The Supreme Court on Monday allowed the Competition Commission of Pakistan (CCP) to proceed against Pakistan Banks Association (PBA) in accordance with the law, on its appeal against a Sindh High Court (SHC) order that restrained it from taking punitive action against the association for acting as a cartel.
A three-member bench comprising Chief Justice Abdul Hameed Dogar, Justice Ijaz-ul-Hassan and Justice Chaudhry Ejaz Yousaf took up the appeal of the CCP and a complaint of Islamabad Stock Exchange against Karachi Stock Exchange for creating monopoly and discouraging investment, and decided to resume further hearing on October 16.
However, the court barred the Commission from recovering penalty, it had imposed on the banks, till October 16. In its appeal, the Commission stated that the high court being in Karachi had no jurisdiction to entertain and grant an interim relief when the penalty was imposed against the association in Islamabad.
The controversy between the CCP and the PBA emerged when the commission show caused the association under the Competition Ordinance 2007 for floating a saving scheme called Enhanced Saving Account (ESA). According to the Commission the scheme was in violation of Sections 4(1) (2 a, c and f) of the ordinance and imposed a fine of Rs 30 million on the PBA and Rs 25 million on each of the guilty banks.
The law prohibits situations which tend to lessen competition such as actions constituting market dominance, competition restricting agreements and deceptive market practices. The PBA comprises Habib Bank, Allied Bank, United Bank, Saudi Pak Commercial Bank, Atlas Bank, National Bank of Pakistan, MCB Bank, ABN Amro Bank (Pakistan), NIB Bank and the Hong Kong and Shangai Banking Corporation of Pakistan (HSBC).
An account holder of these banks under the ESA scheme with Rs 20,000 was offered four percent interest, but whenever the balance went down to Rs 5,000, the depositor stood to lose Rs 50 per month. Instead of availing the statutory remedy available to the association under the ordinance of instituting an appeal before the commission, the association challenged the order of imposing penalty before the SHC on May 27 last that ordered it not to take any coercive action against PBA.
Moreover the petition of the PBA was also not maintainable since the association has failed to avail the adequate remedy of filing the appeal before the appellate bench of the commission under Section 41 of the ordinance, the appeal stated. Former Attorney General Malik Mohammad Qayyum is the legal counsel of the commission while Advocate Khalid Anwar, Makhdoom Ali Khan and Senator Babar Awan are representing PBA.
The court also fixed the petition of Islamabad Stock Exchange against Karachi Stock Exchange for hearing on October 16. The ISE in its petition contended that some brokers of Karachi had formed a cartel and were monopolising the Stock Exchange. This was not only causing damage to the stock exchange but was also against the competition laws, the petition added.
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