Background of Case:

The Commission took notice of the letter dated 22-01-2009 of the Consumer Awareness and Welfare Association (hereinafter ‘CAAWA’), wherein it was alleged that M/s Tetra Pak Pakistan Limited (the ‘TPPL’) was abusing its dominant position in Pakistan and conducted a detailed enquiry under Section 37 of the Ordinance, which was concluded vide enquiry report dated 19-05-2010.

The Enquiry Report concluded that, prima facie, TPPL abusing its dominant position in terms of Section 3(1) read with Section 3(2) of the Ordinance and has contravened the provisions of the Ordinance i.e., (i) through the Trade Compliance clause in the ‘Equipment Sale Agreement’, which is not only unfair in nature but is also in violation of the basic principle ‘ignorance of law is no excuse’, (ii) through its ‘Machine Rental Agreement’ is tying the lease of its Rented Equipment with the machine maintenance/ service agreement, and making it incumbent on its customers i.e. milk/juice processors to enter into a separate service (maintenance) agreement in order to conclude the machine rental agreement. This results in foreclosing the choice of its customers and thereby restricting competition for such services in the relevant market, and (iii) is tying and imposing on its customers the sale of packaging machine with packaging material (aseptic cartons) in its ‘Agreement for the Installation and Commission’ during Commissioning and Validation period. Therefore, a show cause notice was issued to the TPPL.

TPPL instead of filing written reply to the show cause notice and contest the same on merits, preferred an application through their counsel on 14-06-10 under Regulations 30 -33 and 37 of the GER, proposing the commitments on part of TPPL to resolve and address the concerns raised by CCP in its show cause notice.

The Order:

The Commission disposed of the application vide its Order dated 13-08-10. It was observed that, the Trade Compliance Clause found merit in the submissions made by the counsel for TPPL and held that TPPL may keep the Trade Compliance clause in its present form and is not required to amend the same as the customers of TPPL are in-fact benefited from this clause.

With reference to the mandatory maintenance clause observed that the wording of the said clause in particular, the word “shall” gives only a compulsory connotation. Such a requirement that the customer must obtain maintenance service exclusively from TPPL closes the door to any competitor on the maintenance and repair services market. Hence the Bench concluded that the Maintenance clause cannot continue in its present form and therefore, TPPL was directed that the same be amended.

With reference to the performance criteria clause in the Agreement for Installation and Commissioning the Bench observed that by requiring use of TPPL’s packaging material, TPPL was implying that the machine can only perform at optimal level with the use of the packaging material of TPPL, which should not be the case. It was appreciated that TPPL expressed its willingness to amend the said provision and remove such conditionality. Hence, TPPL was directed not only to lift the restriction but also to ensure providing the specifications of the packaging material in the agreement itself for the purposes of commissioning.

The Commission in its Order concluded that, in view of TPPL’s determination to resolve the issue and to address the concerns of the Commission, we are inclined to accept the application of TPPL made under Regulation 30-33 & 37 of the GER, subject to the following conditions, which were agreed to and accepted by the representatives of TPPL on the date of hearing i.e. (i) the Mandatory Maintenance clause shall be re-worded and be intimated to all the parties concerned, (ii) the Agreement for Installation and Commissioning of the equipment shall be amended to the satisfaction of the Registrar of the Commission, so as to remove the condition of using only TPPL packaging material during the commissioning period under the said Agreement, and (iii) the above amendments and consequential changes (if any) in the aforesaid agreements, shall be intimated to the customers of TPPL and given effect in all such agreements with the existing customers of TPPL.

TPPL was also directed to file compliance report in terms of the above conditions with the Registrar of CCP within a period of six (6) weeks from the date of the issuance of the decision, failing which CCP will resume the proceedings under the show cause notice issued to TPPL. It was observed that, upon compliance of this decision, the show cause notice shall stand disposed off.