Breaking: Competition Commission Seek Clarification from ICAP, ACCA and ICAEW
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In surprising turn of events – Competition Commission of Pakistan (CCP) took notice of ‘ICAP notice’ where ICAP ordered audit firms to not to engage students of foreign qualifications, immediately after which panic had erupted among students and members of ACCA and ICAEW qualification.
And How This all Started?
This matter, which was supposed to be dealt between these professionals bodies seems to be getting out of their hands. Initially, there were around 800 ACCA students who were planning to perform a protest in front of ICAP offices in Islamabad, Lahore and Karachi. But the real protest was expected in Islamabad where in a dramatic turn – the local head of ACCA Islamabad Miss Noor Aftab along with other officials met with these students and the protest was called off.
After the protest was called off – many protesters reacted and blamed the organizers for ditching them. Although the truth is far from these allegation, as per our conversation with ACCA Pakistan.
EconomyAge contacted ACCA Pakistan before the planned date of this protest and the officials were worried that if ACCA students start taking matters into their own hands then this will put their negotiation with Institute of Chartered Accountants of Pakistan in trouble and the matter might get delayed further.
But the Show Continues
So who called Competition Commission into this matter? ACCA, ICAEW or CIMA?
If you’re guessing any of the above names then you’re wrong! It was those same students who are furious over delay in response from ACCA Pakistan.
“Many ACCA students emailed us and after looking into the number of emails and sensitivity of matter – Competition Commission decided to play its role by sending notices to all relevant bodies including ICAP and ACCA to submit their viewpoint on this”, told us Senior official of Competition Commission of Pakistan.
According to EconomyAge’s detailed discussion with an official at Competition Commission of Pakistan, she told us that CCP took this notice and is seeking viewpoint to determine if the conflict falls in their scope or not.
When asked if Competition Commission of Pakistan can intervene ICAP, since its a regulatory body and allowed by Ordinance to make laws relating to Accountancy profession in Pakistan, the official responded in affirmation. She said:
“Yes CCP can depending on situations. For instance, PTA is a regulatory body of telecom industry and State Bank is regulating Banking sector in Pakistan but when it comes to practices relating to competition and prices – it falls into CCP’s domain and we can intervene there.”
CCP said that an inquiry it will try to figure out if ICAP notice is negatively impacting the competition in Pakistan then it would intervene and will take corrective measures.
So how long could this take?, we asked the officials at CCP.
“Well, we are dependent on their initial responses. These bodies might ask for an extension to submit their response. Depending on the time they will take and depending on their initial response – we will investigate further if there is something CCP can do about it”, the official responded.
We were also told that CCP is well aware of the fact that ACCA members cannot sign audit report in Pakistan so there are possibilities that they might also seek a reasonable clarification about this practice as well.
Needless to say – this matter is taking unexpected turn for every stakeholder but the ultimate fate rests in the outcome of initial responses by these bodies.
Previous Actions Taken By Competition Commission
Competition Commission of Pakistan is responsible for regulating monopolistic practices in different sectors. Recently, Competition Commission was awarded as the best agency by London Based Competition Law Journal.
Just two weeks ago – Competition Commission imposed a massive penalty of Rs 77 Crore on Banking sector against unfair practices. CCP also initiated legal proceedings against PTCL and hammers Warid for running a deceptive campaign.
Competition Commission is Not New for ICAP
It would be interesting for our readers that both ICAP and CCP are not new to each other.
Almost Four years ago, Competition Commission issued an order against ICAP which accused them of fixing a minimum fees for audit engagement. But within days of this notice – ICAP filed an application to Appellate Bench for an interim relief.
Similar Posts:
- ICAP Decided to take a Stand on its Notice: Sources
- Breaking: Competition Commission Issued Show Cause Notice to ICAP
- Lahore High Court Gives Stay Order to ICAP
- CCP Soon to Pass Final Order in ACCA-ICAP Case
- Breaking: ICAP Notice Was not Aimed for ACCA and CIMA
quite interesting turn of events..
finally!
At last a a hope!
I just love CCP, I never knew the laws of our country are that strong that they will protect citizens of Pakistan, the future of Pakistan.Proud of you CCP
)))
you see how ICAP stalled CCP decision for four year :p
and you still believe CCP can do something about it
ICAP begged for interim relief.
