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Petitioner: PAKISTAN OVERSEAS EMPLOYMENT PROMOTERS ASSOCIATION (POEPA) VS Respondent: G.C.C. APPROVED MEDICAL CENTERS ADMINISTRATIVE OFFICE (GAMCA) ANDGCC APPROVED MEDICAL CENTERS
Court Name: Competition Commission of Pakistan Judge(s): Abdul Ghaffar, Dr. Joseph Wilson, Ms. Rahat Kaunain Hassan Title:PAKISTAN OVERSEAS EMPLOYMENT PROMOTERS ASSOCIATION (POEPA) vs
G.C.C. APPROVED MEDICAL CENTERS ADMINISTRATIVE OFFICE (GAMCA) ANDGCC APPROVED MEDICAL CENTERS Case No.: File No,2(2)/JD(L)/POEPA/CCP/2011) Date of Judgment:2012-06-29 Reported As: 2013 CLD 748 Result: Order accordingly Judgment ORDER 1. This Order shall dispose of the proceedings arising out of Show Cause Notices No,1-25 of 2012, issued to the GCC Approved Medical Centers Administrative Offices (hereinafter referred to as the 'GAMCA') and the GCC Approved Medical Centers operating in Islamabad/Rawalpindi (the GAMCs') established and working in the regions/cities of Islamabad/ Rawalpindi, Karachi, Lahore, Peshawar and Multan, for prima facie violation of sections 3 and 4 of the Competition Act, 2010 (hereinafter referred to as the 'Act'). FACTUAL BACKGROUND A. PARTIES TO THE PROCEEDINGS: 2. Pakistan Overseas Employment Promoters Association-(POEPA): POEPA is a representative body of the overseas promoters in Pakistan. POEPA is licensed by Ministry of Commerce under the Trade Organization Ordinance, 2007 and is also registered under the Companies Ordinance, 1984. 3. GCC Approved Medical Centers: The GAMCs are approved, licensed and authorized by the Executive Board, Health Ministers Council for GCC States to conduct pre-departure medical examination of the intending emigrants to GCC Countries (i,e, Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates). The GAMCs charge medical fee for such tests. At present the GAMCs operating in Islamabad/Rawalpindi are; (i) Khaleej Diagnostic Centre (KDC), (ii) Gulf Medical Centre (GMC), (iii) Urgent Diagnostic Centre (UDC), (iv) Shifa International (SI), (v) GCC Diagnostic Centre (GDC). The GAMCs operating in the city/region of Karachi are; (i) Taj Medical Centre (TMC), (ii) Al Hilal Medical Diagnostic Centre (AHMDC), (iii) Medical Diagnostic Centre
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(MDC). The GAMCs operating in Multan city/region are; (i) Al-Barakat Diagnostic Centre (ABDC), (ii) Dr. Thagfan Diagnostic' Centre (DTDC), and (iii) Multan Diagnostic Centre (MD). The GAMCs operating in the Lahore city/region; are (1) Advanced Medical Diagnostic Centre (AMDC), (ii) Canal View Diagnostic Centre (CVDC), (iii) Iqraa Medical Complex (IMC) and (iv) Taj Medical Travellers Clinic (TMTC). The GAMCs operating in Peshawar city/region are; (i) Al-Khair Medical Centre (AKMC), (ii) Caring & Curing Centre (CCC), OM Frontier Diagnostic Centre (FDC), (iv) Medical Diagnostics Centre (MC) and (v) Peshawar Medical Checkup Centre (PMCC). The GCC countries include; Saudi Arabia, Kuwait, Bahrain. Qatar, the United Arab Emirates and the Sultanate of Oman (hereinafter referred to as the 'GCC States'). In addition to conducting the pre-departure medical tests for the intended emigrants to the GCC States except United Arab Emirates, the GAMCs are also engaged in provision of medical services to the ordinary patients. 4. GCC Approved Medical Centers Administrated Office: GAMCA is the coordinating office for GAMCs established in the regions/cities of Islamabad/Rawalpindi, Karachi, Lahore, Peshawar and Multan. If two or more GAMCs are established in any city, it is mandatory on the GA MCs to establish a GAMCA office in that region/city. GAMCA is responsible for issuing the registration numbers to the intended emigrants and referring, them to the GAMCs for pre-departure medical tests. GAMCA is also responsible for implementation of equal distribution system amongst the GAMCs and monitor their conduct. Hereinafter both GAMCAs and GAMCs are collectively referred to as the 'Respondents'. B. COMPLAINT, ENQU IRY, SHOW CAUSE NOTICES AND REPLIES: 4. POEPA filed a Complaint with the Competition Commission of Pakistan (the 'Commission') against the Respondents. It was alleged in the complaint that GAMCs working under their respective GAMCA have cartelized to allocate the intended emigrants to the GCC States (hereinafter the 'GCC Customers') among themselves on equal basis. Such allocation of customers falls, prima facie, under the arrangement/agreement prohibited under section 4(2)(b) of the Act. It was also alleged that GAMCA has divided the territory of Pakistan for provision of services of pre- departure medical tests into five (5) regions, namely; Karachi, Multan, Peshawar, Islamabad/Rawalpindi and Lahore, which appears in violation of section 4(2)(b) of the Act. Further, GAMCAs are equally distributing the number of GCC Customers for pre-departure medical tests to the GAMCs operating within their region, which is, prima facie, violation of section 4(2)(c) of the Act. And finally that the anti-competitive behavior of the Respondents affects the GCC Consumers who are forced to pay exorbitant fixed charges of the GAMCs, prima facie, in violation of section 4(2)(a) of the Act. The GCC Customers are also unable to get their medical check-ups from a medical center of their suitability. Ironically, after the arrival of the GCC Customers in the GCC States for employment, they have to undergo the same medical tests again, thus paying twice for the same tests. 