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Posted On: 5 February 2015 10:34 am
Updated On: 12 November 2020 02:14 pm

Saying goodbye to monopolies

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Qatar is quite strict about implementing its laws. There is no exception when it comes to protecting the hapless consumer, especially from influential traders. But people were in for a surprise when, recently, the state consumer watchdog at the Ministry of Economy and Commerce shut down the showrooms of some famous car dealers for allegedly taking buyers for a ride.

They were all local dealerships of famed foreign brands of cars. The accusations against them were that they were passing off as new, cars that were repaired and painted after being damaged in accidents. The local media carried this news prominently and it was reported later that some buyers were mulling legal action against those dealers. This was the first time the Consumer Protection Department (CPD) of the economy ministry was seeking strict action against influential car dealers for breaching the law.

The showrooms of the erring dealers were shut down temporarily as punishment. However, some in the local trade and industry objected to the government’s measure arguing that only the courts should have the authority to shut down an outlet of a famous business house as punishment for breaching provisions of a law. Government inspectors should not have such authority, said Ali Hassan Al Khalaf, in remarks published by a local Arabic daily. It is interesting to note that Al Khalaf, now a prominent businessman who is closely following the changes being made to the sponsorship law on behalf of the private sector, is a former director of commercial affairs of the economy ministry. So his comments carry much weight, say observers of trade and industry.

As for the car dealers, there have for long been complaints against them in general and these mostly pertain to high prices. Consumer complaints are also high because after-sales services of cars sold are poor. The CPD keeps warning erring dealers to mend their ways and in a rare consumer-friendly gesture it even set up an office in a car dealer’s premises to keep a close track on their after-sales service. This, the CPD said, was being done on an experimental basis.

The tussle between the government and local dealerships of foreign cars is not new. It dates back to the late 2000s when the government asked the dealers to consider dropping their prices and bring them on a par with those in the rest of the GCC region. The dealers put their foot down and said they could not do so since Qatar was a small market and new cars built with special specifications for local use were brought here for sale and they worked out relatively expensive.

Car dealerships fall among monopolies and Qatar being a free market economy is against monopolistic business practice.

New legislation on monopolies

As the year 2014 was coming to a close, media reports suggesting that a law was in the pipeline to curb monopolies trickled in. The proposed legislation aims at encouraging fair competition in business and preventing monopolies for the benefit of consumers at large. Details of the draft law are yet to be made public but bq understands that all goods and services could be imported into the country without any restrictions once the law is in force.

Cars are an obvious example of a monopoly in Qatar but dealerships of several commodities including foodstuff, clothing and detergents, to name a few, are a common sight here. They have been existing for decades on end – since the days of the oil find. Being trading activity and monopolies sheltered by the state until about a decade ago, the agencies or dealerships are the easiest business to carry out for profit, as opposed to manufacturing, which holds the key to Qatar’s economic diversification effort due to its ability to create jobs and add value to the national economy by providing scope for exports.

“The time has come for the monopolies to go. Qatar is signatory to WTO (World Trade Organization) deals,” an observer of local trade and industry told bq. Media reports hinted that the proposed law could see the light of day this very year after its draft has undergone the lengthy approval process. As per the procedure, a draft law, in this case prepared by the Ministry of Economy and Commerce, is sent to the Ministry of Justice. This ministry thereafter refers it to the State Cabinet. After initial approval, the Cabinet forwards it to the Advisory Council, which represents the people. The Advisory Council has various internal committees whose members are experts in their respective fields.

This draft law (that seeks to curb monopolies) will surely be referred by the Advisory Council to its economic and financial affairs committee and arguably, also to its legal committee. On such matters the committee, as also the Advisory Council, seeks the opinion of the private sector. The committee would then prepare its report with its recommendations. The report would be discussed by the Advisory Council and the recommendations of the committee would be taken into account.

The Advisory Council would then finally send the draft law back to the Cabinet with its opinion and recommendations. Normally, the Cabinet considers favourably the recommendations of the Council about a draft law. If the Cabinet wants a draft law to be sent to it by the Advisory Council with its recommendations on an urgent basis, the general secretariat of the Cabinet makes such a request and the Council listens.

One draft law that comes to mind which the cabinet has asked the Advisory Council to send back with its recommendations is the one that seeks to amend some provisions of the labour law (Number 14 of 2004) so that the format of the job contract of foreign workers could be made compatible with new sponsorship and exit permit regulations, and electronic salary payment system that are in the offing.

The idea of the new law is to also protect the private sector from competition from government monopolies in line with the recent instructions of the Prime Minister, H.E. Sheikh Abdullah bin Nasser bin Khalifa Al Thani. He has asked all government ministries and agencies, including companies, to not launch any new business or expand an existing one without seeking approval from his office. The directives of the premier, who also holds the influential interior ministry portfolio, aim at encouraging the private sector and help widen its role in the national economy. This is in line with the government’s policy of privatization to support the non-oil sector and accelerate the economic diversification effort.