Summary

Background of the Case: CCP took notice on its own of exclusive rights granted to EVTL through a concessionary agreement entered into by and between Port Qasim Authority (PQA) and EVTL to handle and store all liquid chemicals at Port Qasim (the “Concession Agreement”) for 30 years which appeared to have an object or effect to prevent, restrict and reduce competition within the relevant. Show Cause Notices were issued to PQA and EVTL for, prima facie, contravention of Section 4 of the Act. The Order: During the hearing, EVTL raised the objection that the Act is not applicable on the Concession Agreement as it was executed prior to promulgation of the Act. However, PQA filed an application under Section 5 to seek exemption in respect of the Concession Agreement during the course of hearing. The Bench held that all agreements entered into prior to promulgation of the Act but are continuing and have object or effect to restrict competition within the relevant market, fall within the purview of Section 4 of the Act and are required to seek exemption under Section 5. EVTL was imposed a penalty of Rs.10 Million for its failure to seek exemption under Section 5 of the Act. The Bench observed that PQA has failed to carry out due diligence to determine the competition indicators and short comings of the market and also to entrust EVTL with certain obligations or impose constraints to prevent any potential abuse of dominance and to achieve the desired general economic interest. The Bench granted only conditional exemption with respect to the Concession Agreement and has directed PQA to review the Concession Agreement and incorporate therein effective provisions to address competition concerns stipulated in the Order. Failure to comply with the aforementioned direction shall constitute breach of condition having the effect of cancellation of the exemption and making PQA and EVTL to pay a penalty of Rs.1 Million for each day default. Bench also observed this apprehension that PQA has awarded all its major terminal on the basis of 30 years BOT which may set a tendency for exploitative and exclusionary practices by concessionaires. Therefore, PQA has been directed apply exemption in respect of all other concession agreements which will be reviewed by the CCP on case to case basis.