Background of the case:

On 29 February 2016 Evacuee Trust Property Board (ETPB) lodged a complaint with the Commission, wherein it was argued that Regulations and Circulars formulated by APNS are in violation of section 4 of the Act. An enquiry was initiated to assess whether of the Rules, regulations, and circulars are in contravention of the provisions of Section 4 of the Act.

The Enquiry Report found that clause 1 through 9 of APNS Rules dealt with accreditation of advertising agencies by its Executive Committee. Based on the analysis of the documents and evidence gathered in the course of investigation, it was concluded that clause 3(a), 3(b), 3(c), 3(d), 4, 4A(iii), 7 (read with para 13 of ARCE), 4A(v), 6 and 9, 4A(iv) pertaining to conditions for accreditation of advertising agency, trade discount, credit terms and handling of government business were prima facie, restrictive and discriminatory in contravention of Section 42(a) and 4(2)(f) read with Section 4(1) of the Competition Act.

With regards to fixing of the commission of the advertising agencies, the Enquiry Report further highlighted that clause 4A (iii) and 7 of APNS envisage capping of the commission and clause 10 bars negotiating advertising rates. The Enquiry Report also found that the paragraph 5 of APNS MOU barred member publications from offering lower rates, and paragraph 1 of SS Rules also capped trading discount/commission for supplements in contravention of Section 4(2)(a) read with Section 4(1) of the Competition Act.

It was further observed that clause 9 of APNS Rules related to the clearing of payment mechanism and empowered APNS to operate as a clearinghouse on behalf of its members in contravention of Section 4(2)(a) read with Section 4(1) of the Competition Act. If there was any deviation from the aforesaid rules, APNS could impose sanctions and blacklist clients on behalf of its member undertakings and paragraph 12 of ARCE imposed a restriction on direct business between clients and the publication. According to the Enquiry Report, APNS and its member undertaking vide 2003 Circular had attempted to coerce the government clients to purchase more advertising space, which prima-facie constituted the imposition of restrictive trading conditions in contravention of Section 4(2)(a) read with Section 4(1) of the Competition Act. Finally, clause 3(c), 3(e), 4, 7 and 14 of MBH Rules relating to accreditation, renewal of registration, restriction on business, fixing of the commission of MBHs were also found in contravention of Section 4 of the Act.

Subsequently, citing their compliance-oriented approach, APNS proposed to amend the impugned clauses. However, APNS was unable to satisfy the concerns of the Commission on hearings dated 28 November 2016 and 27th March 2018. Furthermore, they failed to provide the requisite documents requested of them.

Issues raised:

I. Whether the Respondent has adopted decisions that tantamount restrictive trade practices and/or price-fixing in the relevant market in contravention of Section 4(2) (a), 4(2) (c) and 4(2) (f) read with Section 4(1) of the Act?

II. If the answer to the above question is affirmative, whether there exist substantial and reasonable grounds that would mitigate the severity of the consequences attracted by the contravention of the Act.

Order:

The Order (dated 06-12-2018) of the Commission held that the impugned clauses were anticompetitive in contravention of Section 4(2) (a), 4(2) (b) and 4(2) (c) read with Section 4(1) of the Competition Act, and therefore all the rules, regulations and circulars stood null and void with immediate effect, with APNS being directed to formulate New Rules and regulations and circulars.

The Commission recognized the Respondent's cooperation and compliance-orientated approach as the mitigating factor and imposed a penalty of PKR 10,000,000/- (Rupees Ten Million Only).

APNS was directed to submit a compliance report in terms of the order in general and paragraph 50 supra with the Office of Registrar of the Commission within 60 (sixty) day from the date of issuance of this order. Subsequently, APNS could formulate new rules, regulation and circulars in compliance with the provisions of Chapter II of the Act and promptly seek exemption under Section 5 read with Section 9 of the Act. 58. In the event, APNS failed to comply with the directions given above within the time period specified and continuing contravening the Act in any manner, it would be held further liable under Section 38 of the Act resulting in the imposition of financial penalties in the amount of PKR 25,000,000/- (Rupees Twenty Five Million) and an additional penalty PKR 1, 00,000/- (Rupees One Hundred Thousand) per day, from the date the order.

Current Status:

In the instant matter, pursuant to the Commission’s order, the Undertaking filed a writ petition before the honorable Islamabad High Court and procured a suspension order in respect to the instant matter. Moreover, an appeal before the Competition Appellate tribunal has been submitted by the Undertaking.