The Competition Commission of Pakistan (CCP) has imposed penalty of Rs 10 million on Defence Housing Authority (DHA), Lahore and Rs 5 million on Wateen Telecom (Pvt) Limited for entering into a prohibited agreement, committing violations of the provisions of the Competition Act, 2010.
The Chairperson, Ms Rahat Kaunain Hassan told a group of journalists here on Tuesday that the CCP Bench comprising Chairperson and Member (M&A) Ms Vadiyya Khalil, passed an Order on March 22, 2011 with respect to the proceedings initiated against the DHA and Wateen Telecom for entering into a prohibited agreement by granting exclusivity, whereby a penalty of Rs 10 million on DHA and Rs 5 million on Wateen has been imposed for violation of the provisions of the Competition Act, 2010. "This is a nominal penalty which has been imposed and if they would continue to breach the law the CCP is empowered to impose maximum penalty as admissible under the law", CCP Chairperson said.
Furthermore, the provisions of the agreement between DHA and Wateen, keeping in view the facts of the case, the grant of exclusivity in respect of right of way and to dig soil, have been declared to be in violation of Section 4 and thus of no legal effect. Accordingly, grant of exemption in respect of such exclusivity has been denied. The parties have been reprimanded that continuing the breach would entail serious consequences and the parties shall be liable to pay maximum penalty of Rs 1 million per day on continuing violation, she said.
The CCP Chairperson said that the commission had initiated proceedings on receipt of several complaints from the residents of DHA, Lahore, in respect of the lack of choice of service providers, other than Wateen, for provision of telecommunication and media services and the unsatisfactory quality of such services. The information provided by DHA and Wateen to the Commission revealed that there was an exclusive arrangement between the parties whereby Wateen was the only service provider entitled to provide telecommunication and media services in certain phases of the property under the control of DHA. Show cause notices were issued to DHA and Wateen, for prima facie contravention of Section 4 of the Competition Act, 2010, which prohibits undertakings from entering into agreements in respect of provision of services which have the object or effect of preventing, restricting or reducing competition within the relevant market unless exemption has been granted by the Commission.
She said that the DHA in the hearings and through written submission admitted that the agreement between DHA and Wateen violated Section 4 of the Act and showed its willingness to modify the agreement in accordance with law. While, Wateen argued that the arrangement between Wateen and DHA did not have the effect of restricting other service providers to provide services within the DHA region. The residents of DHA could avail services from any other service provider using wireless technology and the exclusivity granted to Wateen only pertained to right of way. Wateen also submitted that the exclusive arrangement for 30 years would qualify for an exemption under Section 5 and 9 of the Act, as Wateen has made huge investments, offers competitive rates, deploys a superior quality network, life of the cable used in thirty years and significant environmental hazards would occur if other parties laid their own cable or used Wateen's.
During the course of the hearings identified two broad categories within telecommunication and media services market under the agreement was identified. One being telecommunication and media services provider through HFC fixed line network while the other being those provided through wireless technology. It was concluded by the Commission that due to the inherent nature of the services provided by using wireless technology, no service provider could be excluded from the DHA region. However, the exclusivity granted in respect of right of way led to restricting other service providers that wish to provide telecommunication and media services through fixed line basis, from doing so in the DHA region.
Ms Rahat further said that in respect of the justifications submitted by Wateen for grant of exemption, the Commission found that criteria provided in Section 9 had not been justified. While the rates submitted by Wateen were the lowest among the service providers, however, the Bench observed that merely offering the lowest rates can not be the sole determinant of competitiveness; factors such as availability of choice, quality of service and after sales service, among others should also be taken into account. The parties have also been directed to submit any revised agreement that the parties may sign with the Commission within a period of 30 days from the date of entering into such agreement, CCP Chairperson added.
Comments
Comments are closed.