Cant you read?
“Notice milaya”, “Kakh Na Hilaya”
Tera b wohe haal ho ga ICAP jo Babar Awan ka huwa tha.
supreme court ko challenge mat kero ICAP.
Yeh naya Pakistan hay, yahan subko insaaf milega!!
ankhain kholain plz… its CCP not Supreme court.. mujhay lagta hey ACCA nay paisay khilaay hain CCP ko notice kay liay to put pressure on ICAP..
i stand with all Poor Pakistani who are robbed by ACCA –|–
So the notice to Audit firms by ICAP is fair afterall?
WTF ICAP..what kinda shit u are?ACCA can do external audit in UK ..what nif it is not allowed in pakistan.n ACCA does not rob pakistan,..it’s u because of who many of p[akistanis have left their 75% completed studie of acca n more than that are unemployed..its f***** u guys who rob pakistan ..f*** u .. :@
and… voila!
lets hope that CCP can come up with something good……………….
inshAllah they won’t.. this is not their playground
There is light at the end of the tunnel…ACCA keep your hopes high…
Its still to determine if the conflict falls in the CCP’s scope or not. Lets wait and watch……..
Well, atleast somebody is there with Authority !
though ICAP has a very powerful lobby and i don’t think CCP will be able to influence many decisions.
ICAP is created under Government Enactment just like CCP. CCP has no authority to challenge the provisions of ICAP Act. Only GOP through act of Parliament can make changes in the ICAP Law.
YOU are right.
+1
A good move by CCP .
Seriously a glimpse…kindly do justice
Hope for the best and be prepared for the worst….
(to ACCA students).
CCP’s earlier order against the fixation of minimum fees was also set aside by the Appellate bench
Lets see what happens now!
1st time being proud of pakistan law structure…….. love u ccp, plz do justice….
you should be proud of icap… ACCA is robing Pakistanis and you as well as other thousands are victims.. its still time to think for your own good and for your country.
not to mention our valuable foreign currency reserves are utilized every year bcos of this ACCA… and they are producing ‘unemployed people’ rather than producing ‘accountants’…
its not that im against you guys.. im against ACCA… they have no right to suck money out of my fellow pakistanis
Dear Irfan not just foreign accountancy bodies are sucking money out of Pakistan but there are other foreign educations e.g O-level,A-level, English language courses etc so also protest against for these type of education
@Irfan, and who are you to decide that ? mind you its the west that dominates the world they are the ones that run the education system through out the world even we are following there strandards of accounting are you some crook or something like that ? world is moving towards globalization but you still want to live in your small world ? well for me i chose ACCA because it is very flexible and its a GLOBALLY recognised certificate and it doesnot cost you more than an MBA program from a renowned university here its worth it according to me and your most part of foreign reserve comes from remittances from overseas Pakistanis and you blaming ACCA for foreign reserves ? lol. grow up man or bring some facts to life and be prospective which your profession requires you to.
guys like you are MEER JAFAR of our times
+1
Go do BBA from a third class university paying 70thousand every 5 months! ACCA is in no means an expensive qualification.. All other Professional qualification are expensive then ACCA! People have just made a wrong perception about ACCA!
I AM SURE THAT CCP CANNOT DO ANY THING BECAUSE IT IS VERY HARD FOR ANY AUTHORITY TO CHALLENGE ICAP.
Then courts will do justice with the citizens of Pakistan, no more student wil commit suicide , with the act of Parliament a new body over and above ICAP will be found which will regulate the profession of CAs in Pakistan including foreign bodies in Pakistan.
You can’t murder a person and be released on the grounds of regulating the profession!
lol ACCA students dont commit suicide, ICAP students do
Its mean there is some future of ACCA in Pakistan
Thanx CCP
Dear guys i m also acca student and result awaiting for my last paper. Despite the fact that icap policies are going against me but being a pakistani i support icap. Icap is an autonomous body which can make its own laws. Ordering local firms not to employ acca etc is justice. Answer one thing, everyone, if icap inter qualified goes to UK and asks firms to give him “Icap articles” they will give him a big slap so icap have done the same thing which is in best interest of Pakistan. Dear fellow students dont cry just put extra effort and take this positively. Pass 6 inter papers of icap and find your articles. I challenge any acca student can never pass that 6 icap inter papers without preparation.
