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Monopolies and restrictive trade practices.


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.

b) Free Reserves: Free reserves constitute all reserves plus unappropriated profit of a company excluding the following reserves:

1. Reserve created on revaluation of fixed assets.

2. Goodwill reserve

3. Depreciation reserve

4. Gratuity reserve

5. Workers participation and welfare funds

6. Reserve for taxation to the extent of the actual tax liability of the company.

7. Any other reserves to meet any specific liability existing on the date of the balance sheet.

c. Net Worth Calculation: This is to be computed as per following formulae:

Aggregate of Countable Capital and the Free Reserves(*).

Face Value of such of Company, after reducing Stock or Share X it by its losses(*) Net Worth of an Ordinancy Stock = Countable Capital

* To be determined from the latest audited balance sheet of the company.

It is suggested that these aspects should be got certified by Chartered Accountants and/or Cost and Management Accountants.

4. Monopoly Control Authority (Value of Assets) Rules, 1991: These Rules fixed the amount of the total value of assets to be not less than Rs. 150 million.

Specific suggestions for improvements in the foregoing Ordinance are as under:

1. Preamble: Concern for social stability be also included.

2. Definitions: Section 2 (q): The Companies Act, 1913 (VII of 1913) be replaced by the Companies Ordinance, 1984.

3. Constitution of Authority: Section 8: At least one member must be a Chartered Accountant or Cost and Management Accountant.

The period of five years for holding the office as a member of the Authority be reviewed and reduced to three years.

4. Ordinance not to Apply to Certain undertaking: Section 25: As Pakistan is now following an open and competitive policy, section 25 be deleted.

Monopoly Control Authority Rules, 1971

The above rules constitute three parts namely, Preliminary, Registration of Undertaking and Miscellaneous. Total number of rules is 17. These have been well drafted but require some changes. Suggestions are as under:

1. Fees were fixed long time earlier. There is a need for its upward revision.

2. The scope of an "Accountant" may be expanded so 'that other persons who are properly qualified may be permitted to appear before the Monopoly Control Authority for representations.

3. The period for filling some documents may also be reviewed and suitably increased.

4. The question of treating the information as trade secret may be reviewed as part of public accountability.

List of Forms

The following forms have been prescribed under the laws governing Monopolies and Restrictive Trade Practices:



I. Particulars to be furnished with applications for registration of undertakings.

II. Particulars to be furnished with application for Registration of Individuals.

III. Particulars to be furnished with application for registration of Agreement/Licence of Patents of Technology.

IV. Certificates of Registration.

V. Register of Undertaking

VI. Register of Individuals/Hindu Undivided families.

VII. Register of Agreements.

It would be advisable to improve the contents of the above forms based on the field experience gained by the Monopoly Control Authority.


It is high time that suggestions offered are given due consideration and efforts are made to introduce enlightened improvements to ensure economic, financial and social stability of Pakistan.

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Title Annotation:Pakistan
Author:Saeed, Khawaja Amjad
Publication:Economic Review
Date:Apr 1, 1993
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