Background of the case:

The proceedings were initiated on the complaint of Pakistan Overseas Employment Promoters Association (POEPA) wherein it was alleged that the respondents are fixing a uniform fee, dividing the market and equally allocating the intended emigrants/ expatriate workers (GCC Customers) among themselves for the pre-departure medical tests, which is mandatory in nature to proceed to GCC States Bahrain, Kuwait, Oman, Qatar, Saudi Arabia.

The respondents were also alleged to have been exploiting the customers by restricting their choice and imposing unfair terms and conditions which amounts to violate Section 3 & 4 of the Act.

The Commission constituted an Enquiry Committee to conduct a detailed enquiry on the complaint. The Enquiry Officers completed their enquiry and submitted the Enquiry Report on 31 January 2012. On recommendations of the Enquiry Report show cause notices were issued to GAMCAs for prima facie violation of Section 3 and 4 of the Competition Act, 2010.

The first issue dealt with by the Commission was whether the respondents were undertaking economic activity and whether they fell within the purview of undertakings. In this regard, the Commission considered two tests, i) comparative criterion, and ii) market participation. Under the comparative criterion, where an activity can only be carried out by a public body and that activity cannot be performed by a private entity, that body cannot be considered to be an undertaking. Under the market participation test, it is not merely the fact that in theory, private operators may carry out economic activities having social functions but it is the market condition where under such activities are carried which is dispositive. Based thereon, the Commission concluded in the affirmative.

On the issue of the respondents constituting a single economic entity, the Commission looked into the concept of principal and agent and ruled that such a relationship did not exist between the respondents.

On the issue of foreign state compulsion and act of state defense, the Commission looked at international jurisprudence on the subject, but concluded that the same are not defenses to section 4 of the Act but were considered in the Commission’s discretionary exercise.

Concluding on this issue, the Commission found that the respondents failed to satisfy the test for foreign state compulsion. Similarly, on the act of state doctrine, the Commission also found that the requisite jurisprudential test was also not met.

On the issue of whether fixing of a fee constituted a violation, the respondents were required to file an exemption application. Lastly, on the issue of division of markets and equal allocation of customers, the Commission noted that market divisions end all forms of competition and is an agreement that is per se illegal.

The Order:

A total penalty Rs 450 million penalties included Rs 20 million on each of 20 GCC-approved medical centres (GAMC) and Rs 10 million on each of five GCC-approved medical centres administrative office (GAMCA).

Current Status:

GAMCAs have filed appeals before the Competition Appellate Tribunal and Lahore High Court and Sindh High Court at Karachi and obtain stay orders. The matter is pending adjudication.