Islamabad , 7 October 2008 – The Competition Commission of Pakistan [CCP] has decided not to withdraw the no-objection certificate issued to Siemens ( Pakistan ) to participate in the bidding for the Heavy Electrical Complex to be held on 13 October 2008. Obtaining the NOC was a condition established by the Privatisation Commission for all parties interested in the acquisition of HEC.

The Commission had received a complaint from Iljin Electric Company, Korea asking for the withdrawal of the NOC issued to Siemens on the ground that Siemens had provided false or misleading information; and further, should Siemens successfully acquire HEC, it would be in a dominant position in manufacturing 132KV power transformers and would abuse this dominance to crowd out competitors.

The Commission constituted an Enquiry Committee comprising Mr. Khalid A. Mirza, Chairman, and Dr. Joseph Wilson, Member, which held a hearing on 12 September 2008 attended by the representatives of Siemens and Iljin. The Committee wanted to establish whether there were any grounds in Iljin's contention that the proposed merger between Siemens and HEC would create or strengthen a dominant position, allowing the merged entity to raise prices above competitive levels without losing sales or if Siemens had indeed provided false or misleading information to secure the NOC.

The Committee, subsequent to the hearing, examined the matter in considerable detail based on documents submitted by both parties and through its own research. This involved determining whether the market for power transformers could be segmented according to voltage ratings, analysing market shares, and the relevance of the price factor with respect to the dynamics of competition in the power transformer market.

After examining all the facts, the Committee decided that there was no evidence of dominance in the power transformer market in Pakistan by any one company at present and neither was dominance to be expected as the dynamics of the market showed considerable variability taking into account domestic production and imports. Therefore, no violation of Sections 3 and 11 of the Competition Ordinance, 2007, were foreseen. The Committee also found that Iljin could not unequivocally establish the fact that Siemens had obtained the NOC on incorrect or misleading information. For this reason, the Enquiry Committee recommended to the Commission to refrain from withdrawing the NOC issued to Siemens or from taking any other action under the Competition Ordinance, 2007.

After duly considering the Enquiry Report, the Commission has decided not to withdraw the NOC granted earlier to Siemens. In this connection, it is noteworthy to mention that had the Commission withdrawn this NOC, Iljin would have been left as the sole contestant in the bidding for HEC.

CCP passed Order in the matter of Pakistan mobile communications Ltd (Mobilink GSM)

The Competition Commission of Pakistan (CCP), as successor of Monopoly Control Authority (MCA) has passed an Order on the Show Cause Notice issued by the MCA to Pakistan Mobile Communications Ltd (Mobilink GSM). The Show Cause Notice was issued in July, 2007 under Section 11 of the MRTPO for carrying on unreasonable restrictive trade practices. Taking a lenient view, the CCP has not imposed any fine or penalty in view of the undertaking given by the Mobilink GSM to remove the concern expressed by the CCP on some practices being followed by the service provider.

The Mobilink GSM has been directed to :

• make full disclosure and inform all its customers regarding the SIM lock feature. Importantly, all advertisement and promotional sales material with respect to BlackBerry handsets will in future carry a boldly displayed clear statement that the sales of these handsets are linked/tied with the BlackBerry service and Mobilink GSM Mobile Telecommunication Service;

• disclose the amount of subsidy, in each sale and a reasonable time period not exceeding one year determined on the basis of a pre-established formula on expiry of which the subsidy would be deemed recovered;

• inform the customers how the subsidy could restrict the customers ability to unlock the SIM lock feature;

• provide an unlocking procedure that must be convenient to the customer (e.g. not involving return of handset to a manufacturer);

• make the SIM locking time bound for the customer, keeping in view, international best practices but not exceeding the time period determine as per (b) above; and

• provide the option to switch over to another service provider upon payment of a specified, reasonable fee if the customer wants to switch prior to the expiry of the term.

In view of the submissions made before the Commission in these proceedings, the following issues emerge from the subject proceedings:

• Whether the subject activity in these proceedings constitute part of Telecommunication Services that are regulated, prescribed, determined or required to be approved by a regulatory authority in terms of Section 25 of the MRTPO?

• Whether there is any technical constraint in providing access to the BlackBerry Services (BIS & BES) through Mobilink GSM on the BlackBerry handset when a Mobilink GSM customer switches to another operator/service provider? If so, is there a possible technical solution to address this concern?

