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CCP starts proceedings against PQA, EVTL.

KARACHI, July 10 -- Competition Commi-ssion of Pakistan (CCP) has started proceedings against Port Qasim Authority (PQA) and Engro Vopak Terminal Limited (EVTL) for violations of the provisions of competition law in their agreement to set up an integrated liquid chemical terminal.

"CCP has issued show cause notices to the both entities after finding prima facie violations of provisions of Section 4 and 38 of the competition ordinance", sources told Daily Times on Friday.

The CCP took suo moto notice of an Implementation Agreement (hereinafter referred to as the 'Agreement') executed on 18-02-1996, continuing and presently in force, by and between PQA and EVTL (then known as Engro Paktank Terminal Limited or EPTL) for setting up of integrated liquid chemical terminal and storage farm at South Western zone of Port Qasim, Karachi.

It has been alleged in the show cause notices that, PQA through the Agreement, by awarding exclusive right in favour of EVTL, to operate as chemical terminal operator has prevented competition with other terminal operators for particular traffic within PQA area for 30 years, which is extendible for another 30 years. Such arrangement between EVTL and PQA, prima facie, has the object of creating entry barrier and restricts the competition in the relevant market.

It has also been alleged in the said show cause notices that, pursuant to the Agreement, the customers and users of supply of storage services for liquid chemicals entering the port are, prima facie, left with no option but to use the storage facility offered by the EVTL notwithstanding the fact that terminals for storage of chemicals were already operating at the time of grant of such exclusive rights. Hence, restricting customers/users from choosing a chemical terminal operator/supplier offering competitive trading terms and conditions. It further appears to restrict competition inter se the chemical terminal operators in the relevant market.

CCP issued a General Order published in the Official Gazette vide SRO 51(I)/2008 dated 15-01-08 informing and requiring all the undertakings to seek exemption within (90) days from the issuance of the General Order, in respect of all the agreements falling within the ambit of Section 4 of the Ordinance which were entered into with or without intimation to the defunct Monopoly Control Authority (a competition authority subsisting at the time of promulgation of the Ordinance). Thereafter, reminders to comply with the said General Order were also published in all the leading newspapers. However, despite repeated requests, CCP did not receive any application for grant of exemption for any such agreement executed by PQA so far.

Show cause notices allege that the PQA and EVTL appear to have entered an agreement prohibited under the Ordinance which has the object or effect of preventing, restricting or reducing or distorting competition within the relevant market which prima facie, constitutes violation of Sections 4(1) and 4(2)(d) of the Ordinance.

PQA and EVTL have been called upon to show cause in writing within fourteen days of show cause notices and to appear and avail the opportunity of hearing before the Commission on July 21, 2010 and explain as to why an appropriate Order under clause (b) of section 31 of the Ordinance may not be passed and a penalty at the rates prescribed in Section 38 of the Ordinance may not be imposed.

Published by HT Syndication with permission from Daily Times. For more information on news feed please contact Sarabjit Jagirdar at htsyndication@hindustantimes.com

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Publication:Daily Times (Lahore, Pakistan)
Date:Jul 10, 2010
Words:586
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