Background Facts:

These Appeals were filed on 01.03.2010 against the Order dated 29.01.2010 passed by a single Member in the Show Cause Notices No. 56 & 57 of 2009, wherein it was held that Takaful Pakistan Limited (herein after referred to as the ‘TPL’) tied-in (distinct products of) insurance coverage for travel agents’ default liability towards International Air Transport Association (herein after referred to as the ‘IATA’) with travel and health/accident insurance for passengers and thereby abused its dominant position in the relevant market in violation of section 3 of the Competition Ordinance, 2010 (‘the Ordinance’). Furthermore, the Impugned Order held that TPL and Travel Agents Association of Pakistan (herein after referred to as the ‘TAAP’) entered into a prohibited agreement which violated section 4 (1) of the Ordinance in terms of sections 4 (2) (a) and 4 (2) (g) of the Ordinance. Lastly, Impugned Order also held TPL and TAAP in violation of section 10 of the Ordinance for engaging in deceptive marketing.

In its analysis, the Appellate Bench acknowledged that the mere number of agents relied upon while determining the relevant market and dominance therein in the original order were not sufficient without referring the volume of business that these agents were generating.

The Appellate bench disagreed with the single bench of the Commission observing that the background in which such agreement was entered into was pertinent. As such, it found that TPL did not force TAAP to accept the clubbed arrangement. Detailed discussion on this point is provided in paragraph 38 of the order. Based on its analysis, the Appellate Bench held that there was a commercial justification present aimed at introducing an innovative product, and that no case for tying was made out. As a consequence, there was no violation of Section 3. Moreover, given that there was no violation of Section 3, the Appellate Bench held that the basis for violation of Section 4(1) in terms of Section 4(2)(g) had gone. As regards the violation of Section 4(1) in terms of 4(2)(a), the Appellate Bench also found the impugned order untenable. On the issue of deceptive marketing by TAAP, the Appellate Bench, inter alia, felt that the actions of a few could not be imputed to the whole association in the context of deceptive marketing. However, the Appellate bench provided that notices for deceptive marketing may be issued to any individual agents suspected of engaging in the practice. Similarly, on the issue of deceptive marketing by TPL, the Commission also found the impugned order untenable.

Order:

Based on the written and oral submissions, the commission found that the ruling of the Impugned Order to the extent that it held TPL and TAAP in violation of section 10 of the Ordinance is not found tenable. As no violation of sections 3, 4 and/or 10 or any of their relevant sub-sections is made out. Also, the commission does not deem it relevant to delve into the reasoning for imposition of the penalty or its adequacy in the Impugned Order which is no more of consequence. Thereby accepting the appeals in terms of this order.