• Whether currently the Mobilink BlackBerry customer is entitled to exercise the option of switching over to another RIM enabled service operator for BlackBerry services?

• Whether the buyer of a BlackBerry handset from Mobilink GSM is subjected to a tie-in arrangement which constitutes unreasonably restrictive trade practice under the MRTPO on the part of Mobilink GSM?

The thrust of the above Order is that currently the Mobilink GSM Blackberry customer does not have any option to switch over to another service operator whether RIM enabled or not. It would perhaps also be correct to state that most of the customers are not aware about the SIM locking restriction. Similarly, no procedure is in place whereby the customer can seek unlocking of the SIM from Mobilink GSM as of right, if it so desires for the purposes of switching over to another network/service provider

The case was heard under the Chairmanship of Mr. Khalid A. Mirza, Mr. Abdul Ghaffar, Mrs. Rahat Kaunain Hassan, Miss. Maleeha Mimi Bangash and Dr. Joseph Wilson Members were present. Senior Executive (Mergers, Cartels, Monopoly and Trading) and the Registrar assisted the Commission during the hearings.

Laptop case (Bahria University)

Responding to the notice issued by the Competition Commission of Pakistan (CCP) senior officials of the Bahria University , Islamabad , appeared before the Commission to explain as to why proceedings under Section 38 of the Competition Ordinance may not be initiated against the University.

The hearing of the case was held on June 16, 2008 at the CCP Office. Dr. Joseph Wilson, Member CCP conducted the hearing. Rear Admiral Shahid Latif, Commander Mumtaz Raza and Cap. Tashfeen Riaz appeared on behalf of the University.

The Member, after hearing the case and keeping in view all the facts placed before him observed in his order issued on Friday that since the University is providing educational services and now they have committed to comply with the Competition Law in future, the Commission is not imposing any penalty on the University. However, they have to refund the interest amount up to Rs.10 Million to the students who have purchased the laptops from University on installments and have been paying the interest cost. Further the University was ordered to stop the practice tying immediately.

Taking notice of a news item published in the Daily "The News" on 16-02-2008 alleging that the students seeking admission in the Bahria College were being forced by the University authorities to buy old Laptops, the CCP decided to initiate an inquiry. Vide their letter dated March 04, 2008, the CCP asked the Rector of the University for their comments on the allegation made in the said report, mainly:-

• Bahria College (the College) has made it mandatory for the new entrants to buy Laptops imported by the College;

• 4500 Acer Laptops purchased in 2006 have been sold as a pre-condition to those who got admission in certain disciplines during 2007 and 2008;

• A large number of students were reluctant to buy these Laptops as they already have their own but still they were made to buy these "Obsolete" machines to qualify for admission in the College; and

• Almost 1500 machines still remain unsold and would be provided to the next batch of admission seekers of the College.

In their reply vide letter dated April 11, 2008, the University Authorities admitted that they have been selling the Laptops to the students as it was considered the helpful tool for the students in their education specially in Information Technology. The University, however, informed the Commission that they have revised the policy and from the next semester, no student would be required to mandatorily purchase of Laptops from the University stocks.

The University in its reply stated that it has initiated the scheme only to facilitate the students and enable them to make use of the digital library, e-teaching by faculty and other steps taken by the University to make the campus WiFi. The University also clarified that they bought the Laptops through a loan from Bank of Punjab and they were passing on all the payments received from the students to the Banks for repayment of their loan and the interest amount.

During the hearing, officials of the Bahria University explained that the University imported 4500 Laptops keeping in view the number of students in both the campus of the University in Islamabad and in Karachi . He further explained that so far they have sold 3649 Laptops to the students, out of which 2327 have been sold on installments and 1322 on lump sum payment. The University, however, admitted that due to ignorance of the Competition Law they were unaware of the violation and as soon as they received the notice of the Commission, they stopped the sale of Laptops in the campus and also removed the mandatory requirement of purchase of Laptops.

They further requested the Commission to take a lenient view in their case as they are a prime institution providing educational services to a number of students and they were ignorant of the violation.

In an another matter on the 24 th of July CCP also heard 4 senior cement sector executives who were witnesses at the CCP inspection of APCMA office on 24 th April, 2008. The witnesses made their statements under oath. These statements will assist the CCP in its further proceedings.

