BACKGROUND:

The Islamabad Stock Exchange (ISE) and Lahore Stock Exchange (LSE) filed a complaint against the Karachi Stock Exchange (KSE) for refusing to share its trading platform. The primary issue for the Commission’s consideration was whether such refusal amounts to an abuse of dominant position under the Ordinance.

In relation thereto, the Commission also, inter alia, considered i) whether all three (3) stock exchanges constituted the relevant market? ii) whether the KSE occupied a dominant position in the said market?

The Commission found that all three exchanges constituted the relevant market as, inter alia, commonly listed securities are traded across the exchanges having the same depository and clearing companies. The Commission also held that the KSE occupied a dominant position on account of its 87% market share.

The Commission found that KSE’s actions creating an artificially segmented market and refusal to allow access that would enable consumers to have the best price amounts to exclusionary and anticompetitive conduct that lacks a reasonable business justification violated Section 3.

ORDER:

The Commission held that refusal to deal on part of KSE could not be permitted to continue and, therefore, directed to take such measures along with the other exchanges of Pakistan to enter into an arrangement similar to that of UTS (Unified Trading System) existing between LSE and ISE to ensure availability of and access to the best price of commonly listed securities (on all exchanges) to all investors including those of LSE and ISE (regardless of geographical location).

In case of failure to comply with this direction KSE will be liable to pay a penalty of Rs.50 million at the end of the six month period and thereafter an additional penalty of Rs.250,000/- per day if the noncompliance continues. To facilitate implementation the Commission further directs that if reasonable commercial terms for the arrangement/facility are not agreed between the parties within two months of the date of this Order, any or all parties can make a reference to the Commission which will then proceed to appoint a firm of chartered accountants to make such determination. Under all circumstances it shall be KSE’s responsibility to ensure compliance within the time periods stipulated above.

CURRENT STATUS:

Case transferred to CAT from Supreme Court.