The Daily Times reported that the Competition Commission of Pakistan has imposed PKR 25 million fine on Pakistan Steel Mills for abusing its dominant position in the low-carbon steel market by refusing to deal with customers like Frontier Foundry (Pvt) Ltd.
CCP in its findings pointed out that PSM abused its dominant position in the low carbon steel market by refusing to deal with customers like FFPL in violation of Section 3(3)(g) of the Ordinance.
While determining the amount of penalty to be imposed, CCP felt it is apposite to mention that whereas there is no binding or exhaustive list of criteria that must be taken into account while imposing penalty in every case this Commission has always been mindful of the stated Policy Objectives of the fining guidelines, to deter undertakings from engaging in anti competitive practices and to reflect the seriousness of the infringement.
Also, relevant are factors such as duration of the infringement, its seriousness and any other mitigating and/or aggravating factors. It is no secret that ‘cartelisation’ is generally considered the most egregious violation of the competition law, abuse of dominant position can have equally deleterious effects on competition and the consumers.
Another important factor is that although the duration of the infringement was not very long, it did continue till the Commission intervened in the matter. Therefore, the corrective conduct appears to be a result of proceedings initiated by the Commission rather than independent efforts by PSM. CCP investigators have also taken into account not only the specific circumstances but also the general context of the infringement. In this regard, it is particularly relevant that this infringement was borne out of the conduct of a state-owned enterprise. It is CCP’s considered views that in a country like Pakistan state-owned enterprises must take extra care to ensure that competition is not distorted because of their actions or, indeed, omissions. Barriers to entry for competitors to PSM are extremely high, and there are no plans in the foreseeable future for the establishment of comparable or competing steel mill in the country. Therefore, it behooves an undertaking in PSM’s dominant position to take whatever steps necessary to promote fairness, transparency, and a reliable process in allocation of its coveted products. Every dominant undertaking has a special obligation to avoid engaging in a monopolistic or exclusionary manner, but particularly those that are entrusted by the state to produce those goods that would otherwise need to be imported, the CCP order added. CCP has said in its order that also notable is the fact that this infringement would not have occurred without the active participation of the senior management of PSM. Without prejudice to the aforesaid, we acknowledge that the conduct of PSM has been co-operative since the change of its management in August 2009 and that has also been a relevant factor taken into consideration.
A balance needs to be struck between imposing a fine reflecting the infringement, its character and effect as well as the progressively co-operative conduct of the undertaking. This Commission has, in the past, held that the competition law is at a nascent stage in Pakistan and therefore in many cases a measure of restraint has been exercised while imposing the penalty. ”In the light of the above and under the circumstances, it is our considered view that Rs 25 million would be an appropriate penalty to be imposed on PSM in this case”. CCP has refrained from imposing a higher penalty which ordinarily would have been appropriate considering the gravity of the offence and instead imposed a relatively moderate fine, taking into account the fact that the abuse occurred for a period of three (3) months, pertained only to SAE 1080 and SAE 1010 billets which comprise a very small portion of the annual production at PSM, and that all the abuse occurred under the leadership of the then-Chairman who has since been removed. However, CCP has cautioned the current and future leadership at PSM from engaging in anti-competitive conduct of any kind in the future. We would like to take this opportunity to reprimand PSM for abusing its dominant position, and any future infringement of the Ordinance would be viewed most adversely by the Commission and justify the imposition of a far higher penalty.
(Sourced from dailytimes.com.pk)
