The Commission initiated proceedings against Engro Vopak Terminal Limited (EVTL) for abusing its dominance position. The primary issue considered was that whether a monopoly is created by EVTL by virtue of a concession agreement which enables EVTL to dictate its own terms and conditions and abuse its dominant position in the relevant market.

As regards the relevant market, the Commission agreed with its earlier order in SCN 23/2010 (Concession – EVTL and PQA) and retained the same reasoning. On the question of dominance, the Commission found that the concession agreement, inter alia, created barriers to entry and prevented competition making EVTL’s dominance in the relevant market quite obvious.

On the issue of whether the tariff charged pursuant to the storage agreement can be termed as an abuse of dominant position, the Commission inquired that in the peculiar facts of the case, whether parties that enter into a contractual arrangement on their own volition and had agreed to certain mechanism of pricing can subsequently challenge the same and question its legality on the ground of ‘abuse of dominance’ by the other party. In this regard, the Commission held that it cannot interfere (barring exceptional circumstances) in the commercial arrangement to correct terms of a “private free bargain” entered into between parties. The Commission held that no case of abuse was made out.

On the issue of whether non-disclosure of tariff break-up for future contract can be termed as refusal to deal, the Commission found that EVTL was a monopoly in the relevant market and failure to disclose basis of tariff in negotiations for a future contract may distort consumer’s choice and affect competition therein. Additionally, the Commission also noted that refusal to deal is not limited to outright refusal to do business, rather strangulation of customer by a dominant supplier to do business on unrealistic terms is also tantamount to a refusal to deal and has been termed as constructive refusal to deal which covers the instances of excessive pricing, imposing unfair trading conditions, treating a customer in a discriminatory manner and margin squeeze. This was held to violation section 3(3).

However, although the Commission recognized that non-disclosure of such information was refusal to deal, it did not have the mandate to determine the cost or its basis for the purposes of future private/commercial bargain. As such, no penalty was imposed.