Legal And Regulatory Environment.docx

1Competition Act 2010: Abuse of Dominant Position; Cinpax, Siza Foods, Bahria University; made it mandatory for all incoming students to buy laptops imported by the University. Prohibited Agreements; ICAP, Pakistan Ship Agents Association. Deceptive Marketing; Zong, Harley Davidson. Approval of Mergers; Vimpel. S28 functions and powers of the Commission; (a) initiate proceedings & make orders; (b) studies for competition; (c) enquiries; (d) advice to undertaking, asked, its actions in relation to the law; (e) competition advocacy (f) all actions for implementing the Act. S30 Proceedings (a) give notice of its intention stating reasons (b) undertaking(s) heard before the Commission their argument. S31 Orders, Interim if final will take time. S33 same powers as are vested in a civil court (a) enforcing attendance of witness, (b) production of document as evidence, (c) accepting evidence, (d) requisitioning of any public record, (e) examination of witness or document. S34 power to enter and search premises S35 power of forcible entry. S38 Penalty S39 Leniency 2 Regulatory agencies two primary functions in government: they implement laws and they enforce laws. Implementing laws: Advance notice, Proposed regulation, Public comments, review comments, final regulation, implementation. Regulatory enforcement; Investigation, Decision. 3 PEMRA: Content, News, Talk shows, Editorial oversight, Live and conflict, Plagiarism, Violence, Religious Tolerence, Privacy, Language, Advertisements, Public Interest, allegations, Hate speech 4 Case Laws: 1- Appelent – pakistan broadcaster ascociation – opponent - Pakistan Electronic Media Regulatory Authority ("PEMRA ") inserted a clause in licence agreements of broadcasters that restricted the maximum period of an advertisement break during prime time, and also enforced R.15(3) of Pakistan Electronic Media Regulatory Authority Rules, 2009 which set a minimum time duration between two successive advertisement breaks--Legality---Commercial speech could be regulated by the State---No one could be forced to listen or watch that he may not like to, and one could not be invaded with unsolicited interruptions while eagerly watching or listening to something of his interest---Viewers watched television in expectation of content feeds and not advertisements---Broadcasters attempted to lengthen commercial breaks by putting more advertisements to maximize revenue irrespective of whether the viewer was willing or not---Frequency and volume of advertising caused lack of continuity in programming and significantly reduced the quality of viewing experience---Duration of advertisement was inversely proportional to the quality of the viewing experience---State was obliged to regulate the right to speech when it came in conflict with the right of the viewers or listeners---Rule 15(3) of the Pakistan Electronic Media Regulatory Authority Rules, 2009 and the impugned clause in the licences of broadcasters merely regulated duration of advertisements broadcast by television channels, and the spacing between advertisements slots and programme contents; the same neither prohibited/restricted the contents of any broadcast, nor were invasive on the right to free speech and freedom of expression---Said Rule and clause were also in conformity with the Art.18 of the Constitution, which protected the right to conduct a lawful business, but also made it permissible to regulate any trade or profession by a licensing system---Duration of advertisement breaks proposed by broadcasters during present proceedings were overwhelmingly in compliance with R.15(3) and the impugned clause ---High Court had rightly upheld the legality and propriety of R.15(3) of the Pakistan Electronic Media Regulatory Authority Rules, 2009 and the impugned clause---Appeal filed by broadcasters was dismissed accordingly 2 – A - Avari Hotels – O - Federation, Notice issued by Pakistan Electronic Media Regulatory Authority (PEMRA ) demanding plaintiff to obtain a license for Cable Television (CTV) operations in its hotel---Plaintiff claimed not to be falling within meaning of CTV Operator as he was not "transmitting" and/or "broadcasting" through "head-end" channels in its hotels as alleged in the impugned notice--Defendant's application under O.VII, R.11, C.P.C. seeking rejection of plaint for not being maintainable under Ss. 42 & 56(d)(i)(j) of Specific Relief Act, 1877---Order of Trial Court rejecting plaint upheld by Appellate Court---Validity---Evidence would be required for deciding questions as to whether plaintiff was "transmitter" and/or "broadcaster" through "head-end" or engaged in business of transmission or retransmission of audio visual programs by cables or MMDS, and whether such were services licensable under Pakistan Electronic Media Regulatory Authority Ordinance, 2002 and Pakistan Electronic Media Regulatory Authority Rules, 2002---Trial Court while granting interim injunction had come to conclusion that admittedly

