CCP says recovered Rs10mn penalty from PIA for ‘abusing dominant position’

The Competition Commission of Pakistan (CCP) recovered a long-standing penalty of Rs10 million from the Pakistan International Airlines (PIA), originally imposed in 2009 for “abusing its dominant position by excessively increasing Haj fares in 2008”, according to a CCP statement on Friday.

The development comes a day after Pakistan government announced to seek expressions of interest (EOI) next week for the sale of the national carrier.

“The penalty was imposed after the CCP conducted an inquiry based on media reports alleging that PIA had charged exorbitant Haj fares.

The inquiry revealed that the national carrier had unreasonably increased Haj fares by more than 80%—from Rs38,500 to Rs70,000 for the southern region, and from Rs46,200 to Rs85,000 for the northern region,“ CCP statement read.

The conduct was found to be in violation of Section 3(3)(a) of the then Competition Ordinance, it added.

“Taking a lenient view in line with its policy of encouraging compliance and good business practices, the CCP imposed a token penalty of Rs10 million.”

The statement further said the PIA had challenged the CCP’s decision in the Supreme Court of Pakistan, arguing that it had incurred losses on Haj flights and was only fulfilling its duties as a national carrier.

“The Supreme Court, however, referred the matter to the Competition Appellate Tribunal (CAT) as the appropriate forum for adjudication.

“Following multiple hearings, the case was dismissed by the Tribunal due to non-appearance of PIA’s counsel. After the lapse of the appeal period, CCP exercised its enforcement powers under Section 40(2)(a) of the Competition Act, 2010, and recovered the penalty amount through attachment of the airline’s bank accounts.”

The government has been seeking to sell a 51-100% stake in the debt-ridden carrier, to raise funds and reform cash-draining, state-owned enterprises (SOEs) as envisaged under a $7 billion International Monetary Fund programme (IMF).

Its failed attempt to privatise the PIA last year after receiving a single offer, well below the asking price of more than $300 million.