CCP imposes Rs 450m fine on GCC medical centres

Posted on 10 months ago

ISLAMABAD (Online): The Competition Commission of Pakistan (CCP) has imposed a total penalty of Rs 450 million including Rs 20 million on each of 20 GCC Approved Medical Center (GAMC) and Rs 10 million on each of five GCC Approved Medical Centers Administrative Office (GAMCA) for indulging in collusive activities in violation of Section 4 of the Competition Act, 2010 (the 'Act').
A CCP Bench comprising of Chairperson, Rahat Kaunain Hassan, Member, Abdul Ghaffar and Member, Dr Joseph Wilson, passed and issued the Order in respect of the proceedings initiated against GAMCAs & GAMCs (Respondents) for division of market and equal allocation of customers among the themselves and also exploiting customers by restricting their choice and imposing unfair terms and conditions in violation of Section 4 of the Act.
The proceedings were initiated on the complaint of Pakistan Overseas Employment Promoters Association (POEPA) wherein it was alleged that the Respondents are fixing a uniform fee, dividing the market and equally allocating the intended emigrants/ expatriate workers (GCC Customers) among themselves for the pre-departure medical tests, which is mandatory in nature to proceed to GCC States Bahrain, Kuwait, Oman, Qatar, Saudi Arabia. The Respondents were also alleged to have been exploiting the customers by restricting their choice and imposing unfair terms and conditions which amounts to violate Section 3 & 4 of the Act.
The Bench in its Order rejected the grounds taken by the Respondents that "fixing a uniform fee, dividing the market and equally allocating the intended emigrants/ expatriate workers (GCC Customers) among themselves for the pre-departure medical tests is an 'Act of State' and the Respondents are compelled to the implement such system, therefore, under the doctrine of 'foreign sovereign compulsion' the provisions of the Act are not applicable to them. The Bench observed that these doctrines are not available or recognized as defenses for contravention of Section 4 provisions, at best the Commission can look and examine these grounds in its discretionary exercise while considering grant of exemption. The defenses on the basis of these doctrines after being examined on merit were held to be untenable.
With respect to the price fixing aspect, the Bench has observed that given that such medical tests are in the nature of mandatory/ necessary services for the GCC Customers and are only conducted by the accredited medical centers i.e. GAMCs; if a prescribed fee in the form of ceiling is not provided, the GAMCs could start charging fee at exploitative rates (particularly keeping in view the customers it caters for). The purpose of allowing upper ceiling for such prescribed fee would also allow certain level of competition amongst the GAMCs vis-à-vis fee. It would also provide incentives for the Respondents to strive for greater efficiency and better quality of services as once the price is capped as an upper ceiling, the GAMCs may still work towards reducing operational costs along with improvement in quality of services.

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