CCP fines Rs 15m to DHA and Wateen

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KARACHI – The Competition Commission of Pakistan (CCP), on Tuesday, penalised Defence Housing Authority (DHA) and Wateen Telecom Limited (WTL) an amount of Rs 15 million for violating the Competition Act, 2010. The penalty was imposed through an order passed by a CCP bench comprising of CCP Chairperson Rahat Kaunain Hassan and Member (M and A) Vadiyya Khalil. DHA and WTL were fined by the watchdog for, what the Commission said, entering into a ‘prohibited agreement’ under which the former granted exclusive rights to WTL for digging soil.
Furthermore, the CCP also declared provisions of the bilateral agreement as illegal. “Accordingly, grant of exemption of such exclusivity has been denied,” the CCP said. It said that parties had been reprimanded that continuing the breach would entail serious consequences and the parties should be liable of paying a penalty of Rs 1.0 million for each day of the violation.
The Commission had initiated proceedings on receipt of several complaints from residents of DHA, Lahore, with respect to the lack of choice in service providers, other than Wateen, for provision of telecommunication and media services. Information, provided by DHA and Wateen, to the Commission revealed that an exclusive arrangement exists between parties, whereby Wateen was the only service provider entitled to provide telecommunication and media services in certain phases of the property under control of DHA.
Show-cause notices were issued to DHA and Wateen, for prima facie contravention of Section 4 of the Competition Act, 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. DHA, in hearings and through written submission, admitted that 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 arrangement between Wateen and DHA did not have the effect of restricting other service providers provide services within DHA. 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 and deploys a superior quality network. Significant environmental hazards would occur if other parties laid their own cable.