The Competition Appellate Tribunal has upheld the Competition Commission of Pakistan’s decision to penalise Pakistan Telecommunication Company Limited (PTCL) and other Long Distance International (LDI) operators.
LDI operators, including PTCL, entered into an anti-competitive International Clearing House (ICH) agreement. The tribunal directed the companies to deposit the fine within 30 days.
Background:
In 2012, the LDI operators entered into an agreement wherein all incoming international calls were routed through a single gateway operated by PTCL. The arrangement fixed a uniform termination rate of around 8.8 US cents per minute—up from about 2 cents previously. It allocated revenue shares and traffic quotas among LDI operators. The agreement led to closure of competing networks and increase in prices for overseas callers.
CCP decision:
The CCP declared the ICH a cartel arrangement involving price-fixing and market-sharing. In April 2013, it imposed penalties of 7.5% of annual turnover on each LDI operator. It directed the Pakistan Telecommunication Authority (PTA) to restore pre-ICH competition.
The Commission noted that while incoming call volumes fell by 70% after ICH—from 1.9 billion minutes in September 2012 to 579 million in February 2013—LDI revenues jumped 308%, from $8.37 million to $59 million.
Tribunal verdict:
The tribunal upheld the CCP’s findings. But, it reduced the penalty to 2% of turnover generated from the ICH arrangement. If the operators fail to pay within 30 days, the verdict reads, the original 7.5% penalty will be reinstated.
The order rejected claims of state compulsion or Ministry of Information Technology directives. It stated that records showed LDI operators themselves sought and secured the policy directive for ICH.
The tribunal affirmed that the Competition Act, 2010, applies to government bodies and regulators. It noted that even the PTA could be held liable for restricting competition. It dismissed arguments that the CCP lacked jurisdiction. “Calls were incoming and free to local consumers,” says the tribunal, stressing that the agreement restricted market entry and competition.