appellant was providing hotel management services to its guests, thus, he was not involved in transmission and distribution of programs to subscribers, rather he was using TV Channels to ensure availability of programs to its guests---Appellant had a legal character to invoke jurisdiction of court for a declaration that provisions of Pakistan Electronic Media Regulatory, Authority Ordinance, 2002 and Rules were not applicable---Plaintiff's case prima facie fell into pail of S.42 of Specific Relief Act, 1877---High Court set aside impugned order in circumstances. 3- A- Ary – O- Federation. Petitioner applied to Pakistan Electronic Media Regulatory Authority (PEMRA ) for licence of landing rights of satellite television channel for transmiting religious and educational knowledge---Grievance of petitioner was that despite deposit of processing fee, the Authority had not issued required licence for the past many years---Validity---Authority in its absolute unfettered discretion, acted arbitrarily and discriminately by issuing licence to entertainment, sports, English and other television channels by ignoring channel of petitioner without any sufficient reasons and cause--Authority in pursuance of powers conferred upon it, had delayed licence to such an extent that petitioner was kept waiting for years without any fault on its part, thus Authority did not act fairly, transparently, judiciously and above any suspicion---Vested right of individual was protected by the Constitution and by fundamental rights guaranteed to citizens---Functionaries like Authority in question, which exercised statutory power were legally and constitutionally bound to discharge their functions strictly in accordance with law, otherwise an action contrary to law would not be sustainable and such Authority would expose itself for discriminatory treatment, which amounted to denial of valuable fundamental rights of people, for whose benefit such Authority had been created---Action of Authority was ultra vires, contrary to the Constitution and law, having no legal sanctity--- High Court directed the Authority to strictly follow principles of 'equity' and 'fairness' for taking decision on application submitted by petitioner for issuance of licence--Constitutional petition was allowed accordingly. 4- A - Shahid Masood- O - federation - Act of operators of cable TV networks, blocking / obstructing transmission of petitioners and consequent denial of distribution service to the channels in question and to the viewers who were paying the operators for the services, prima facie, was a gross violation of terms and conditions of licences granted to them under Ss. 20 and 24 read with the provisions of Ss. 27 and 28 of Pakistan Electronic Media Regulatory Authority Ordinance, 2002 and thus attracted penal provisions of Ss. 30 and 33 of the Ordinance, in respect of not only the ones committing such violations but also those abetting the same---Supreme Court after examining the factual, legal and even constitutional aspects of the' matter directed as under that Chairman PEMRA would ensure immediate distribution of broadcast services of its licensed channels, even if the same involved strict legal action against delinquent cable TV operators, if any; that Chairman PEMRA would personally monitor and ensure that transmission of broadcast of petitioner channels was continued to be aired without any hindrance or obstruction of whatever kind and was to submit a report in such behalf on the next date of hearing under his own signatures; that Provincial Police Officers of all Provinces including Sindh and Punjab were directed to ensure that if at all, any law and order situation would be created, which could hinder the transmission of petitioner channels then they should take immediate correctional steps including strict action, in accordance with law against any person found causing such hindrance.

In January 2011, The Competition Commission of Pakistan (the “Commission”) took notice of the increase in prices of 50 kg Urea bags by the Urea manufacturing units operating in Pakistan through several newspaper reports. Keeping in perspective the agricultural orientation of the country and the implications this 4 could have not just on farmers but the economy as a whole, letters were written to all the major Urea manufacturers demanding an explanation for the increase and the dates they became effective. 5. The main ground given by the Urea Manufacturers for these increases was the Government of Pakistan (“GOP”) induced gas curtailment (natural gas being a primary raw material in the production of Urea) faced by their plants, Two of the manufacturers also took the grounds that they were mere

price followers and had no option but to follow price increase once it was carried out by the price leader. From the responses it turned out that the increase in prices were more or less simultaneous and the quantum of this increase did not vary from one manufacturer to the other. This raised a suspicion of collective action and exploitative behavior especially when seen in the light that the efficiency and the factors affecting each company were too different to warrant a similar reaction under the circumstances. 6. As the year 2011 progressed, the pattern of price increase continued as noted in various newspaper reports. It reached the extent where a Pakistan Today’s report of July 28, 2011 quoted the then chief executive officer of Engro Corporation Mr. Asad Umar as admitting that a price increase of PKR 750-800 in the last eighteen months was equivalent to an accumulative increase over the last 32 years. The Bench finds and holds both FFC and EFL to have abused their dominant position individually by raising the prices of Urea unreasonably above competitive levels. We must bear in mind the obligation attached to dominant undertakings as highlighted in ECR 1983 Pg NO. 03461; NV Nederlandsche Banden Industrie Michelin v Commission of the European Communities wherein it was observed: “10. A finding that an undertaking has a dominant position is not in itself a recrimination but simply means that, irrespective of the reasons for which it has such a position, the undertaking concerned has a special responsibility not to allow its conduct to impair genuine undistorted competition on the common market.” 482. In determining the quantum of penalty, taking into all factors available on record, including the accounting comparators, in particular, the facts that: the subsidies given by GOP and availed by FFC alone is around PKR 11 billion and that availed by EFL is around PKR 4.5 billion in a period of one year, given the nature of the product i.e. Urea being the essential commodity and the significance it holds for Pakistan’s economy; we are of the considered view that the subject price increase of the product in question i.e. Urea is by all means astronomical, unfair and unreasonable. Therefore, such violation makes it a just and fit case for imposition of a maximum penalty. In fact the harm done to the consumers is far more than what could be translated into deterrence through such imposition, but we are constrained by the maximum penalty envisaged under the Act. Accordingly, the Bench hereby imposes a penalty equivalent to 10% of each of the undertakings turnover in 2011; a sum that amounts to PKR 3.14 billion in case of EFL and PKR 5.5 billion in case of FFC - each held liable to pay the penalty for abusing its dominant position in violation of Section 3(3) (a) of the Act.