ISLAMABAD: The Competition Commission of Pakistan (CCP) has removed a major hurdle in the export of seasonal fruit to Europe, the UAE, and other countries, by addressing the issue of mandatory condition of filing of indemnity bonds by the exporters with international airlines.

The CCP has issued an order here on Wednesday to address the issues faced by the said exporters.

The All Pakistan Fruit and Vegetable Exporters, Importers and Merchants Association (PFVA) and the Air Cargo Agents Association of Pakistan (ACAAP) had filed complaint with the CCP under Section 37(2) of the Competition Act, 2010 against foreign airlines operating in Pakistan for alleged violation of Section 3 of the Competition Act.

The complainants accused the foreign airlines of charging higher rates on the export of mangoes from Pakistan, in comparison to the charges levied for exports from India for the same destinations.

Furthermore, exporters had to give undertaking of no claim or indemnity bond, which exempts the exporters from the loss incurred due to delay or damage caused during transit and handling.

The condition of filing indemnity bonds had forced many exporters to exit the mango export business as, in numerous cases, they had faced financial losses due to delays in fruit expiry issues.

The CCP's enquiry noted that contrary to international conventions and prevalent practice in other jurisdictions, Pakistani mango exporters were required to furnish an indemnity bond by all airlines (except Turkish), which absolves the airline of all responsibility of loss.

On 9th June 2020, the authorised representative of the complainants informed the CCP Bench that subsequent to initiation of the enquiry by the Commission, the respondents i.e. foreign airlines waived the requirement of filing of indemnity bond/no claim, which exempts the respondents from the loss incurred due to delay or damage caused during transit and handling.

Subsequent to the removal of the said condition, the airlines are now responsible for catering the lose(s) or damage(s), if incurred, during the air carriage as this issue was pending for the last 15 years, and many exporters had left the export business due to this condition.

The representatives of the complainants highly appreciated the efforts of the commission during the enquiry proceedings, and also acknowledged the commission for their support and efforts in fizzling out the aforesaid condition of indemnity bond, which has boosted the business of exporters.

The complainants were informed that in order to establish a violation of Section 3 of the Act, the complainants have to establish that the respondents hold a dominant position i.e. the respondents have 40 percent of the market share in the relevant market of mango exports, and that the respondents are in a position to influence the decisions of the consumers and competitors, and they can behave independently.

Since, no substantiating material was provided by the complainants to support the submissions of dominance, hence, the conclusions of the enquiry report highlighted in Para 3 above cannot be reversed.

The CCP's bench in its order acknowledged that the major grievance of the complainants also stands addressed during the conduct of enquiry, hence, it does not require any further emphasis.

The bench emphasized that the competition law is a subset of principles stimulating innovation, productivity and competitiveness, contributing to an effective business environment in the country.

This generates economic growth and employment.

It also creates possibilities for small and medium-sized enterprises, removes barriers that protect entrenched elites, and reduces opportunities for corruption.

The ACAAP has welcomed the CCP's order.

While talking to Business Recorder, ACAAP Chairman Mohsin Abbas Dharsi said: "I have read the CCP order in toto, and would like to comment that partial relief is gained by the industry, by virtue of which no exporter or agents has to file any undertaking or indemnity bonds to most of the air carriers. This has given a sigh of relief to the export-houses and air cargo agents."

He added that we, at the ACAAP, would like to appreciate the professionalism of the Commission for conducting the investigation through interviews and meetings with stakeholders.

The sincere efforts of the Commission have really paid-back to the trade, for assisting to achieve the successful abolishment of the unjustified demand of "Indemnity Form" by airlines operating from Pakistan.

According to the Trade Development Authority of Pakistan (TDAP), Pakistan is the world's sixth-largest mango producer with 1.7 million metric tons mangos produced every year.

In 2019, Pakistan exported 1.5 million tons mangos, worth a reported $80 million, to the world, compared to 1.3 million tons exported in 2018.

Out of this, 65 percent export is done via sea, while 35 percent mangos are exported by air.

Comments

Comments are closed.