6. The Commission initiated an enquiry pursuant to section 37(2) of the Act by appointing the Enquiry officers to conduct a detailed enquiry on the issues raised in the complaint. The Enquiry officers submitted the Enquiry Report dated 31-1-2012 (hereinafter referred to as the 'Enquiry Report'). The Enquiry Report concluded as follows:-- "6.1.1 Territorial allocation is an arrangement among the GCC Approved Medical Centers which, prima facie, has the object or effect of preventing, restricting or reducing competition within the relevant market in violation of the provisions of section 4(1) and, in particular, section 4(2) (b) of the Act; 6.1.2 Practice of equal distribution of consumers/ customers among the GCC Approved Medical Centers for the purpose of conducting pre-departure medical test, prima facie, has the object or effect of preventing, restricting or reducing competition within the relevant market in violation of the provisions of section 4(1) and in particular section 4(2)(b) and (c) of the Act;
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6.1.3 The GCC Approved Medical Centers appear to have fixed the fee to be charged from the consumers/ customers for the pre-departure medical tests, prima facie, in contravention of section 4(1) and in particular section 4(2)(a) of the Act; 6.1.4 The role of GAMCAs, prima facie, is that of a facilitator of the GCC Approved Medical CenteRs, In fact GAMCA plays a major role to monitor the `common policy' of equal distribution and fixed fee being charged from the consumers/ customers for the pre- departure medical tests. Such practices of GAMCA, prima facie, have object or effect of preventing, restricting or reducing competition within the relevant market in violation of the provisions of section 4(1), in particular, section 4(2)(a), (b) and (c) of the Act. 6.1.5 The GCC Approved Medical Centers are the only authorized medical centers to carry out pre- departure medical tests mandatory to procure visa for GCC Countries except the United Arab Emirates. The GCC Approved Medical Centers appear to carry out their functions under the supervision of GAMCA in their respective region/ city and under a common policy of equal distribution and fixed fee. 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. " 7. On the above said findings and in light of public interest surrounding the case it was recommended by the Enquiry Officers to initiate proceedings under section 30 of the Act against GAMCAs and GAMCs. 8. The Commission while taking into account the conclusions and the recommendations of the Enquiry Report, deemed it appropriate to initiate proceedings under section 30 of the Act against the Respondents, by issuing Show Cause Notices. Consequently, proceedings under section 30 of the Act were initiated against the Respondents by issuance of show cause notices. The Respondents were required to file written replies to the show cause notices within fourteen (14) days from 9-2-2012. They were required to appear on separate dates i,e, from 28-2-2012 to 5-3- 2012 before the Commission through a duly authorized representative and avail the opportunity of being heard. Relevant paragraphs of the show cause notices are reproduced herein below:-- Show Cause Notices issued to GAMCAs:-- (7) WHEREAS, in terms of Part 5.3 of the Enquiry Report in eneral and paragraphs 5.3.14 to 5.3.16 in particular, GAMCAs are established in every city where two or more GAMCs are operating. The President and the General Secretary of GAMCAs are elected every year from the representatives of the member GAMCs on rotational basis and it appears that GAMCAs provide a forum to discuss matters of mutual interests of GAMCs and take anticompetitive decisions in violation of the Act.; (8) WHEREAS, in terms of Part 5.3 of the Enquiry Report in general and paragraph 5.3.17 to 5.3.20 in particular, it appears that the fee charged from the consumers/ intended immigrants/ expatriates by the GAMCs across Pakistan is uniform and apparently is fixed under the auspices of GAMCAs and subsequently proposed to the Executive Board for its approval; (9) WHEREAS, in terms of Part 5.4 of the Enquiry Report in general and paragraphs 5.4.10 to 5.4.12 in particular, it appears that GAMCAs create unnecessary hurdles for consumers and refuse to entertain the consumers/ Intending immigrants/ expatriates for medical examination on the plea that they belong to other areas and should get their medical checkups done only from their place of residence; (10)WHEREAS, in terms of Part 5.3 of the Enquiry Report in general and paragraph 6.1.5 in particular, GAMCAs are, prima facie, facilitating GAMCs and plays a major role in monitoring the 'common policy' of equal distribution and fixed fee being charged from the consumers /intended immigrants/ expatriates for the pre-departure medical tests. Such practices of GAMCAs, prima facie, have object or effect of preventing, restricting or reducing competition within the relevant
