CCP working on telecom sector

[Salman]

CCP working on telecom sector

Islamabad: Competitive Commission of Pakistan (CCP) is working on anti-competitive cases in telecom sector against cellular phone operators, LDIs, broadband DSL services.

Senior Joint Director of CCP Nadia Nabi, said this while giving briefing of the cases in different sectors to the participants of Competitive Consultative Group. The meeting was also attended by official of Pakistan Telecommunication Authority (PTA).

She informed the meeting that CCP as a vigilant body has taken different action against telecom operators during the year 2011. She said that action has been taken against Warid Tel, Wateen and Vimplcom while new cases on the telecom and broadband operators would be made public after legal proceeding and different inquiries.

She said that in August 2011, CCP issued a show cause notice under Section 30 of the Competition Act, 2010 to M/s Warid Telecom (Pvt.) Limited for deceptive marketing practices. During March 2011, CCP imposed penalty of Rs. 10 million on DHA and Rs. 5 million on Wateen for violation for entering into a prohibited agreement under the law.

During the same period, competitive competition of Pakistan granted conditional approval to a cross border acquisition of Wind Telecom by Vimpel Com Ltd. after undertaking Phase-II review of the transaction to address the competition concerns.

The merger of two leading international telecommunication groups, Vimpel com and Wind Telecom which shall create the worlds sixth largest mobile telecommunication carrier measured by the number of subscribers raised competition concerned.

Because the acquisition of Wind Telecom by Vimplecom will result in indirect change of control of OTH, and its subsidiaries in Pakistan; the fact that Telenor (Norway) will have 31.7% equity shares and 25% voting shares in Vimplecom after the transaction gets consummated, which prompted CCP to open the Phase-II review of the transactions.

The relevant market in the instant case in an oligopolistic market, wherein the potential for coordinated effects (also referred to as joint dominance or collective dominance ) are high, as the competitors are able to coordinate their commercial conduct.

The presence of Telenor (Norway) in the board of VimpelCom raises the potential for coordination (tacit collusion) between PMCL and Telenor Pakistan.