CCP imposes penalty on DHA, telecom firm

ISLAMABAD - The CCP Tuesday imposed penalty on Defence Housing Authority and Wateen Telecom for entering into a prohibited agreement. CCP bench comprising of Chairperson, Rahat Kaunain Hassan and Member (M&A) Vadiyya Khalil, passed an Order in respect of the proceedings initiated against the DHA and Wateen Telecom for entering into a prohibited agreement by granting exclusivity, whereby a penalty of Rs 10m on DHA and Rs 5m on Wateen has been imposed for violation of the provisions of the Competition Act, 2010. Furthermore, the provisions of the agreement between DHA and Wateen, keeping in view the facts of the case, the grant of exclusivity in respect of right of way and to dig soil, have been declared to be in violation of Section 4 and thus of no legal effect. Accordingly, grant of exemption in respect of such exclusivity has been denied. 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 1m for every day of the continuing violation. 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 Wateen, for provision of telecommunication and media services and the unsatisfactory quality of such services. The information provided by DHA and Wateen to the Commission revealed that there was an exclusive arrangement between the parties whereby Wateen was the only service provider entitled to provide telecommunication and media services in certain phases of the property under the control of DHA. 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 which have the object or effect of preventing, restricting or reducing competition within the relevant market unless exemption has been granted by the Commission. DHA in the hearings and through written submission admitted that the agreement between DHA and Wateen violated Section 4 of the Act and showed its willingness to modify the agreement in accordance with law. While, Wateen argued that the arrangement between Wateen 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 Wateen only pertained to right of way. Wateen also submitted that the exclusive arrangement for 30 years would qualify for an exemption under Section 5 and 9 of the Act, as Wateen 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 or used Wateens.