Abusing of dominance position: CCP sets aside show cause notice to telecom firm

A two-member bench of the Competition Commission of Pakistan (CCP) has set aside a show cause notice, issued to a telecom company by the CCP on allegations of restricting the choice of consumers and abuse of its dominance position. In this regard, the CCP bench has issued an order here on Friday that the telecom company does not possess dominance position in the market. The show cause notice issued to the telecom company has no merit and disposed of.
The principle issue in consideration is whether the undertaking has resorted to a tie-in arrangement in the market for analogue television (the ATV) services in Phase V of Defence Housing Authority Lahore (the DHA), thereby restricting the choice of consumers and abusing its dominant position in violation of Section 3(1) read with Sections 3(2) and Section 3(3)(c) of the Competition Act.
According to the order of the CCP Bench, the CCP concludes that the Enquiry Report has erroneously defined the relevant market and that the correct identification in the instant matter is the market for pay TV services which includes both ATV and DTV and all other ancillary and related services within the area of DHA Lahore.
Furthermore, due to lack of sufficient data and evidence on record, the CCP bench is unable to make a conclusive finding with regard to issue. Hence, the undertaking cannot be held to possess a dominant position in the relevant market. Consequently, the question of an abuse of dominant position, in contravention of Section 3 of the Competition Act, does not arise, the CCP order said.
In light of the said determinations, the CCP bench does not find merit in the show cause notice (SCN) issued to the undertaking. This order shall dispose of the proceedings initiated pursuant to Show Cause Notice 58/2016, dated 30 December 2016 (the SCN), issued by Competition Commission of Pakistan (the Commission) to the telecom company (the Undertaking), for prima facie violation of Section 3 of the Competition Act (the Act). The SCN was issued pursuant to an enquiry initiated under Section 37(1) of the Act and concluded vide an enquiry report dated 23 November 2016 (the Enquiry Report).
The undertaking is a company incorporated under the Companies Ordinance 1984. It is engaged in the business of providing converged communication/telecommunication services including television, multimedia, voice, internet and enterprise solutions to residents as well as business organisations in Pakistan. A Dhabi Group venture, the undertaking began its operations in Pakistan in 2007 with the deployment of a fibre optic network in the country for its broad-based internet provision. It is an "undertaking" in terms of Section 2(1)(q) of the Act.
However, the Commission considers it appropriate to comment that a determination under Section 3(3)(c) of the Act which prohibits the abuse of a dominant position through the practice of a tie-in, entail an analysis to be carried out as to whether the sale of a product is made conditional on the purchase of another product from another market.
The CCP bench is also in agreement with the foregoing approach. With reference to the first condition, the CCP bench has already reached an opinion that pay TV market could not be subdivided into ATV and DTV as DTV was merely a further development of ATV. Moreover, inevitable digital evolution of pay TV services through the transition from gradual replacement to complete supersession of ATV by the more superior DTV technology did not justify segmenting ATV and DTV into two separate sub-markets within the pay TV services market. Since, ATV services and DTV services cannot be sub segmented into two separate product markets. Hence, the question of a tie-in of substitutable services within the same relevant market does not arise.
With reference to the second condition, based on the correct identification of the relevant market being that of pay TV services within Phases I to V of DHA, there is no evidence that suggests that the Undertaking holds a dominant position. The conclusion of the Enquiry Report that the Undertaking is dominant due to its 100% market share is untenable and rejected due to an erroneous demarcation of the relevant market and lack of information on record to support the same. With reference to the third condition, we note that television broadcasting sector in particular is evolving through the transition from ATV to DTV services based on the directions of PEMRA. Such evolution and technological advancement has already been achieved in most of the developed world. Hence the CCP bench is of the considered opinion that it is not an independent decision of the Undertaking, rather it is due to the intervention by the sector regulator owing to the technological advancements. Hence, even the third condition is not satisfied. With reference to the fourth condition, the data provided to CCP by DHA Lahore, there are numerous Pay TV providers throughout phases I to V of DHA where the Undertaking operates. Some of the undertakings engage in the provision of competing services.
The PEMRA has also confirmed to the Commission, the presence of various cable operators throughout phases I to V of DHA making it a further competitive market. In addition, the Undertaking has also submitted the dated vide its letter dated 21 March 2018, wherein data of customers of DHA Phase Vis provided, who have switched from the Undertaking's service to other Pay TV service providers. Hence, CCP bench is of the considered view that no market is foreclosed. Accordingly, no case for abuse of dominance is made out, the CCP bench added.