What are the pre-requisite conditions necessary for the successful implementation of competition law across the board of Jurisdictions in South Asia to ensure that the law is not merely an ineffective transplant from the western context. This is essentially the premise of Amber Darr’s book Competition Law in South Asia. As contemplated in the abstract, Darr attempts to formulate a pervasive theory/ supposition/ which presents the view that the effectiveness of competition reform in specific regional states is closely associated with the distinct role and combination of judicial, political and administrative institutions.;  She demonstrates this by drawing a detailed comparative case study analysis in the outcomes between the two largest and most developed competition Jurisdictions in the region; namely India and Pakistan. By visiting the Indian and Pakistani Experience and therefore dissecting the differences in the inputs of laws between both states’, the author is able to identify some of the key ingredients needed to reap the greatest returns for achieving the long-term objectives of the legislation, as well as those structural elements which create hurdles; hence answering the major premise of her question. After this she conducts a brief individual overview of the experiences of the remaining states such as Afghanistan, Nepal, Bangladesh, Sri Lanka, Maldives, and Bhutan; suggesting key policy recommendations which should be taken into consideration by lawmakers during the adoption strategy of Competition law in these largely underdeveloped jurisdictions.

First and foremost, Darr interacts with the existing theoretical literature surrounding adoption of legislation; this includes works by legal transplant scholars such as Montesquieu and Kahn-Freud who have argued that laws are intrinsically interlinked to the circumstances they are born out of; laws which demonstrate indifference to such context risk being rejected. It is in this light she encapsulates the idea that when competition laws are transplanted from jurisdictions in which they are grounded by means of diffusion and adoption; that such adoption should be wary of its compatibility with the specific pre-existing socio-economic and institutional environment of the host jurisdiction. It is also worth mentioning that implementation should be a continuous process of adaptation which progresses with time in order for it to morph into its most optimal form. The author very importantly draws the distinction between policy diffusion and transfer; with the former being described as an organic movement of policy independent of policy actors while transfer is the intentional enforcement; incorporating such concepts is important because it helps facilitate our understanding of the reasons behind dissemination of legislation across borders in the first place and the role of the institutions in the process.

Darr coins the terms ‘coercion’ used to describe adoption under pressure by multi-lateral agencies and foreign states and ‘socialisation’ which is used to describe adoption wherein the state employees a spectrum of methods to assimilate knowledge from the experiences and frameworks other countries to develop legislation that is tailored to their own domestic circumstances. Ultimately these procedures affect the legitimacy of the legislation which trickles down how enforcement pans out. In any case, the author subscribes to the hypothesis that the development of a law consists of 3 major stages; the first two which are part of the adoption, whereby the intended parameters of the law are first established, then the law is introduced for formal ratification and finally it moves into the implementation stage which comprises interpretation of the law and extent to which it is availed. Understanding that the implementation or enforcement of legislation is largely shaped by the role of the existing institutions in the host nation, such as the judiciary, as well as the state’s political priorities which could range from increasing domestic market competitiveness, to gaining legitimacy from foreign investors and financial institutions.

Darr explains that Pakistan’s journey in adopting its existing competition legislation, initiated by its quasi-military government in 2006, reflected an interplay of national development objectives and the influence of foreign financial institutions. The flaw in this is that at the time of adoption, there existed an absence of coordination between the financial agencies pushing for legislation and the legal and bureaucratic get up of the state which is responsible for its enforcement; as a result, there is a lack of appreciation and understanding of the law; hence hindering its success. Competition legislation was first introduced into the Pakistani context in the form of the Restrictive Trade Practices (Control and Prevention) Ordinance 1970 at a time when a few handful families wielded control over near all the state’s industrial and financial assets and power. However, these initial steps were later reversed due to nationalisation policies. The rebirth of competition legislation began post-2001, with assistance from UNCTAD and the World Bank, with the state’s objective in seeking legitimacy international legitimacy and economic efficiency. Pakistan’s reliance on external guidance, primarily from the World Bank, resulted in a law deeply rooted in the European Model but less tailored to its specific context, hence it is described as coercive in its nature. The legislation’s initial enactment through presidential ordinances rather than parliamentary debate further reflected a top-down approach, raising questions about its constitutionality and more importantly permanence/ robustness. The subsequent Competition Act of 2010, although ratified by the parliament, largely mirrored the substance in the 2009 and 2010 Ordinance’s with the introduction of Competition Appellate Tribunal, indicating the influence of the initial coercion-based approach.

In contrast, India’s process of adoption involved broader domestic stakeholder engagement and a more inclusive review process. The Indian Government had specifically established the Raghavan Committee, tasked with engaging with a plethora of industry leaders, chambers of commerce, experts, consumer organisations, academics, and government officials to formulate a policy best suited to the Indian socio-economic and political context. The Indian legislation while also influenced by international models, demonstrated a more participatory bottom-up approach, hence placed under the umbrella of socialisation or Indianisation, leading to a competition law more attuned to its unique legal and economic environment. The success of this is demonstrated by the fact that the Indian Courts therefore had greater understanding of the law, which allowed them to assume greater freedoms in developing the jurisprudence surrounding competition; eventually reaching a point where they start entirely citing Indian case law rather than that from foreign precedents as is in the Pakistani context. This difference in legislative processes between Pakistan and India underscores the significance of domestic legal and institutional capacities in shaping the adoption and effective implementation of competition laws. For example, the author credits India’s participatory approach to statutory adoption for having enhanced the legislatures capacity to counter to challenges arising from the largely unregulated and fast-growing digital sector, which is why while the Pakistani legislature has remained largely idle, the Indian government has initiated efforts to regulate competition in the e-commerce space.

