SATURDAY APRIL 23: Non-payment of CCP fee by regulatory bodies: issue still pending with Law Division

ISLAMABAD: The Chairperson of Competition Commission of Pakistan (CCP), Rahat Kaunain Hassan, said on Friday that the crucial issue of non-payment of 3 percent fee/charges by the regulatory bodies was lying pending before the Law and Justice Division for comments on the objections raised by the regulators.
On the conclusion of roundtable on the 'New competition regime--implications for business conduct', organised by Economic Freedom Network Pakistan, she told reporters that some regulatory bodies have raised objections on the issue of 3 percent annual fee/charges collected by the regulatory bodies. On the issue, Ministry of Finance fully supports the CCP for collection of fee/charges from the regulators. Despite total support of the Finance Ministry, the regulators are still reluctant to pay the due amount. The objections raised by the regulators are still pending before the Law and Justice Division for last four months and so far the Division has not finalised its comments.
The CCP had submitted its detailed comments to the Law Division on the objections which were initially cleared by the Division. However, the final observations/ruling of the Law Division on the issue is still awaited for the last many months.
The financial autonomy of the CCP is necessary for smooth functioning of the Commission, but the regulators have not yet paid any amount on account of fee/charges collected and the matter is pending before the Law and Justice Division. As compared to the allocated budget of Rs 369 million for 2010-11, the government has released only Rs 100 million. At the same time, regulatory bodies are not ready to pay 3 percent fee of their annual collection, Rahat added. She said that if all regulators are prepared to pay the fee, the maximum amount would not exceed Rs 300 million.
The Competition Commission (Collection of Fees and Charges) Rules, 2009 deal with the transfer of fees and charges levied by regulatory agencies. The percentage of fees and charges shall be such as the Federal Government may from time to time prescribe and notify in the official Gazette. The regulators, liable to pay specified fee to the CCP, include the Securities and Exchange Commission of Pakistan; National Electric Power Regulatory Authority; Oil and Gas Regulatory Authority; Pakistan Telecommunication Authority; and Pakistan Electronic Media Regulatory Authority.
Following are the observations of the regulatory bodies on 3 percent fee and remarks of the CCP to the Law Division: According to the observations of the Pakistan Telecommunication Authority, as per section 4(1) (m) of their Act, regulation of competition n the telecommunication sector and protection of consumer rights is included in the functions of PTA. The section 12 (3) provides that any surplus of receipts over the actual expenditure in a year shall be remitted to the Federal Consolidated Fund. Therefore, there should be no obligation on PTA to pay the prescribed rate of 3 percent charge or their revenue.
The CCP responded that as rightly pointed out by Finance Secretary that laws administered by the relevant regulatory bodies will not require amendment prior to any payment to CCP of such percentage of fee and charges collected by the regulatory body concerned. The Competition Act 2010, under section 59 thereof, has been given an overriding effect and is binding for all.
The charge levied has to be paid prior to the remittance of surplus on the consolidated fund as this will also comprise a part of expenditure on part of the regulatory body. As mentioned by the Finance Secretary: The Competition Act 2010 in line with the functions of all the global anti-trust bodies provides for certain specific functions including actions against cartelisation abuse of dominant position deceptive marketing practices and control on mergers creating monopolies.
The claim by any regulatory authority that they are regulating the competition and protecting the interests of consumers parallel to the Competition Act, is misconceived and such overlapping does not create any conflict as both are operating in their distinct domain and there are distinct violations under each law, CCP added.
The observations of the SECP said that there being only one Commissioner, it is not within his authority to make any commitment. They have not been provided copy of the advice of Law and Justice Division and many of the operational issues raised by SECP have not been addressed.
The CCP responded that as mentioned by the Finance Secretary, that there is no resolution or decision making required to honour its obligation under law. Under section 5(5) of the SECP Act no Act shall be invalid by reason only of the existence of a vacancy or defect in the constitution of the Commission. While legal issues of SECP have been addressed, it is not for the Ministry of Law to address the operational issues, CCP said.
As per observations of the Ogra, the Supreme Court judgement bars imposition of fee where no services are rendered and as CCP is not rendering any particular service to the sector-specific regulators the Ministry of Law has to take into account this principle laid down by the superior courts. The date of Notification precedes the relevant rules. Hence, there is a legal defect and the Notification cannot be made binding.
The CCP responded that since the levy is in the nature of a "charge" and not "fee", the principles cited are not relevant for this purpose. Please see: As cited in 2003 CLC 513 Encumbrance, cost, expense. (Oxford Dictionary) Charge is price of, or rate of something, encumbrance, lien or claim Re-compensate/reimburse the cost or expenses incurred or for providing services/ facilities.
Fee is for the services rendered and change is a claim (ie right to payment) on any rational basis, be it cost or expenditure or a claim based on statutory right. As observed by the Finance Secretary the issue that the Notification dated 23-12-2008 for fixing the rate of levy which was issued preceding the issue of rules under the Competition Act had already been resolved by the Law and Justice Division.
Moreover the law does not require it to be prescribed by rules. In this regard the wording under section 20(2)(f) is 'as prescribed by the Federal Government' the word prescribed is not defined in the Act. Hence even the notification is perfectly valid to prescribe such percentage, CCP said.
According to the observations of the Pemra, the case of CCP is unique and there is no such instance that the financial needs of one organisation are met by other authorities. Our Ordinance does not provide for such payment. It further said that we have not surplus funds. The charge has been made on income of five regulatory authorities and certain other authorities have been excluded. This is discriminatory. The notification gives retrospective effect, which is not proper. Concern was also expressed that the imposition of such percentage of fee and charges should not have been uniform for all regulatory bodies.
The CCP observed: this is not a legal objection. However, there are instances even in the international competition regime eg in Portugal 6 percent of the revenue is contributed by the regulatory bodies to support the competition agency. The levy of 3 percent charge on the revenue of five regulatory authorities and not others is in the discretion of the government. As such, the observation that all the regulatory authorities in Pakistan should have been included is uncalled for. It is incorrect to say that the notification gives retrospective effect.
The competition law came in the year 2007, the notification prescribed the percentage in December 2008 for the current year. Therefore, retrospectively is not clear. The mere fact that the imposition is with reference to percentage of the fee and charges levied envisages principle of proportionality and it is not a fixed or uniformed charge. The Nepra stated that our law does not provide for any payment to the CCP. Responding to this, the CCP submitted the same remarks to the Law Division as mentioned in case of other regulators.