ISLAMABAD, July 1: The Competition Commission of Pakistan has imposed a penalty of Rs10 million on Engro Vopak Terminal Limited for entering into a monopolistic contract with Port Qasim Authority.

The order was passed by the bench comprising of CCP Chairperson Rahat Kaunain Hassan, Members Vadiyya Khalil and Dr Joseph Wilson, said that the EVTL and PQA violated the Competition Law by entering into a prohibited agreement. The CCP had taken notice of the exclusive rights granted to EVTL, a liquid terminal at Port Qasim, through a concessionary agreement by the PQA to handle and store all liquid chemicals at the Port Qasim for 30 years.

The bench noted that the agreement appeared to have an object or effect to prevent, restrict and reduce competition within the relevant market and added that both the EVTL and the PQA needed to obtain exemption from the Competition Commission under the regulation and inform the CCP that the agreement would not have any impact on the competitive environment in the sector.

Under the order the PQA had been directed to take immediate action to address the competition concerns stipulated in the agreement within the given time frame.

“Failure to comply with the aforesaid directions shall make PQA and EVTL further liable for a penalty of Rs1 million for each day default.” The CCP order said and the PQA had been directed to seek exemption in respect of all of its agreements granting concessionary rights to private undertakings.

According to the details the EVTL had been at odds with the CCP over the regulations being applied over its Concession Agreement with the PQA.The EVTL raised the objection during the proceedings that the Competition Act is not applicable on the ‘Concession Agreement’ as it was executed prior to promulgation of the said act.

However, the bench responded that the CCP had issued a general order, which was published in the Official Gazette SRO 51(I)/2008 dated 15-01-2008, requiring all undertakings to seek exemption within 90 days from the date of issuance of General Order.

The CCP bench also said that intervention in the case was imperative where adverse effects of lessening of competition outweigh any benefits resulting from the grant of concessionary rights.