects governing the subject under review are stated below:

1. Monopolies & Restrictive Trade Practices (Control and Prevention) Ordinance, 1970: This Ordinance consists of six parts namely, preliminary, undue concentration of Economic Power etc, Prohibited. Monopoly Control Authority, Function and Powers of the Authority, Registration and Penalties and Appeals. This comprises 25 sections. The Ordinance was amended twice. The first amendment was made on June 16, 1980 through the promulgamation of Monopolies and Restrictive Trade Practices (Control and Prevention) (Amendment) Ordinance, 1980 and on June 27, 1982 through promulgamation of Monopolies and Restrictive Trade Practices (Control and Prevention) (Amendment) Ordinance 1982. Suggestions for improvements have been separately dealt with in this paper.

2. Monopolies Control Authority Rules, 1971: These Rules were amended five times on March 16, 1977, June 10, 1978, December 18, 1978, December 9, 1980 and June 16, 1982. There are 17 Rules contained in it. Suggested changes have been separately death with in this paper.

3. The Monopoly Control Authority (New Worth of Stock and Shares) Rules, 1977: The Rules were enforced on August 25, 1977 and included definition of Countable Capital and Free Reserves. Moreover, competition guidelines for net worth were also laid down. These are summarised below:

a) Countable Capital: This represents an amount of paid up capital of a company as reduced by the aggregate of the paid up value of preference shares and of such other stocks and shares to which no voting power is attached.

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