ISLAMABAD: The Peshawar Electric Supply Company (PESCO) is facing the charges of applying discriminatory conditions, price discrimination, and unfair trading terms in granting the Right of Way (ROW) to various cable service providers.
An enquiry conducted by the Competition Commission of Pakistan (CCP) submitted in its recommendations that the PESCO abused its dominant position by applying discriminatory conditions, price discrimination, and unfair trading condition in the market of ROW through electric poles availed by different types of cable service providers in prima facie violation of Section 3 and 4 of the Competition Act, 2010.
The CCP initiated the enquiry against the PESCO after receiving two formal complaints by Cyber Internet Services (Private) Limited and Nayatel Private Limited under Section 37(2) of the Act for an alleged increase in rent for the ROW service through its electric poles, and imposing discriminatory conditions in prima facie violation of Sections 3(3)(b), 3(3)(d), 3(3)(e), 3(3)(h), 4(2)(a), 4(2)(f), 4(2)(g) of the Act.
The complainants alleged that the new renting policy of PESCO along with other discriminatory and dissimilar conditions, such as provision of 10 minutes free advertisement, free internet facility with 4mbps minimum bandwidth, and cable specs being determined by the PESCO, are in violation of Sections 3 and 4 of the Act. The complainants further alleged that as per new renting policy they are now being charged Rs100/pole/month as compared to other general cable and TV operators, who are being charged Rs10/pole/month, which is price discrimination in violation of the Competition Act.
New renting policy was duly approved in the 145th meeting of the board of directors of PESCO held on July 7, 2020, whereby, the rental charge was increased to Rs100/pole/month from Rs10/pole/month only for aerial optical fiber cable operators along with some ancillary conditions.
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The Enquiry Committee held that the PESCO holds a 100 per cent share in the relevant market, thereof, is presumed to be dominant in the same in terms of Section 2(1) (e) of the Act.
As per findings of the enquiry report, PESCO by imposing ancillary condition on top of charging a rent for use of the relevant service, has done so unilaterally as a result of its seemingly absolute control over the facility. The said imposition being unrelated to the nature of the contract, was neither necessary nor proportional in terms of securing the PESCO’s commercial interest and is therefore ostensibly an unfair trading condition in terms of Clause (a) of subsection (3) when read with Sections 3(2) and 3(1) of the Act
Moreover, PESCO has discriminated between the combo triple service providers and cable providers by charging the former a different rent for a common transaction i.e. right to passage through its owned facility. Although, the PESCO has provided various reasons for carrying out such price discrimination, however it has been unable to substantiate the same. In the absence of such objective justification, the said behaviour of PESCO appears to be in prima facie contravention of Section 3(3)(b) read with Sections 3(2)&(1) of the Act.
However, the Enquiry Committee concluded that the condition imposed by PESCO on fiber optic cable service providers to offer it services such as fast speed internet, and advertisement time, free of charge, do not fulfill the basic conditions necessary in leading to a prima violation of Section 3(3)(d) read with Sections 3(2) and 3(1) of the Act.
The Enquiry Committee could not surmise the dissimilar conditions imposed on the two types of cable services, which as it appears have distinct characteristics and target audience, create a competitive advantage or disadvantage for any of them as they operate in seemingly different markets. This in perspective, the enquiry committee has been unable to find any prima facie contravention of Section 3(3) (e) of the Act. Also, with respect to allegation of refusal to deal, the Enquiry Committee noted that the very action of PESCO to increase the rental charges, does not appear to be a case of constructive refusal to share an essential facility, and hence does not seem to fall under a violation of Section 3(3)(h) read with Sections 3(1) and (2) of the Act.
Regarding allegations of contraventions of Sections 4(2)(a), 4(2)(f), 4(2)(g) of the Act by the complainants, the Enquiry Committee analyzed that the impact of increase in pole rent would have a minimal or insignificant impact either on the service provider or the consumer of this service, if and when such an impact is passed on the latter. In view of the consideration, the new rates for pole rent do not appear to stifle competition to an appreciable extent and hence do not appear to equate to a restrictive trading condition in terms of Section 4(2)(a) read with Sections 4(1) and 4(2) of the Act. Furthermore, the conditions imposed upon the Complainants by means of an agreement, do not appear to be in prima facie contravention of Sections 4(2)(f) and (g) when read Section 4(1) of the Act.
Copyright Business Recorder, 2022
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