ISLAMABAD, August 19: The Competition Appellate Tribunal has upheld the Competition Commission of Pakistan’s (CCP) decision to penalize Pakistan Telecommunication Company Limited (PTCL) and other Long Distance International (LDI) operators for their involvement in an anti-competitive International Clearing House (ICH) agreement. The tribunal has directed the companies to pay the fine within 30 days.
The dispute traces back to 2012 when PTCL and other LDI operators entered an agreement to route all incoming international calls through a single gateway operated by PTCL as the head of the LDI consortium. The deal raised the termination rate from about 2 cents per minute to 8.8 US cents and allocated revenue shares and traffic quotas, effectively shutting down competing networks and increasing prices for overseas callers.
The CCP deemed the ICH arrangement a cartel, involving price-fixing and market-sharing, and imposed penalties of 7.5% of annual turnover on each operator in April 2013. The Pakistan Telecommunication Authority (PTA) was also tasked with restoring competition before the ICH arrangement. Despite a significant fall in incoming call volumes—dropping from 1.9 billion minutes in September 2012 to 579 million in February 2013—LDI revenues surged by 308%, from $8.37 million to $59 million.
The tribunal, while upholding the CCP’s findings, reduced the penalty to 2% of the turnover generated from the ICH agreement. It also warned that failure to pay within 30 days would result in the reinstatement of the original 7.5% penalty. The tribunal rejected the operators’ claims of “state compulsion” or directives from the Ministry of Information Technology, confirming that the operators themselves sought and secured the policy directive for ICH.
Furthermore, the tribunal affirmed the application of the Competition Act, 2010, to government bodies and regulators, ruling that even the PTA could be held accountable for restricting competition. It dismissed the argument that the CCP lacked jurisdiction because the calls were incoming and free for local consumers, emphasizing that the ICH agreement hindered market entry and competition.
