Uncompetitive practice: CCP finds support against International Clearing House

Consumer groups, businesspersons back CCP’s call to strike down the proposal.

ISLAMABAD: The 16th meeting of Competition Consultative Group (CCG) was held at the Competition Commission of Pakistan (CCP) Auditorium here on Friday, chaired by CCP chairperson Rahat Kaunain Hassan. Participants were briefed on recent initiatives taken by the CCP, and were invited to give feedback on the proposed establishment of an International Clearing House (ICH) for the telecom sector.

The proposal had come under a policy directive issued by the Ministry of Information Technology (MoIT), and the CCP had raised competition concerns over it in a policy notice issued on August 28, 2012.

The CCP chairperson highlighted competition concerns regarding the ICH, stating that advances in the telecom industry are a result of deregulation of the sector. She said that growth in volumes, low rates for consumer and more choices as well as better quality of services may be threatened by the proposed exchange. The establishment of an ICH was not only against the Telecom Deregulation Policy 2003 and the Competition Act, 2010, but also contravened Pakistan’s international obligations under the General Agreement on Trade and Services.

Members and officials of the country’s top antitrust watchdog, and representatives from the Pakistan Electronic Media Regulatory Authority, the Public Procurement Regulatory Authority, and other officials from different sectors of the economy, including consumers’ rights groups, were in attendance at the meeting.

The participants unanimously supported CCP’s stance against the ICH. Notable among them was the former Pakistan Telecommunication Company CEO Junaid Khan, who had overseen the entity’s privatisation.

He said that establishment of the ICH will increase arbitrage in the international market; especially from the UK and North America, which are the major call termination markets; and would thus encourage the grey market and the use of Voice over IP services.

“The setup may improve revenues of major telecom players in the short term, but may not benefit the industry at large and consumers in the long run,” he said. He emphasized that the move will promote quota systems at the expense of merit, entrepreneurship, quality of service and incentive to growth. He stated that the policy will help bigger telecom players more than smaller operators.

Dr Huma Bukhari, chairperson of the Consumer Association of Pakistan, said the ICH was an issue of concern to consumers, and that the CCP should be fully supported in its efforts to protect consumers’ interest. She added that the ICH arrangement appears to facilitate the formation of a cartel, which is anti-competitive and could harm consumers’ interest. Kaukab Iqbal, president of the Consumer Association of Pakistan, said that if the decision to establish ICH was not shelved, consumer groups would take the matter to court.

Published in The Express Tribune, September 29^th, 2012.