Darr ultimately recognises that its crucial for such states to strike a balance between ensuring that the law appeals both to an international and domestic audience; that by building a footing on both spectrums it would help the state secure a competitive market status but also be widely understood and applied appropriately by the domestic parties involved.

The book also draws parallels between the competition regulatory bodies in both India and Pakistan as they constitute the enforcement branch of the competition law. It is noted that the very objectives of both regulators vary; with the Competition Commission of India seeking domestic legitimacy whereas the Competition Commission of Pakistan, given its association to the western model, was more interested in leveraging its international legitimacy. She breaks down the number of CCP and CCI orders, penalties and directions imposed since inception, and concludes that that the orders of the latter are largely taken up on complaints, which reflects greater public understanding of the law whereas the former largely takes suo-moto notice. Reference is made to the fact that the Pakistani government holds significant power in the structure of the Competition Commission, having the authority to appoint CCP members and exempt certain entities from competition legislation based on international obligations or national interest. However, she highlights that this concentration of power, especially in regards the appointment and potential removal of CCP members, raises questions about the commission’s autonomy and effectiveness. For example, the trend highlights that the CCP actually lost for example no orders were passed in 2014 because of the government’s failure to make necessary appointments needed to maintain a quorum. Additionally, the intervention of general courts in the decisions of CCP often complicates the enforcement process, potentially leading to delays and hindrances in developing a robust competition jurisprudence. This underscores the importance of aligning competition legislation with the specific context and legal culture of the adopting country to ensure its effective implementation and legitimacy among stakeholders.

A large portion of the book emphasises on the sheer importance of a fruitful relationship between the adopted legislation from the foreign jurisdictions and the pre-existing legal system as it holds a direct impact on the laws wider legitimacy and acceptance in society, ultimately bringing into alignment with the needs of the host economy. The author draws statistical comparisons between the Indian and Pakistani apex courts in their approaches. Trends appear to point out that the judiciary in India has acted out decisively against constitutional complaints raised against orders of the CCI; which is stressed from the fact that they have passed more final orders than interim ones. For example, in the case Amir Khan Productions (Pvt) Limited v. Union of India, the Bombay High Court ruled that the CCI had did in fact have jurisdiction to issue show cause notices in advance of adjudication by CCI because it had the right to form a preliminary opinion. The overall trend in Pakistan is quite literally the opposite and it appears that general courts are more likely to pass interim restraining injunctions after an initial hearing; this was demonstrated in the case of the Sindh High Court Bar Association v. Federation of Pakistan in which the Pakistan Sugar Mills Association successfully obtained additional restraining orders against the CCP.

The lack of coordination between the general courts and the Competition Commission originates in the lack of legitimacy the law holds amongst the judicial structure; largely because the judiciary was kept out of the deliberations regarding adoption. This has prevented the law from really taking up root in the country. Rather than appealing orders of the CCP in the appellate tribunal and then Supreme Court, aggrieved parties cite the jurisdiction of the apex courts in the original Suo moto jurisdiction by challenging the orders on constitutional grounds. In response, both the High Court and Supreme Court have entertained such petitions; opening the floodgates of frivolous litigation and while at the time of the books publishing, it has yet not passed a final verdict on the competition appeals; it has simply passed interim injunctions that refrain the CCP from collecting penalties. This is contrasted from the relationship between the CCI and the Indian courts which Darr describes as largely “productive”. Indians’ courts have disposed of a greater number of constitutional challenges to the orders of the CCI than their Pakistani counterparts.

The author notes that while states like Sri Lanka and Bangladesh, too ratified the legislation through their respective parliaments, giving off the appearance of a bottom-up, participatory and inclusive of institutions approach on the face value; that it is largely superficial because it appears that no such committees were established, like the Raghavan Committee in India, to formulate policy recommendations based on the suitability of the legislation according to their respective environments. Nor did it appear that the parliamentary bodies held the capacity to meaningfully engage and collect local knowledge on the ground and apply that to the proposed legislation because they were constrained by factors including lack of historic understanding of competition, experience with legislative processes and submission to the will of multi-lateral financial agencies. Darr argues that consequently this would add to the detrimental way the laws are interpreted by the judicial get-up, implemented, and practically applied.

The book is concluded with a set of valuable policy recommendations that would enhance the efficacy of the existing competition regimes in all South Asian States. The author recommends that in the laws initial draft stage there should be an emphasis on competition advocacy and streamlining enforcement; by doing so it would increase the visibility of the legal framework from paper to practice, widening its public legitimacy and hence establishing a uniform playing field for participants. When streamlining enforcement, the competition authorities should acknowledge and target regulating certain industries where consumers are sensitive to anti-competitive practices cartelisation, in particular food and pharmaceuticals. Interestingly, she also suggests regulating buyer-side cartels, as dominant players purchasing raw-materials abuse their market positions against smaller labor-intensive suppliers’ She does clarify that any such action should be contingent on its underlying impact on consumer prices and ensuring that a delicate balance is achieved between achieving social objectives whilst not compromising on economic efficiency.

© Bloomsbury Pakistan 2024