At long last, the government has unveiled a competition law aimed at curbing unfair trade practices and protecting the interest of consumers and competitors. This law seeks to respond to Nepal’s obligations under the WTO. It reminds one that successive governments did not detect this pressing need before, though many businessmen took advantage of the lack of this law, often in collusion with officials, to become rich overnight at the expense of consumers and existing or potential competitors. However, it is better late than never. The law, called the Competition Promotion and Market Protection Act 2063, provides safeguards against actions designed to restrict competition in business by making illegal such activities as cartel forming, collective price fixing, tied selling, bid rigging, placing market restrictions, market segregation, syndicate operation, undue business influence and exclusive dealing.

Nepali consumers and business rivals will, from now on, be entitled compensation if they suffered loss or damage from anti-competitive practices. The law also puts a ceiling on any company owning more than 50 per cent share in the same line of business. The violators of the law will be liable for fine up to half-a-million rupees depending on the nature of the breach. Besides, it also prescribes fines for people who lodge complaints on flimsy grounds. The first reaction to the law have been more or less welcome. But skepticism has been expressed over some of its provisions, as well as the draft regulations under the law. These relate to such areas as implementation, the structure and the composition of the board to be formed to enforce the law, delegation of “excessive” special authority to competition inspectors, and provision for vague terms and conditions, including for punishment.

Some of the terms enunciated merit. The lack of its effective implementation would render this important piece of legislation largely useless, a fate so many of Nepali laws have suffered, including the decade-old consumers’ protection law, to which the new law is closely related. Another serious question may arise over the lack of an effective mechanism for taking tough action against the enforcers if they failed in their duty. Objection to vague and ambiguous terms as well as special powers of the competition inspectors have arisen from the fear of abuse of authority and corruption at official level. But on the other hand, the amount of the fines in serious breaches might appear too small to sufficiently deter big time offenders. There is an equal need for monitoring the practices of the new law to expand room for timely correction. In the final analysis, the law will be judged in terms of its effectiveness at checking unfair practices, i.e., whether the price, production and marketing cartels, and monopoly business seen in so many sectors of the economy will be demolished. If yes, service delivery and the functioning of the economy will get a lot better. Of no small importance is the indispensability of making the consumers aware of their rights.