Competition Commission’s role in inflation management

The rising tide of inflation in Bangladesh is more than a mere statistic; it represents a growing crisis affecting everyday lives. With inflation hitting 10.49 percent in August 2024 -- down from a staggering 11.66 percent in July -- consumers feel the pinch in their wallets.

Central to this challenge are supply chain disruptions, intensified by logistical inefficiencies, dependence on imported goods and monopolistic practices in essential industries. As these factors intertwine, they create a perfect storm for market instability. The Bangladesh Competition Commission (BCC) must urgently step up its efforts to address these issues, regulate market dynamics and safeguard consumers from the relentless march of rising prices.

Established in 2012, the BCC plays a crucial role in fostering competitive markets and curbing anti-competitive practices. However, operational delays, skilled staff shortages and lack of initiative have hindered its effectiveness.

Strengthening the commission's capacity is essential as monopolistic behaviour among wholesalers and distributors continues to drive prices higher. In markets dominated by intermediaries, supply manipulation and unfair mark-ups further strain consumers while diminishing profit margins.

Concentration within supply chains significantly hampers producers' ability to negotiate favourable terms, limiting consumer choice and contributing to inflated prices. Recent projections from the Asian Development Bank anticipate inflation will rise to 10.1 percent in fiscal 2024-25, highlighting the urgent need for proactive measures in market regulation. Addressing these challenges is vital to creating a more competitive environment, market stability and fair pricing.

The BCC should also prioritise dismantling bottlenecks within agricultural and consumer goods markets, where intermediaries exert significant influence. Promoting direct sales from producers to consumers through avenues such as farmers' markets and digital platforms can help reduce reliance on middlemen. However, successfully implementing these reforms will necessitate long-term structural adjustments.

Furthermore, vigilant monitoring of mergers and acquisitions will be instrumental in preventing excessive market concentration. The BCC must take assertive moves when such mergers jeopardize competition, safeguarding a fair and dynamic market environment.

Inflation has been further intensified by disruptions in transportation and dependence on imports. Recent data indicates that local items account for 72.5 percent of inflation, highlighting the need for improved distribution.

The government can support the BCC by ensuring sufficient funding and providing technical expertise, particularly in competition law and supply chain management. The commission requires knowledgeable and capable individuals to enhance its effectiveness.

To strengthen competition law enforcement, it is important to streamline processes by simplifying the filing of complaints and investigations, thus encouraging stakeholder participation. Implementing regular monitoring of market practices and publishing enforcement reports will enhance transparency. Additionally, educating businesses and consumers about competition law and its reporting mechanisms is essential for fostering compliance. Besides, imposing stricter penalties for violations will deter anti-competitive behaviour and promote regulation adherence.

A comprehensive response to inflation necessitates synergistic collaboration among government entities, market regulators and private stakeholders. By further empowering the BCC to take effective measures, the country can foster competitive markets, tackle supply chain inefficiencies, and safeguard consumers from unjust price increases.

As inflationary pressures continue to escalate, the urgency for decisive action has reached a critical juncture. Enhancing the capabilities of the BCC and effective execution and enforcement is essential for reinstating market confidence and safeguarding the economy from potential disruptions. This proactive measure will not only stabilize the current economic landscape, but also fortify Bangladesh's resilience against future challenges.

The writer is a logistics specialist and the president of AmCham Bangladesh.