ISLAMABAD: The Competition Commission of Pakistan (CCP) has imposed a cumulative fine of Rs30 million on the Pakistan Engineering Council (PEC) for restricting competition in the market for insurance coverage of public civil works in violation of Section 4 of the Competition Act 2010.
The order has been passed by a bench comprising the commission’s chairperson, Vadiyya Khalil, Dr Shahzad Ansar, Member (Office of Fair Trade and Advocacy) and Ikram Ul Haque Qureshi, Member (Cartels and Trade Abuses and Legal).
The order disposes of the proceedings arising out of the show-cause notice issued to the PEC after the completion of an inquiry based on a complaint received against the engineering body. The complaint alleged that the body had restricted insurance coverage of public civil works to only ‘AA’ rated companies, which placed other insurance companies at a competitive disadvantage.
The order finds that the PEC had included provisions in its standard bidding documents, which restricted insurance companies not having an ‘AA’ rating from providing bid and performance guarantees to civil work projects in the public sector. The practice effectively foreclosed the market to two-thirds of insurance providers, which also resulted in the reduction of choices available to consumers and amounted to a restrictive trading condition in terms of Section 4(2) (a), in violation of Section 4(1) of the Act.
The requirement, placed by the PEC, is only applicable to insurance companies and not to banks, which are also engaged in providing the same services, and thus constitutes the application of dissimilar trading conditions to equivalent transactions in terms of Section 4(2) (f), in violation of Section 4(1) of the Act.
In view of the two violations, the CCP, besides imposing the penalty, has further directed the PEC to amend the standard bidding document, refrain from engaging in similar practices in the future and submit a compliance report with the Registrar of CCP.
Courtesy : Dawn News