Seminar on Competition Law

The Competition Commission of Pakistan (CCP) in its desire to improve awareness and understanding of competition laws and their implications for various business sectors in the country is organizing two seminars on the "Importance of the Competition Regime in Modern Business" in Bhurban on 28 th July, 2008 and in Karachi on 30 th July, 2008. The seminars will assist the CCP in its advocacy responsibilities, in projecting its work to a wider audience in the country and in enhancing awareness of the need to make competitiveness an integral element in the long term development of the Pakistan economy.

Prominent guest speakers at the seminars will be Mr. Alden F. Abbott, who is a Director in the Bureau of Competition, Federal Trade Commission of the United States , Mr. Alberto Heimler, Central Director for Research and International Affairs in the Italian Competition Authority and Mr. Vinod Dhall, Member and Acting Chairman of the Competition Commission of India. The guest speakers will provide insights from an International perspective regarding the need for competition laws and their importance in the promotion of a healthy business environment in a modern economy.

Participants in these seminars will include senior business executives, office bearer of professional bodies and high level Government officials as well as officers of International development agencies.

Fixation of prices of CNG by CNG Station Owners Association of Pakistan (July 10, 2008)

The Competition Commission of Pakistan (CCP) has taken notice of arbitrary fixation of prices of CNG by CNG Station Owners Association of Pakistan and directed its Chairman to submit relevant information regarding the working of the association and the powers being exercised by it in fixation of sale prices of CNG in the country.

The action has taken by the CCP in view of numerous reports published in the national press complaining that the CNG Dealers Association was fleecing the consumers by fixing the prices in an arbitrary and cartel like manner for various parts of the country. The Oil & Gas Regulatory Authority (OGRA) vide its letter dated 05-07-2008 addressed to the Chairman, CNG Station Owners Association of Pakistan (and copy thereof endorsed to the Chairman, CCP) has also informed that CNG consumer price is deregulated and is determined by the CNG license on competitive basis. According to this letter OGRA states that no CNG association, therefore, has any legal authority to determine, fix or notify CNG consumer price as a cartel. Therefore the collusive behaviour of CNG Owners Association in fixing prices would be monitored vigilantly.

The CCP vide its letter dated July 09, 2008 addressed to Malik Khuda Buksh (Chairman, CNG Station Owners Association of Pakistan), Karachi has asked for a formal response to the issues raised therein, by July 21, 2008. The letter asks whether,

a) the price of CNG is exclusively fixed by the association or if there is any role played by regional associations as well in price fixation of CNG?

b) the association ever asked its member CNG stations to stop supply of CNG to the customers?

c) the price fixed by the association is applicable throughout Pakistan on a uniform basis or it varies from region to region?

d) there is a price monitoring system devised by the association?

e) the membership of the association is compulsory for all the CNG stations?

The Competition Commission of Pakistan will determine its course of action after due consideration of the response provided and a thorough review and analysis of all relevant facts pertaining to the industry.

In another move the CCP has directed executives of Cement Sector to appear as witnesses in the case of obstruction of CCP officials duty of conducting search and inspection of APCMA office.

CCP showed concern regarding "the economic loss caused to the students who were forced to purchase the Laptops" by Bahria University . ( June 10, 2008 )

The Competition Commission of Pakistan (the Commission, CCP) has directed the Administration of Bahria University, Islamabad , to appear before the Commission on June 12, 2008 and explain as to why proceedings under Competition Ordinance, 2007, may not be initiated.

Taking notice of a news item published in the Daily "The News" on 16-02-2008 alleging that the students seeking admission in the Bahria College were being forced by the University authorities to buy Laptops, CCP decided to initiate an inquiry. Vide their letter dated March 04, 2008, CCP asked the University for their comments on the allegation made in the said report, mainly:-

• Bahria College (the College) has made it mandatory for new entrants to buy Laptops imported by the College;

• 4500 Acer Laptops purchased in 2006 have been sold as a pre-condition to those who got admission in certain disciplines during 2007 and 2008;

• A large number of students were reluctant to buy these Laptops as they already had their own but still they were forced to buy these machines to qualify for admission to the College; and

• Almost 1500 machines still remain unsold and would be provided to the next batch of students admitted to the College.

CCP showed concern regarding "the economic loss caused to the students who were forced to purchase the Laptops". To assess and address this concern, the Commission has granted the University an opportunity of being heard and to explain the University's position. The hearing is scheduled for 12 th June, 2008 at 11 a.m. at the CCP Head Office, Islamabad .