CCP Imposes Rs. 15 Million Penalties on DHA, Wateen

Competition Commission of Pakistan (CCP) has slapped penalties of Rs. 15 million on Defence Housing Authority and Wateen for entering into an agreement, which is considered as illegal and anti-competitive practice.

As per CCP investigation provided by DHA and Wateen operator there was an exclusive arrangement between the parties whereby broadband operator was the only service provider entitled to provide telecommunication and media services in certain phases of the property under the control of DHA.

Therefore, 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.

This agreement will affect preventing, restricting or reducing competition within the relevant market unless exemption has been granted by the CCP.

CCP Action

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 for every day of the continuing violation.

Competition Commission of Pakistan (CCP) bench comprising of Chairperson, Rahat Kaunain Hassan and Member (M&A) Vadiyya Khalil, passed an Order on Tuesday and imposed Rs. 10 million penalty on Defence Housing Authority and Rs. 5 million on Wateen for entering into a prohibited agreement by granting exclusivity.

CCP 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 operator, for provision of telecommunication and media services and the unsatisfactory quality of such services.

The parties have also been directed to submit any revised agreement that the parties may sign with the CCP within a period of 30 days from the date of entering into such agreement.

DHA Briefing

DHA in the hearings and through written submission admitted that the agreement between DHA and Wateen violated Section 4 of the Competition Act and showed its willingness to modify the agreement in accordance with law.

Wateen Argument

Wateen argued that the arrangement between telecom operator 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 mobile operator only pertained to right of way.

The operator also submitted that the exclusive arrangement for 30 years would qualify for an exemption under Section 5 and 9 of the Act, as it has made huge investments, offers competitive rates, deploys a superior quality network, life of the cable used is thirty years and significant environmental hazards would occur if other parties laid their own cable.

CCP concluded that wireless internet services could be provided by different operators as far as technology is concerned but fixed line services such as telecommunication and media is based on wired and fixed line and have been granted exclusivity in DHA region.

CCP spokesperson confirmed ProPakistani the penalties on DHA and Wateen Telecom.