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market in violation of the provisions of subsection (1) of section 4, in particular, clauses (a), (b) and (c) of subsection (2) of section 4 of the Act; (11)WHEREAS, in terms of Part 5.4 of the Enquiry Report in general and paragraph 6.1.6 in particular, GAMCAs are, prima facie, in order to implement the equal distribution system and to exploit consumers/ intended immigrants/ expatriates by foreclosing the choice of consumers/ intended immigrants/ expatriates; thereby restricting competition for the relevant services in the relevant market apart from imposing it unfairly on its customers which prima facie, is in violation of subsection (1) section 3, in particular, clause (a) of subsection (3) of section 3 of the Act; Show Cause Notices issued to GAMCs:-- (7) WHEREAS, in terms of Part 5.3 of the Enquiry Report in general and paragraphs 5.3.1 to 5.3.10 in particular, the Undertaking along with other GAMCs under the garb of curbing the malpractices by some of the GAMCs proposed, not only the territorial division of Pakistan among themselves but further recommended an equal distribution of consumers among themselves, thereby eliminating any chance of reduction in their profitability without competing with any other market player; (8) WHEREAS, in terms of Part 5.3 of the Enquiry Report in general and paragraphs 5.3.14 to 5.3.16 in particular, GAMCAs were established in every city where two or more GAMCs are operating. The President and the General Secretary of GAMCAs are elected every year from the representatives of the member GAMCs on rotational basis and it appears that GAMCAs provide a forum to discuss matters of mutual interests of GAMCs and take anticompetitive decisions in violation of the Act; (9) WHEREAS, in terms of Part 5.3 of the Enquiry Report in general and paragraphs 5.3.17 to 5.3.21 in particular, the Undertaking along with all other GAMCs is charging the same fee for the pre- departure medical tests from the consumers/ intended immigrants / expatriates proceeding to the GCC Countries except United Arab Emirates', which under the auspices of GAMCAs is decided and fixed and also proposed to the Executive Board for approval. Prima facie, these practices, have the object or effect of preventing, restricting or reducing competition within the relevant market in violation of the provisions of subsection (1) of section 4, in particular, clause (a) of subsection (2) of section 4 of the Act; (10) WHEREAS, in terms of Part 5.3 of the Enquiry Report in general and paragraphs 5.3.6 to 5.3.16 in particular, it appears that the Undertaking along with other GAMCs is engaged in division of territories as well as dividingequally among themselves the consumers/intended immigrants/expatriates for the pre-departure medical tests. Such practices also, prima facie, have the object or effect of preventing, restricting or reducing competition within the relevant market in violation of the provisions of subsection (1) of section 4 , in particular. Clauses (b) and (c) of subsection (2) of section 4 of the Act; (11) WHEREAS, in terms of Part 5.4 of the Enquiry Report in general and paragraphs 5.4.1 to 5.4.6 in particular, the relevant market is captive market and the prospective consumers can only get the relevant services from the Undertaking and other GAMCs on their terms and conditions and not otherwise. Therefore, prima facie, the GAMCs including the Undertaking, severally and jointly, under the auspices of GAMCAs have the ability to behave to an appreciable extent independently of competitors, customers, thus hold dominant position in the relevant market; (12) WHEREAS, in terms of Part 5.4 of the Enquiry Report in general and paragraphs 5.4.7 to 5.4.12 in particular, it appears that the Undertaking along with other GAMCs is abusing its dominant position by restricting the choice of consumers/intended immigrants/expatriates and imposing, prima facie, unfair trading conditions including; (i) repeat medical tests conducted to charge extra fee; (ii) customer declared unfit 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, restrict competition
