ISLAMABAD  - The Competition Commission of Pakistan (CCP) has disposed off a show cause notice issued to Indus Motor Company Limited after compliance by the company with the provisions of the Competition Act, 2010 by addressing competition concerns in the Booking Order.

CCP received concerns raised by customers regarding the Booking Order issued by Indus Motor Company for purchase of a new car. Scrutiny of booking order revealed that terms and conditions mentioned therein appear to be unfair trading conditions imposed on customers in terms of Section 3(3)(a) of the Competition Act, 2010. Indus Motor Company limited was issued Show Cause Notice in this regard.

During the course of hearing, M/s Indus Motor Company Limited requested the Bench to allow them to amend the terms and conditions of its booking order and submitted a revised draft booking order in compliance of the provisions of the Competition Act. Terms and conditions which have been rectified by M/s Indus Motor Company Limited include the following: Regarding cancellation of booking, initially the Indus Motor had sole and absolute discretion to accept or reject the request of cancellation by the buyer. If for some reasons Indus Motors failed to deliver the vehicle as ordered or on time, the buyer could not cancel the contract. It was at the entire discretion of the Indus Motor and the buyer would be bound to take delivery of the vehicle on full payment for the same. Cancellation right is an important tool that creates balance among the parties. Indus Motors has rectified this imbalance not only by relinquishing its unilateral right to reject the request for cancellation by the buyer but also waving off any charges in case the application for cancellation is based on an unsatisfactory change in price or delivery schedule.

Such rectification made by Indus Motors has put the consumer at an equal footing with regard to the aspect of cancellation by leaving room for the customer to cancel the booking at no extra expense if the consumer is not satisfied with any changes made in the initial agreement pertaining to price or delivery schedule.

Under the original PBO, Indus Motor had the sole right to alter some or all terms and conditions of PBO and also the right to interpret them conclusively.  Having such a clause in the contact can be used to force the buyer to accept increased costs, new requirements, or reduced benefits, and is therefore considered unfair whether or not it is meant to be used in that way. This clause has been completely removed from the revised draft PBO.

Similarly, another condition whereby any dispute between the customer and Indus Motor company was to be conclusively decided by the Managing Director of Indus Motors has been amended to refer such dispute to an Arbitrator to resolve and settle the matter under the arbitration Act 1940 of Pakistan, thus giving fair and equal right to both parties i.e. the buyer and Indus Motor.

Initially, Indus Motors held the sole right to change the design, construction specification without notice to buyers. Such clause gave power to Indus Motor to substitute something different for what it has actually agreed to supply. During the hearing it was explained to the Bench that change in specifications of the vehicle could take place due to constant advancement in technology or under the direction of the government. In light of this discussion, PBO was revised which specifically mentions that Indus Motor may make minor alterations to the design and construction specification of the Vehicle, and make such alterations in the vehicle as required by any Federal and/or Provincial legislation.

Indus Motor had the sole right to change price of the vehicle without notice to buyer at the time of delivery. This clause created uncertainty as to price and buyer was not sure of how much extra amount is to be paid at the time of delivery for getting what he or she has been promised even though the “consideration” has already been paid. This lacuna has been removed by explicitly mentioning in the revised draft PBO that revision of prices would only be subject to a change, if any, in Government levies/taxes and/or currency fluctuation.

CCP is geared to create a level playing field for all businesses in the country. Shaping a constructive, effective and responsive competition regime will require the commitment and contribution by all parties. CCP is appreciative of prompt response and diligent efforts by M/s Indus Motors Company Limited to resolve the issue in compliance with the Competition Act.

Since its establishment, CCP has been focused on corrective behavior, a positive outcome of which is that businesses are rectifying their anti-competitive practices/ behavior and are integrating competition compliance into their corporate governance framework.