CCP passes order in the matter of filing indemnity bonds with airlines by mango exporters

June 25, 2020 (MLN): The Competition Commission of Pakistan (CCP) has passed an order addressing the issue of mandatory filing of indemnity bonds by the mango exporters with the international airlines, thus removing a major hurdle in mango export from Pakistan.

The All Pakistan Fruit & Vegetable Exports, Importers and Merchants Association (ACAAP), Vegetable Exporters, Importers and Merchants Association, and Air Cargo Agents Association of Pakistan (PFVA) filed complaint with the CCP against foreign airlines operating in Pakistan, inter alia, Emirates Airline, Qatar Airways, Oman Air, Turkish Airways, Gulf Air, Saudi Arabian Airlines and Etihad Airways, for alleged violation of Section 3 of the Act.

The complainants accused the airlines of charging higher rates on the export of mangoes from Pakistan in comparison to the charges levied for exports from India for the same destinations. Furthermore, exporters had to give undertaking of no claim or indemnity bond which exempts the exporters from the loss incurred due to delay or damage caused during transit and handling. This condition was a major hurdle in mango export to the United Arab Emirates, Europe, and other countries.

The CCP’s enquiry noted that contrary to international conventions and prevalent practice in other jurisdictions, Pakistani mango exporters were required to furnish an indemnity bond by all airlines (except Turkish) which absolves the airline of all responsibility of loss.

The CCP’s bench hearing the case was told by the complainants that subsequent to initiation of the enquiry by the Commission, the airlines waived the requirement of filing of Indemnity bond / no claim. Subsequent to the removal of the said condition, the airlines are now responsible for catering the lose(s) or damage(s), if incurred, during the air carriage as this issue was pending for the last fifteen (15) years and many exporters had left the export business due to this condition.

The bench in its order acknowledged that the major grievance of the complainants also stands addressed during the conduct of enquiry, hence, it does not require any further emphasis.

The bench emphasized that competition law is a subset of principles stimulating innovation, productivity and competitiveness, contributing to an effective business environment in the Country. This generates economic growth and employment. It also creates possibilities for small and medium sized enterprises, removes barriers that protect entrenched elites and reduces opportunities for corruption.