Under Section 29 of the Competition Act, the commission is mandated to review policy frameworks for fostering competition and recommend amendments to laws that affect competition.
In this context, the commission examined a statutory regulatory order issued by the federal government imposing a 15% regulatory duty on imported steel billets.
The commission noted that the steel industry is comprised of:
- large integrated steel manufacturing units that produce their own billets and convert them into steel bars; and
- non-integrated re-rolling mills that rely on local and imported steel billets to make steel bars.
The commission concluded that the imposition of a 15% regulatory duty on the import of steel billets affected the cascading nature of the tariff structure that the federal government had previously introduced. Further, the regulatory duty structure raised the price of imported steel billets, which affected non-integrated re-rolling mills only by forcing them to purchase billets from integrated players. As downstream competitors, integrated manufacturing units were unlikely to provide steel billets at competitive prices to non-integrated re-rolling mills, thereby placing them at a competitive disadvantage. This disproportionate duty structure in the steel industry creates barriers to expansion for existing re-rolling mills and barriers to entry for potential aspirants in this growing market.
The commission therefore recommended a reduction in the regulatory duty on steel billets to create a level playing field in the market for steel products – particularly high-quality steel bars used in infrastructure development projects.
For further information on this topic please contact Samiya Fikree or Ferzeen Bhadha at Vellani & Vellani by telephone (+92 21 3580 1000) or email ([email protected] or [email protected]).
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