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in the relevant market and are in contravention of subsection (1) of section 3, in particular, clause (a) of subsection (3) of section 3 of the Act; 9. The Respondents collectively filed their written reply to the show cause notice through their Counsel Mr. Salman Akram Raja, Advocate Supreme Court on 15-3-2012. Salient points of the reply are as under:-- (i) The Rules and Regulations for Medical Examination of Expatriates Recruited for work in GCC States (the `Rules & Regulations') were formed exclusively under the direction and the mandate of the Health Ministers' Council for the GCC States (the "Health Ministers' Council") and not the GCC medical centers in Pakistan as erroneously concluded in the Enquiry Report. (ii) The Executive Board of the Health Ministers' Council for the GCC States (the 'Executive Board') acts as the executive organ of the Health Ministers' Council that represents sovereign states. (iii) Purpose of equal distribution system is to ensure that medical centers are not involved in mal- practices. (iv) GAMCs are not performing an economic function because they are conducting pre-departure tests to ensure that any disease does not travel to GCC States. Such function is a sovereign prerogative of the GCC States. Therefore, pre-departure test is not an economic activity by its nature and there is no relevant market in this case. All bodies namely; GAMCs, GAMCA and the Executive Board engaged in the process of pre-departure tests are performing the essential functions of the GCC States and are not involved in any economic activity. Hence, are not covered under the definition of undertaking given in the Act. (v) The legal relationship between the Executive Board and the GAMCs is that of a principal and agent or auxiliary arms of the Executive Board to the extent that these centers conduct pre- departure tests of GCC CustomeRs, As divisions of the same entity, the Executive Board has the right to set a fix price and provide for the equal distribution of medical tests between the GAMCs. (vi) The anticompetitive practices compelled by foreign countries can not be penalized under the competition law. The Respondents have no option to act outside of the Rules and Regulations of the Executive Board. C. HEARINGS BEFORE THE COMMISSION: 10. The first hearing in the matter was held on 20-3-2012. Mr. Malik Ghulam Sabir, Advocate appeared on behalf of Raja Muhammad Akram and Co. And Mr. I'ida Ahmed, Secretary appeared on behalf of POEPA. Mr. Malik Ghulam Sabir, Advocate informed the Commission that they had sent the request for adjournment through fax and courier which was not received at the Registrar's Office. He requested for adjournment due to the fact that Mr. Salman Akram Raja, Advocate, Supreme Court had been unable to attend the hearing before the Commission as he was previously engaged in Lahore. The Commission expressed its discontentment at the request, noting that none of the four authorized Counsel had been able to attend the hearing. However, the Commission acceded to the request on the condition that the adjournment granted was final, and no subsequent adjournments were to be granted. Mr. Fida Ahmed was asked to file parawise reply to the reply filed by the Counsel of the Respondents by 2-4-2012. 11. Second hearing in the matter was held on 25-4-2012. Mr. Salman Akram Raja and Mr. Omer Akram Chaudhary, Advocates of Raja Mohammad Akram & Co. Appeared before the Bench on behalf of the Respondents along with Dr. Inaam, Dr. Hashmat Malik, Dr. Shamshad, Mr. Mujahid Malik, Mr. Ahmad Sheikh Advocates. Mr. Qausain Faisal Mufti, Advocate along with Mr. Fida Hussain, Secretary appeared on behalf of POEPA before the Bench. 12. The counsel appearing on behalf of the Respondents argued the matter at length and elaborated the written reply dated 15-3-2012 and the justifications for the conduct under question before us. It was mainly argued that the Respondents are conducting medical test on behalf of the
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Executive Board and the medical reports are used for procurement of visas, therefore, the activity performed by them is not an economic activity and hence, they are not undertaking in terms of section 2(1)(q) of the Act. He further argued that the legal relationship between the Executive Board and the Respondents is that of a principal and agent to the extent that the said GAMCs conduct pre-departure medical check-ups of the GCC CustomeRs, The Respondents are closely regulated by the Executive Board, their licenses are renewed on annual basis and the Rules and Regulations also provide for the penalties, which include the penalty of revocation of license, for any violation of the Rules and Regulations by the Respondents. Therefore, the Executive Board and the Respondents are single economic entity and the provisions of competition law are not applicable on them. He further argued that the actions of the Respondents are compelled by the Executive Board, which is a sovereign entity, therefore, there is a specific bar of the Competition Law and the proceedings be dropped. In support of his arguments various judgments were relied upon which are discussed in detail in the later part of this Order. 