Rs.25 million fine imposed on 5 universities for deceptive marketing

ISLAMABAD: The Competition Commission of Pakistan (CCP) has imposed a total penalty of Rs. 25 million on 5 universities which were advertising un-accredited engineering programmes in violation of Section 10 of the Competition Act, 2010.

A CCP Bench comprising Chairperson Ms. Rahat Kaunain Hassan and Members, Abdul Ghaffar and Dr. Shahzad Ansar passed an order in respect of show cause notices issued to 27 institutions/universities offering engineering programmes and claiming to be either accredited or approved/recognized by Pakistan Engineering Council (PEC) for, prima facie, violation of Section 10 of the Competition Act.

The order states that it is clear that the term `accredited by PEC' implies that an engineering program has effectively met the norms and procedures prescribed by PEC and only those students that obtain an accredited engineering programme degree are able to register with PEC as qualified engineers.

The Bench held that as accredited status holds value for both, the engineering institutions and students; therefore, claims to this effect cannot be made in a casual manner. As none of the 27 universities had been accredited by PEC for intake of students in 2011, the Bench concluded that they had violated the provisions of Section 10 (1) of the Competition Act.

The CCP Bench in view of its findings established that the 27 universities that had been issued show cause notices could not be treated in the same manner.

The subject 27 universities have been divided by the Bench in to 3 distinct categories (a) those claiming to have been approved/recognized/permitted by PEC in respect of introduction of new programs (b) those claiming to have been accredited by PEC but ensuring that no students graduate without an accredited engineering program degree and (c) those claiming to be accredited by PEC but whose graduates have obtained un-accredited engineering programme degrees.

The order highlights that the proceeds generated by the 27 universities from students graduating in a year are approximately over 500 million for a four-year engineering programme.

As the financial impact on students and their parents of such practices of engineering universities is substantial, due disclosures must be ensured by the universities to enable students to make informed decisions.

The CCP Bench reprimanded all the 27 universities and directed all universities offering engineering programs make due disclosures in the future.

The Bench is of the view that minimum mandatory disclosures must include information in respect of each engineering program relating to last batch that was accredited by PEC, status of application of re-accreditation and/or grant of green signal by PEC.

The bench also observed that PEC being the only accrediting body in Pakistan for the engineering institutions has to remain conscious that its monopoly in the market of granting accreditation has to be transparent and above board.

The PEC was also directed to issue clear and concise guidelines in respect of the accreditation procedure and a code of conduct in order to facilitate engineering institutions in complying with due process of accreditation in an efficient manner.

The Commission has taken a lenient view in respect of the universities falling in the first two categories.

In respect of the third category where graduates have come in the market and are unable to register with PEC, the Bench finds that this is too serious a violation to be condoned without penalty. The fee of the 5 universities falling in this category ranges between Rs. 400,000 to 800,000.

The students that have obtained degrees in respect of un-accredited engineering programs not only suffer financial loss but also loss of employment opportunities within and outside Pakistan.

In order to create deterrence a penalty of Rs. 5 million is imposed on each of the 5 universities falling in the third category.

The subject universities have been directed to file written commitments with the Registrar of the Commission reporting compliance with the order within 30 days of the issuance of the order.

If violation of the order is a continuing one, such university shall be liable to pay a penalty of Rs. 100,000 everyday in terms of Section 38 of the Competition Act.

The CCP Bench also observed that for financial loss or missed career opportunities, the students or their parents may claim compensation before the courts of competent jurisdiction.