Travel, medical insurance for passengers: TPL, TAAP penalised for fixing price

The Competition Commission of Pakistan (CCP) has passed an order against Takaful Pakistan Limited (TPL) and Travel Agent Association of Pakistan (TAAP) for violating Section 3 (Abuse of Dominant Position), Section 4 (Prohibited Agreements) and Section 10 (Deceptive Marketing Practices) of the Competition Ordinance, 2009.
A penalty of Rs 20 million has been imposed on TPL for tying passengers' travel insurance with the default insurance guarantee. According to a press release issued on Monday, TPL and TAAP both had been penalised for fixing price of travel and medical insurance for passengers and each shall pay a penalty of Rs 10 million whereas for deceiving passengers, TAAP shall collect from its members and pay a penalty of Rs 10 million.
TPL and TAAP entered into an agreement, first in 2008 and then in a revised one in 2009, to provide the default insurance guarantee as required by the International Air Transport Association (IATA) to airlines. However, TPL made it mandatory for travel agents to also purchase passengers' travel insurance, an entirely distinct product from the default insurance guarantee.
The agreement between TPL and TAAP fixed the premium to be charged from the passengers for their travel insurance. And both TPL and TAAP (through participating travel agents) were engaged in deceptive marketing practices by failing to provide passengers as to the price and/or character of the travel insurance that they were being charged for.
Proceedings in the matter were initiated on the reference filed by the Civil Aviation Authority of Pakistan on an arrangement made between TPL and TAAP. Therefore, an inquiry was initiated which led to issuance of show cause notices against both undertakings.
Dr Joseph Wilson, Member Monopolies and Trade Abuses (M&TA), in his detailed order, directed TPL to cease and desist immediately from collecting contributions from the travel agents in respect of passengers' travel insurance cover. However, he directed TPL to continue to provide TAAP members default insurance guarantee at the same rate of contribution as before.-PR