You are talking about justice ? and what about the ACCA students here will you call it justice to them from your perspective ? well let me remind you brother icap is local here in Pakistan only but acca is international covering its affiliation in many countries but icap ain’t, you trying to impose your local degree to international level ? think about it. Here is a challenge for you too pass fundamental papers of ACCA without preparation lol. cmon man ofcourse you need to prepare no matter how much you know a subject don’t be emotional
Farooqui I laugh at you and your claim of being an ACCA student.Jerk ;p
farooqi sahab they slap a foreigner and you and icap are talking of slaping your own children. and if the icap doesnot sees acca as a good qualification then why didnt it ban it before why doesnt stops institutes from offering such qualifications
Could be a case of a bribe is is expected of in Pak
Well, ACCA should take care of their students and provide facility of articles to them rather throwing this responsibility on the shoulders of CA’s firms…
ICAP decision is very good for CA-inters. First right to enter is CA firms is always with ICAP students… rather these foreign associates…
Well done ICAP!
they are not CA firms its just that here accounting regulatory body here in Pakistan is not independant it also governs CA so you can’t just tag the firms made for CA’s only from ICAP well personally am against it, it should be independant to avoid discrimination well lets see how the situation unfolds.
Problem is simple. ICAP students even first attempt were not able to complete articles as there was no place in audit firms who were hiring ACCA trainees for short term and i personally noticed how quality of audit declined due to this. For CAs CA firm is compulsory; For ACCAs the whole industry is open !!
so according to you we don’t have a right to make a prospective career in auditing ? and well here ICAP is just runing from competition that’s all, and if the quality of audit had been declined ACCORDING TO YOU than why would firms prefer ACCA’s at the first place ? take the big 4 they should hire quality than as according to you which is only with CA’s they can’t ruin there reputation by hiring ACCA’s aint ? and if that would had been the case than firms wouldn’t had been hiring ACCA’s nor ICAP would had been required to issue a notice like this to them. Bring some facts here brother.
mr rahim for your kind information acca members cannot compete with icap members in any aspect. That is a reality you should accept it and furthermore pwc, deloitte and grant thorton are not hiring acca students. You are talking crap you should know that. icap also have foreign affiliation you can check it on their website.
Brother they cannot get decent jobs coz of their “PRESTIGIOUS” qualificatino… they are distracted
You are a jerk farooqui…ACCA members cant compete with ICAP??Are you kidding me?You come out of Multan baby, move to other parts of world, your ICAP members are crap there…not even clerk..Where you live on earth…
its a shame that you talk like this. i pity on you and your mentality. you are comparing certification body with chartered certified body wow what a comparison. dude what you are expecting after going acca you are gona get executive position in multinational company??? just ask pakistani student doing acca in UK you will know who the clerk is.
Talk on merit boy. Do not cry. it is the students like you who are responsible of downfall of acca in Pakistan. There is a sit linkedin.com just visit it and search for high positions in corporate sector.
Well talk globally brother and its your perspective and yes it is cause of the letter issued by your body and bring out some facts or information to prove your perspective can’t prove any thing brother and remember one thing its always the ability of a person that makes him develop education is a base through which you can make it to the sky well thats what i believe and well CA has got a long history here so its ofcourse expected to have more people in corporate sector here aint ? and you are in hr department of the top4 audit firms any how ?
Dear Farooqi …. You sounds such a “ghaddaar” type person, ur like ” jis thaali mein khaya, usi mein chaid kar dya ?” and how the hell could you say that ACCA cannot compete CA in any respect ? oh Yeah, your right bro … Fortunately ACCA doesn’t have quota system, they don’t fail people for no reason, i guess u would have understood what my point is … if you don’t, u won’t understand evah … !!! Now i bet you cannot be a student of ACCA, if you are than you must have cheated in paper f1 and p1 for sure …. !!!
well why are you comparing these two bodies with each other.Your arguments are really diverting people from the real main issue which is.. why are acca students not allowed to practice in audit firms just like CAs? it should be noted that despite of acca students practicing in Pakistan from so many years previously why icap had not stopped them and why now?These bodies really need to sit and communicate with each other and clear us if any doubts.secondly if icap still is not ready to allow these students then they must be ready for retaliation around the globe which is happening currently.
