Collusive activities: Medical centres slapped with Rs450m fine

Centres fixed uniform fee, divided market for medical tests of workers going abroad.

ISLAMABAD:

The anti-trust watchdog has slapped a fine of Rs450 million on medical centres for collusion in the market for provision of medical services to Pakistanis who travel to the Gulf Cooperation Council (GCC) member countries in search of jobs.

The Competition Commission of Pakistan (CCP) imposed a penalty of Rs20 million on each of the 20 GCC-approved medical centres (GAMC) and Rs10 million on each of the five GCC-approved medical centres administrative offices (GAMCA) for indulging in collusive activities in violation of the Competition Act 2010.

A CCP bench comprising Chairperson Rahat Kaunain Hassan and members Abdul Ghaffar and Dr Joseph Wilson passed the order in respect of the proceedings initiated against the medical centres for division of market and equal allocation of customers among themselves and also exploiting customers by restricting their choice and imposing unfair terms and conditions, according to the CCP.

The proceedings were initiated on the complaint of Pakistan Overseas Employment Promoters Association, alleging that the medical centres were fixing a uniform fee, dividing the market and equally allocating the intended expatriate workers among themselves for pre-departure medical tests, which is mandatory for those proceeding to GCC states – Bahrain, Kuwait, Oman, Qatar and Saudi Arabia. The system of pre-departure medical tests has been in place since 2000.

The bench, in its order, rejected the stance taken by representatives of the medical centres that fixing a uniform fee, dividing the market and equally allocating the intended overseas workers among themselves for pre-departure medical tests was an ‘Act of State’ and they were compelled to comply with it. They took the plea that under the doctrine of ‘foreign sovereign compulsion’ the provisions of the Competition Act were not applicable to them.

The plea of the medical centres’ representatives that the equal distribution system was implemented in order to curb malpractice ie discouraging kickbacks was also found not tenable and could not be a ground to allow express contravention of law, said the CCP.

The malpractices, if at all, had to be addressed it should have been done either through effective monitoring, proper enforcement, imposition of penalties or cancellation of licence and accreditation, it added.

It was observed that the division of market and equal allocation of GCC customers allowed the medical centres to operate in their comfort zones by ensuring guaranteed revenues. Therefore, the bench concluded that the competition was prevented and restricted, leaving no incentive to bring any innovation or efficiency.

The CCP asked the representatives of the medical centres to discontinue the practice of territorial division and equal allocation of GCC customers among themselves and file compliance report before mid-August.

The CCP observed that in case the medical centres continue with the practice of market distribution, they will be liable to an additional penalty of Rs500,000 for each day of default.

Published in The Express Tribune, July 26^th, 2012.