Tribunal Orders PTCL and LDI Operators to Pay Fine

The Competition Appellate Tribunal (CAT) has upheld the penalty imposed by the Competition Commission of Pakistan (CCP) on Pakistan Telecommunication Company Limited (PTCL) and other Long Distance International (LDI) operators. The tribunal has instructed the companies to remit the specified fine within a period of 30 days.

The commission highlighted a substantial decline in incoming call volumes, which decreased by 70% following the implementation of the anti-competitive International Clearing House (ICH) agreement among telecom operators. Specifically, call volumes dropped from 1.9 billion minutes in September 2012 to 579 million in February 2013. Conversely, LDI revenues experienced a significant surge of 308%, escalating from $8.37 million to $59 million.

While affirming the CCP’s conclusions, the tribunal opted to reduce the penalty to 2% of the revenue generated from the ICH arrangement. The CAT stipulated that failure to comply with the payment deadline of 30 days would result in the reinstatement of the original 7.5% penalty.

However, the CAT has conditionally decreased the fine to less than half of the amount initially levied by the CCP, which had imposed penalties of 7.5% of annual turnover on each LDI operator, including PTCL, for engaging in an anti-competitive ICH agreement.

In 2012, LDI operators, including PTCL, entered into an agreement stipulating that all incoming international calls would be routed via a unified gateway managed by PTCL, acting as the head of an LDI consortium. This arrangement established a consistent termination rate of approximately 8.8 US cents per minute—a notable increase from the previous rate of about 2 cents. It also dictated the allocation of revenue shares and traffic quotas among the LDI operators. As a result, competing networks were shut down, and prices for international callers increased.

The CCP characterized the ICH as a cartel arrangement that involved both price-fixing and market-sharing. In April 2013, the commission imposed penalties equivalent to 7.5% of annual turnover on each LDI operator and directed the Pakistan Telecommunication Authority (PTA) to restore competition to pre-ICH levels.

The order refuted claims of “state compulsion” or directives from the Ministry of Information Technology, asserting that records demonstrated that LDI operators themselves had sought and obtained the policy directive for the ICH.

The tribunal corroborated that the Competition Act of 2010 is applicable to government entities and regulators, emphasizing that even the PTA could be held accountable for actions restricting competition. It dismissed arguments asserting that the CCP lacked jurisdiction on the grounds that the calls were incoming and free to local consumers, underscoring that the agreement curtailed market entry and competition.