Allowing foreign cos’ is good for competition - Trade Minister on activated carbon dispute

The most significant development was Fernandopulle's refusal, submitted in writing to the court, to give his concurrence to the formulation of regulations by the Coconut Development Authority (CDA). Now the Court comprising judges N. Jayasinghe, S Tilakawardene and N.E. Dissanayake wants to know why.

By Natasha Gunaratne

Trade Minister, Jeyaraj Fernandopulle last week refused to gazette rules that would restrict the import and export of raw materials used in activated carbon production.

In a letter, which was read out in the Supreme Court, the minister said the regulations would not be fair to foreign companies and since coconut shell prices are currently on the decrease, allowing a foreign company like Jacobi Carbons would create competition and help to elevate falling prices.

This transpired at the on-going court battle between the local activated carbon industry and foreign owned Jacobi Carbons Lanka (Pvt) Ltd with Prime Carbons Lanka (Pvt) Ltd, a local producer, filing action against Jacobi over the use of local raw material.

The most significant development was Fernandopulle's refusal, submitted in writing to the court, to give his concurrence to the formulation of regulations by the Coconut Development Authority (CDA). Now the Court comprising judges N. Jayasinghe, S Tilakawardene and N.E. Dissanayake wants to know why.

The regulations were required to be gazetted as a result of a February 13, 2006 Supreme Court order. According to counsel for the petitioner, Prime Carbons, the regulations were intended to control the import and export of the already scarce local raw materials used in the manufacture of activated carbon. Minister Fernandopulle in his letter says he had refused to give his concurrence to the regulations and has spoken to the President on this issue was well. He said the regulations would not be fair to foreign companies and since coconut shell prices are currently on the decrease, allowing a foreign company like Jacobi Carbons will create competition and help to elevate falling prices.

K. Kanag-Isvaran, Counsel for Prime Carbons argued that the local industry will face closure if the regulations are not framed and are needed to create a level playing field in the industry.

He further said that the Minister's refusal is a violation of Article 12 of the Constitution which guarantees equality before the law.

Haycarb, the worlds leading activated carbon manufacturer, whose attorney, Mohan Peiris, was present at the inquiry was allowed intervention ino the case by the Court. He argued that the core issue appears to be the consumption of local resources to the detriment of the national economy and whole industry, one which brings significant revenue into the country.

Faiz Mustapha, counsel for Jacobi Carbons argued that the Minister is not under any obligation to give his concurrence to the formulation of the regulations and that local companies are out to monopolize the market. The court questioned if Jacobi Carbons is not already at an advantage in terms of the concessions given to them by the Board of Investment (BOI) to which Musthapha said he has no objection to price control. However, the court firmly stated that price control cannot be regulated and is therefore, not feasible.

The court issued notice on Fernandopulle to respond as to why he is not giving his concurrence to the regulations since the settlement of February 13, 2006 cannot be put into effect until they are formulated. The date of the next inquiry has been set for December 6.