Despite strict warning from super regulator the Competition Commission of Pakistan (CCP), the Ministry of Information Technology and Pakistan Telecommunication Authority (PTA) have proposed establishment of International Clearing House (ICH) and fixation of termination rates on incoming overseas calls to Pakistan from October 1, 2012.
Keeping in view the proposed plan, various overseas Pakistanis have approached and shared their serious concern with the CCP stating that the hard working overseas Pakistanis who call their loved ones in Pakistan will now find it extremely expensive to call Pakistan and the remittance to Pakistan will also reduce.
Apprehensions have been expressed that the economic activity will suffer as overseas companies will be discouraged to do business with Pakistan. The worry is that if establishment of ICH and the fixed termination rates on incoming overseas calls to Pakistan is given effect as proposed by the Ministry of Information Technology and PTA from October 1, 2012 it will become very expensive in comparison to the neighbouring countries.
CCP has also learnt that international companies have expressed their concerns regarding these proposed changes and the impact on their businesses in Pakistan. These companies are requesting the Ministry of Information Technology and the PTA to consider delaying any implementation until the trade implications [vis-à-vis Pakistan’s international obligation under General Agreement on Trade and Services (GATS)] in this regard have been discussed further.
The CCP had issued a policy note on August 28 to the Ministry of Information Technology and PTA recommending the withdrawal of the directive issued on August 13, 2012 by the Ministry of Information Technology proposing establishment of ICH exchange for international incoming calls for long distance international, fixed-line local loops, wireless local loops and mobile operators (proposed ICH arrangement).
In its policy note, CCP had also advised Ministry of Information Technology and PTA that any such proposed arrangement or agreement if entered into, is not tenable in terms of Section 4 of the Competition Act, 2010.
It had also been observed in the policy note by CCP that in terms of Para 3(d) of the Directive, the representatives of PTA and Ministry of Information Technology on board as observers of proposed ICH arrangement, in itself curtails the free market commercial decision making of the LDI operators and perhaps undermines the regulatory powers of PTA.
The CCP had noted in its policy note that a substantial advantage will be available to the existing LDI operators due to the proposed ICH arrangement. The incumbent LDI operators will be in a position to exploit the said arrangement through a cost advantage over potential new entrants.
CCP in its policy note had concludes that under the directive and proposed ICH arrangement price fixation and sharing of market (quota allocation) are promoted. Such practices like price fixation and quota allocation are considered per se illegal being the most pernicious anticompetitive conducts. Competition regime is all about applying competition policy and principles of law to make undertakings compete vigorously with each other. This fair business rivalry ensured through the competition rules brings efficiency, increased productivity, creates a wider choice for consumers and helps reduce prices and improve quality. It also plays important role in weeding out inefficient undertakings and relocation of output from less productive to more productive undertakings. It needs to be recognised that the larger benefit of competition is to promote and enhance economic efficiency.