13. Subsequent to the hearing, vide letter dated 26-4-2012, the counsel for the Respondents was directed to provide the following information/documents:- (i) Complaints mentioned in letter dated 27-11-1999 which were forwarded from GCC Approved Medical Centers in Pakistan to Executive Board of the Health Ministers' Council for GCC States ("Executive Board") regarding 'involvement of recruitment agents in medical examination' and 'uncertainty in distribution of medical slips'; (ii) Letter dated 19-9-2008 written by Dr. Shehzad Ahmed, President GAMCA (Rwp/Isl.) to Executive Board requesting approval to charge Rs,3000 as fee for medical examination by the GCC Approved Medical Centers in Pakistan; (iii) During the hearing reference was made to a certificate dated 29-2-2012 issued by the Executive Board. The relevant correspondence was requested to explain the context for the issuance of the said certificate; (iv) Documentary evidence in support of the claim that post arrival medical tests in GCC States are conducted only randomly and are not compulsory for each GCC Customer; (v) Information regarding GAMCs who were alleged/found involved in malpractices in the pre equal distribution system and what disciplinary actions were taken against them? Whether these medical centers still continue to operate as GAMCs? (vi) Documents supporting inspection of GAMCs carried out in Pakistan by the Technical Committee, Executive Board from January 2008 to April 2012; (vii) The instances where GAMCs in Pakistan have been penalized for any violation of Executive Board's Rules and Regulations; (viii) Number of GCC Customers declared unfit in post arrival medical tests in GCC States; (ix) What will be the impact of E-Communication System of the Expatriate Program on the existing equal distribution system among the GAMCs? (x) Describe geographical limits of each GAMCA established in Pakistan and also who decides the territorial boundaries of GAMCAs? And (xi) List the GAMCs which provide services exclusively to GCC Customers only (do not entertain local patients). 14. Mr. Salman Akram Raja responded to the above queries vide his letter dated 7-5-2012. The salient features of the reply are as under: - (i) GAMCs did not file any complaint to the Executive Board and only the negative representation of POEPA was brought to the notice of Executive Board. The Executive Board was specifically referred the minutes of meeting of POEPA dated 6-7-1999; wherein all the promoters were directed to get the medicals of their clients from VIP Health Clinic and Gulf Medical Center. Minutes of meeting and brochure issued by POEPA in this regard was provided;
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(ii) The letter dated 19-2-2008 was written by the GAMCA for revision in fee for pre-departure medical check-ups due to currency fluctuation. Copy of the letter was provided; (iii) Copy of the letter dated 14-2-2012 was provided, in response of which the certificate dated 29- 2-2012 was issued by Executive Board; (iv) Copy of the relevant excerpt of the Rules and Regulations was provided in support of the argument that on arrival in GCC States, medical tests are conducted on random basis; (v) List of GAMCs was provided whose licenses were revoked by the Executive Board; however, it was mentioned that no specific reasoning was provided to the Respondents for revocation of the licenses; (vi) The Technical Committee of Executive Board was not able to conduct the regular inspections of the GAMCs between 2008 to April 2012 due to security reasons; (vii) Instances were provided where the GAMCs were penalized for not following the Rules and Regulations; (viii) The number of GCC Customers who were declared unfit in their post-arrival medical check- ups was not provided on the pretext that the same is not available with the Respondents; (ix) The E-Communication System will minimize the role of the GAMCAs in the distribution of emigrant workers to the GAMCs, the GCC Customers will be distributed among the GAMCs by the Executive Board as per its discretion; (x) As per Article 1 of the 'Rules and Regulations to Coordinate the Activities between the Executive Board and GAMCAs', "the GAMCAs consist of all approved medical centers in any city in the country which conducts and implements the pre-departure medical check-ups program for expatriates recruited for work in the Arab Gulf countries'. The said article also provides that the GAMCAs must have at least three medical centers as members; and (xi) GAMCs are dedicated medical institutions to conduct pre-departure medical check-ups for GCC CustomeRs, However, routine medical care is also provided by these Centers but forms a very small proportion of the overall activity of the centeRs, The GAMCs treat routine medical care as an activity distinct from the pre-departure medical check-ups for GCC States and maintain separate accounts for both activities. 15. Third hearing in the matter was held on 22-6-2012. All authorized representative from the last hearing appeared before the Commission. 16. The counsel for POEPA submitted the comments on the…
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