Involvement in cartelisation: CCP issues show-cause notices to GAMCA, GCC medical centres

The Compe-tition Commission of Pakistan (CCP) on Thursday issued show cause notices to Gulf Corporation Council (GCC) approved Medical Centres Administrative Offices (GAMCA) and GCC approved Medical Centres in Pakistan for, prima facie, involvement in cartelisation, restricting the immigrants/expatriates to have pre-departure medical tests only from GCC approved medical centres.
This case is the first of its kind directly involving general public particularly labour class, who go to Gulf countries to earn valuable foreign exchange. The CCP has taken immediate notice of the on-going practice of the GCC Medical Centres, which are conducting pre-departure tests of intending immigrants on their own terms and conditions. The case is also related to the consumer protection which deals with the practical problems of labour class, who go through the pre-departure medical tests only from GCC approved medical centres, sources stated.
Moreover, CCP has also conducted detailed inquiry to investigate the whole matter and facilitate the general public going to Gulf countries for jobs etc. The CCP's action shows the commitment and persistent efforts of the commission to check cartelisation and anti-competitive practices directly hurting the consumers. Along with team of competition experts of the CCP, show cause notices have been served by Ikram-ul-Haque Qureshi, CCP Registrar and Director General (Legal), who thoroughly analysed data/facts for carrying out investigation in the said case, sources added. The CCP has issued show cause notices to GAMCA and GCC approved Medical Centres for, prima facie, cartelisation in distributing customers on equal basis, fixing medical fee and exploiting customers by restricting their choice and imposing unfair terms and conditions thereby violating Section 3 and 4 of the Competition Act, 2010.
It appears that this captive market arrangement enables them to engage in exploitative conduct by imposing trading conditions on their customers, prima facie, in contravention of Section 3(1), in particular, Section 3(3) (a) of the Act, CCP stated.
A formal complaint was filed by Pakistan Overseas Employment Promoters Association (POEPA) to the CCP against GAMCA and GCC Medical Centres in Pakistan that GCC Medical Centres working under their respective GAMCA have cartelised to allocate the customers among themselves on equal basis. The Commission initiated an enquiry and appointed Nadia Nabi (Senior Joint Director) and Noman A. Farooqi, (Joint Director) as enquiry officers to conduct a detailed enquiry on the complaint. The enquiry officers have submitted the enquiry report on January 31, 2012.
According to the enquiry report of the CCP, to procure visa for GCC countries except UAE, every intended immigrant/expatriate is required to go through a pre departure medical test, which is conducted only by GCC approved medical centers. Currently there are 20 GCC Medical Centers divided in five regions of Islamabad/Rawalpindi, Lahore, Peshawar, Karachi and Multan along with adjoining cities. In each region there is one GAMCA established to oversee the working of GCC Medical Centers in the region. Each GAMCA is also engaged in issuing registration numbers to the intended emigrants and referring them to the GCC Medical Centres for tests to ensure equal distribution system amongst the GCC Medical Centres.
In terms of the enquiry report, equal distribution system was introduced in 1999 when the GCC Medical Centers started complaining to Executive Board of GCC Health Ministers Council about "uncertainty in distribution of medical slips". Fear that one GCC Medical Centres is getting more business by paying commission to recruiting agents to refer customers to its medical centre apparently resulted in formation of GAMCA for equal distribution system in the region of each GAMCA.
The enquiry report also highlights that no disciplinary action was taken against the medical centre involved in mal-practices and it is still working. Further, the enquiry report concludes that prima facie, GCC Medical Centres are charging the same fee for the pre-departure medical tests, which under the auspices of GAMCA is decided and fixed and also proposed to the Executive Board for approval.
These practices of territorial division and equal distribution of customers and fixing the fee, prima facie, restricted the choice of customers and competition among medical centres for price and quality of services and therefore are in contravention of Section 4(1) and 4 (2)(a),(b) and (c) of the Act.
The CCP has found that the intending immigrants/expatriates face hurdles and exploitation or even fail to travel and their visas expires because of prima facie malpractices of GCC Approved Medical Centers, apparently for the unfortunate reason that there is no regulatory body to oversee the functioning of GCC Medical Centers and the consumers/ intending emigrants/expatriates have no mechanism to redress their grievances. It appears that GAMCAs and GCC Approved Medical Centers dictate their own terms and conditions and customers are playing in the hands of GCC Medical Centers which absolutely go unchecked.
In terms of the enquiry report, it appears that this particular case involves a captive market as the intended immigrants/expatriates for the GCC Countries except UAE have to get their mandatory medical test conducted by only GCC Medial Centres. Further, their choice is restricted to a particular medical centre allocated by GAMCA. Therefore, prima facie, the GCC Medical Centres, under the auspices of GAMCAs have the ability to behave to an appreciable extent independent of competitors, customers and thus hold dominant position in the relevant market. The enquiry report also reveals instances whereby it appears that GCC Medical Centres are conducting pre departure tests of intended immigrants on their own terms and conditions including; (i) repeat medical tests conducted to charge extra fee; (ii) customer declared unfit once has no choice/alternative, (iii) customers required to go through a repeat test are forced to come back to same medical centre; and (iv) refusal to conduct medical test on the basis of city of origin. Such practices, prima facie, amount to unfair trading conditions imposed on customers and are in contravention of Section 3(1), in particular, Section 3(3)(a) of the Act.
Under the given facts and circumstances in the enquiry report, it appears that GCC Medical Centres and GAMCAs are subjecting a vulnerable segment of society to unfair conditions. Most of the intending immigrants/expatiates to GCC countries are those people who procure visa for manual labour in these countries. In fact these immigrants bring a significant amount of remittance from GCC countries to Pakistan which is to the tune of US $6-8 billion in a year. On the other hand GCC Medical Centers are earning a huge amount through pre-departure medical tests. In last 3 years (2008-2010), medical centers only in the region of Peshawar, Karachi and Islamabad/Rawalpindi earned Rs 1.8 billion excluding repeat tests whereas medical centres in the region of Lahore and Multan earned in one year (2010-2011) Rs 144 million.
The CCP report pointed out that the pre-departure medical tests are distinct in nature as they can only be conducted by the GCC Medical Centres and not by any other Medical Centre. Therefore, there is no debate regarding the interchangeability and substitutability of the pre-departure medical tests conducted at GCC Medical Centres. Hence, the relevant service for the purposes of this enquiry is 'pre-departure medical tests for the intending immigrants/expatriates to the GCC Countries' except United Arab Emirates.
Despite arguments on behalf of GAMCA that the equal distribution system is pro-competitive rather than being anti-competitive, no effort was made by them to seek exemption of the claimed 'pro-competitive' system from the Commission under the gateway provision of Section 5 of the Act., CCP said. The CCP further said that the GAMCAs and GCC Medical Centers have been given fourteen days to show cause in writing and to avail the opportunity of being heard before CCP. The show cause notices were issued by the Director General (Legal)/ Registrar of the Commission.