faooqi is not acca student he is icap sick student who faied many time in c/d modual this type of psycho iacap u can easyl avalable in libraries and any where who at the end the give the favour icap in result of perfesnal jalusly and un justic behaviour of icap with its students by fail them on demad/supply basis rather then whre the deserve or notnever mind its can hapend my brother when face the un justic/un ethical behaviour
While audit quality has nothing to do with that, a ca-inter does compliance of liabilities the same way as any ACCA,audit procedure are same for both..
working papers are same for both and if you are concerned with that they should spend 3years in firms then instead of banning them impose this restriction that they will be bound to work for firm for 3years.
You ICAP always create crisis that is the reason you failed to grow globally!!
well dear supreme court of Pakistan user name
why don’t u go 2 supreme court for forming a “super ” accounting body above the ICAP.
Why CCP then?
Thanks
Because, we have a system here we can’t directly approach supreme court for this matter use some brains
Mr. Rahim,
I am member of both ACA and ACCA. i can understand your desparation. but by any means ICAP can’t be blamed. Its late but in the right direction. CA students have the first right to Audit firms. the quality of qualified ACCA (passed) can’t match even the CA inter, ACA is too far to compare. i know this by personal experience. there was a time 2002-2006 when top audit firms hired ACCAs but it really declined the quality of work and eventually none of them is hiring ACCAs except for E&Y.
Please check the difference in audit rights of ACA (England and Wales) and ACCA in UK. it will clarify your confusions regarding parity of ACA and ACCA.
So instead of advocating ACCA immaturely, stay calm and avail the industry opportunities which are widely available to you. you can get better pay there in order to get 3 years work experience for your membership. BTW i am foreseeing the number of ACCAs to be similar to B.coms in next 6-8 years.
CCP cant move ICAP as it didnot act unlawfully. Secondly, ICAP has lobbing enough to wipe out such petty issues.
Wish you good luck
I think you are high on crack and your views are coming somewhere from clouds. You better go back and Check out the rights of ACCA and ACA (ICAEW). Both have same rights. ACCA also has royal charter.
@Rahim are you stupid?
You need to file a petition to the registrar of the supreme court of Pakistan, he will study the case and will put your case for hearing in front of the Judges.
Rahim when you came to Pakistan btw??
@member, by the way have you studied law any how ? don’t you know about the hierarchy of courts you can’t approach directly to supreme court gather some information first dude and i was born here and think twice before accusing some one of stupidity. Got that ?
You are a serious lol
Going to supreme court is seperate from going to CCP.
In uk all the accounting bodies are supervised and regulated by Rsb and chartered accountant board.
No coflict of interest arises while in PAkistan ICAP is producing CAs and also regulating the profession, here is the conflict.
Google some knowledge dude.
ya every body knows about that dear but its just directed towards that super accounting body .
thanks
What you all are forgetting is that partners of all the firms are senior ICAP member (some are ICAP officials and council members as well) even if CCP annuls the effect of the notice partners may refuse to entertain foreign body contracts on their own. As a gesture to show their power they have in the profession
I guess itx a time for Acca students to ask ACCA to involve british embassy and directly resolve the matter by talking to GOP.
i greatly appreciate icap decision regarding banning non icap students in pakistani firms. icap should not go on feet against any blackmailing decision by any authority.rather it should strongly hold on its decision.its the matter of the future of icap students.
Very good decision by CCP, they should impose huge penalty on ICAP for such action.
Though, ICAP is an autonomous body which can make its own laws but ordering audit firms not to employ any foreign qualified students is against the law & ACCA, ICEAW & CIMA students who is living in Pak and who wants to get the audit experience rather than going into industry.
I am also ACCA, CIA qualified member, i was also interested to make audit firm experience. Unfortunately, unable to inter in such field. Those students having such audit firm experience are superior to limited- industrial experience, they can easily switch to difference sector or industry.
The audit firm should have the right to appoint any potential candidate whether it is ICAP student ot ACCA student or ICEAW.
Lets check the history ICAP presence in Pakistan 1960′s and ACCA flurishes in pakistan after 2000. One thing I would say which i predict for Accountancy in 2020 – 2030 a work “Globalisation” If the founder of CA’s (English) follows Global approach – see ICAEW pathway for membership for ACCA so simple. With regret the ICAP would be isolated in next 10 to 20 years by only producing 5000 members out of 180 million population.
