Background of the Case:

CCP initiated an enquiry in respect of practice of universities/institutions offering unaccredited engineering degrees/courses under Section 37 (1) of the Competition Act, 2010. The matter was brought to the attention of CCP through a letter that highlighted an article in a newspaper regarding universities/institutions that were offering unaccredited engineering degrees/courses to their students. CCP constituted an enquiry whether institutions offering engineering degrees/courses have been involved in deceptive marketing practices in terms of Section 10 of the Competition Act, 2010.

According to the findings of the Enquiry Report, the Higher Education Commission (HEC) pursuant to its mandate has authorized the Pakistan Engineering Council (PEC) to carry out accreditation of institutions offering engineering degrees/courses. The institutions offering engineering degrees/courses that fulfill the necessary requirements laid down by PEC are granted accreditation and their names are listed in the First Schedule of the Pakistan Engineering Council Act, 1976 (the ‘PEC Act’) which is updated from time to time. On perusal of advertisements in print and electronic media by various institutions offering engineering degrees/courses for the year 2011, the enquiry officers found that 27 institutions offering engineering degrees/courses in various disciplines were claiming to have been accredited, approved, allowed or permitted by PEC. However, on comparison of the advertisements with the updated list of the First Schedule of the PEC Act, it was found that none of the 27 institutions had been granted accreditation for the year 2011 as claimed in their advertisements.

The Enquiry Report concluded that the unaccredited institutions offering engineering degrees/courses and claiming to be accredited have, prima facie, violated Section 10 (1) of the Act. These institutions have also, prima facie, disseminated false and misleading information that is capable of harming business interests of others and distributed information to consumers regarding accreditation, lacking reasonable basis relating to the character and suitability of the degrees/courses offered and quality of education in terms of Section 10 (2) (a) and (b) of the Act.

The Commission considered various issued, including whether the institutions were conducting an economic activity, fall within the purview of the term undertaking and whether students can be defined as consumers. Given that all institutions were offering services on a market, they were undertakings within the meaning of section 2(1)(q). Similarly, while construing the term consumer liberally, it held that the term extended to students.

The order states that it is clear that the term ‘accredited by PEC’ implies that an engineering program has effectively met the norms and procedures prescribed by PEC and only those students that obtain an accredited engineering program degree are able to register with PEC as qualified engineers. The Bench held that as accredited status holds value for both, the engineering institutions and students; therefore, claims to this effect cannot be made in a casual manner. As none of the 27 universities had been accredited by PEC for intake of students in 2011, the Bench concluded that they had violated the provisions of Section 10 (1) of the Competition Act.

The Order:

The CCP Bench in view of its findings established that the 27 universities that had been issued show cause notices could not be treated in the same manner. The subject 27 universities have been divided by the Bench in to 3 distinct categories (a) those claiming to have been approved/recognized/permitted by PEC in respect of introduction of new programs (b) those claiming to have been accredited by PEC but ensuring that no students graduate without an accredited engineering program degree and (c) those claiming to be accredited by PEC but whose graduates have obtained un-accredited engineering program degrees.

The bench also observed that PEC being the only accrediting body in Pakistan for the engineering institutions has to remain conscious that its monopoly in the market of granting accreditation has to be transparent and above board. PEC was also directed to issue clear and concise guidelines in respect of the accreditation procedure and a code of conduct in order to facilitate engineering institutions in complying with due process of accreditation in an efficient manner. Rs. 5 million each imposed on University of Faisalabad, Wah Eng College, Univ of South Asia, Institute of Business Management and Synthetic Fiber Development and Application Centre College of Textile Engineering.

Current Status:

The universities complied with the order by filing the undertakings before the CCP. University of Faisalabad, Wah Eng College, Univ of South Asia, Institute of Business Management and Synthetic Fiber Development and Application Centre College of Textile Engineering have filed appeal before the Competition Appellate Tribunal. The matter is pending adjudication before the Tribunal.