Possible telecom shutdown could lead to CCP action -Pakistan Press Foundation (PPF)

Paksitan Press Foundtion

Possible telecom shutdown could lead to CCP action

By: SOHAIL SARFRAZ

ISLAMABAD: The reported threat of telecom companies to shutdown the country’s communication system has raised serious questions, with legal experts saying that provisions of the Competition Act, 2010 could be invoked if such a decision is collectively implemented by the telecom sector.

Analysts told Business Recorder on Friday that the telecom companies’ protest against an ongoing investigation against them was not an anti-competitive practice, as it will not affect competition in the market. The act of switching off all kinds of telecom communication had nothing to with the price fixation or secret meetings to collectively raise prices/charges of any item, they said.

Similarly, they said, telecom operators were raising their voice in a tax evasion case and they are not directly demanding anything from their consumers. According to them, the companies are also not reducing competition in the market by collectively stopping supplies, distribution, acquisition or control of goods etc. However, the aspect of competition could be analyzed in case all such companies collectively close their systems depriving the people from making calls without any alternative, they said. The consumer protection and prohibited agreements comes under the mandate of the CCP and if this happens, the provisions of Section 4 of the Competition Act, 2010 could be invoked for initiating action against any sector.

It depends upon the collective strategy being adopted by telecom companies before invoking provisions of the Competition Act 2010. Section 4 relates to prohibited agreements between undertakings. This provision of the Competition Act, 2010 prohibits companies from entering into any agreement pertaining to production, supply, distribution, acquisition or control of goods or the provision of services which have the object or effect of preventing, restricting or reducing competition within the relevant market.

In case telecom companies mutually agree to collectively shut down the communication system on national level, the CCP can intervene and commence investigation to probe reasons behind such a collective action which would directly hurt the general public as well as the business community. Experts maintained that if telecom companies collectively closed their communication system, this might be considered a violation of the Competition Act of 2010.

Under Section 4 of the Competition Act, 2010 (prohibited agreements), no undertaking or association of undertakings shall enter into any agreement or, in the case of an association of undertakings, shall make a decision in respect of the production, supply, distribution, acquisition or control of goods or the provision of services which have the object or effect of preventing, restricting or reducing competition within the relevant market unless exempted under section 5 of the Competition Act, 2010.

Such agreements include but are not limited to fixing the purchase or selling price or imposing any other restrictive trading conditions with regard to the sale or distribution of any goods or the provision of any service; dividing or sharing of markets for the goods or services, whether by territories, by volume of sales or purchases, by type of goods or services sold or by any other means; fixing or setting the quantity of production, distribution or sale with regard to any goods or the manner or means of providing any services; limiting technical development or investment with regard to the production, distribution or sale of any goods or the provision of any service; or collusive tendering or bidding for sale, purchase or procurement of any goods or service and applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a disadvantage and make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts. According to Section 4 of the Competition Act of 2010, any agreement entered into in contravention of the provision in Sub-Section (1) shall be void.

Business Recorder