Time is not too far for ICAP Rulers by just comparing it with recent middle eastern Dictator’s reforms. About to happen.
The action of ICAP is Fair and Right. No body can challenge this regulatory body.
[...] to Institute of Chartered Accountants of Pakistan asking them to explain their letter in which it refrained audit firms to hire trainees of foreign accountancy qualifications, sources privy to the matter [...]
Audit firms relate to ICAP, professional practice and its governance run by SECP/ICAP, country taxation and corporate matters in ICAP hand, country’s financial job market in hands of ICAP, ACCA affiliate training in any company for three years deemed sufficient for ACCA to grant membership by their own rules etc, even ACCAs cannot audit in country, then who will win and who will lose. The management of ACCA in Pakistan is seriously not concerned about resolution of all above stated matters let alone they be defending ACCA students/affiliates. It’s all a crap and ACCA should have reconciled rather than fighting. CCP is not a sole decision maker. Only in this blog can reader read about the cases where CCP has to defend its actions in courts. Nevertheless, both, ICAP and ACCA should devise a reconciliation mechanism. Students/members should understand that thousands of affiliates graduating every year only in Pakistan are actually becoming a demand/supply problem in reality. Even with no ICAP/CA in country, they will find difficulties and that is the vow of such global degrees. Even in England, ICAEW ensures the quality and demand/supply. ACCA however is concerned only about leniently passing and earning zillions of money in form of admission, registration, examination, and affiliate and membership fee. Compare membership fee paid by an ACA of 10,000 versus that of ACCA of about 30,000 PKR with an exceptionally low market employment. On avg an ACCA member is just equivalent to a LUMS/IBA grad (40/45K) versus a fresh ACA (90/100K). These are all ground realities which we all should FACE, FEEL and CONSIDER before making any decisions.
just one word, acca is currently being hired at 15000k, and the word ‘globalization’ which u guys are strongly pointing at, let me tell u, acca is being offered a pay of a clerk and its because of this globalization and no regulations…its the time to think, do what is some what unique not something that everyone is able to do…count your acca’s right now the are crying for jobs yet you think acca body really cares about you and will protect you??
they just need cash thats it…i wish icap should have given atleast 2 years time before taking this decision though i totally agree with it.
I always come to this website just to watch wording used and read peoples mind and i guess people here just believe that its only the qualification or professional body that play an important rule in their career.They never talked about their working attitude, the professional behaviour which is the most important.Being a respective member of a professional body I enjoyed and I am still enjoying a wonderful career.Just to let you know the biggest promoters of these foreign qualification( ACCA, ICEAW, AND CIMA) is ICAP itself not the said professional bodies.Please change your working culture to a proper corporate culture blaming each other wont help you.
what should ACCA students should do in mean time ??? continue ACCA or not .. my 2 years are going to waste ?? i am finalist ..
[...] This case was initiated by Competition Commission after ICAP issued notice to audit firms asking them to refrain from hiring accountancy students of foreign qualification which soon turns into a hot war. [...]
When should we expect a decision from CCP?
1
BEFORE THE
COMPETITION COMMISSION OF PAKISTAN
IN THE MATTER OF
SHOW CAUSE NOTICE ISSUED TO
INSTITUTE OF CHARTERED ACCOUNTANTS OF PAKISTAN (ICAP)
(F. NO: 1(52)/ICAP/C&TA/CCP/2012)
Dates of hearing: October 4, 2012
November 1, 2012
November 16, 2012
November 27, 2012
Present: Ms. Rahat Kaunain Hassan
Chairperson
Mr. Abdul Ghaffar
Member
Dr. Joseph Wilson
Member
On behalf of:
Institute of Chartered Accountants of
Pakistan (ICAP)
Mr. Ahmed Saeed, President
Mr. Abdullah Yousaf, Member Council
Mr. Yaqoob Satttar, VP (South)
Mr. Naeem Akhter Sheikh, VP (North)
Mr. Shoaib Ahmed, Secretary
Mr. Salman Akram Raja, ASC
Mr. Sameer Khosa, Barrister,
Ms. Amna Hussain, Advocate
Mr. Malik Ghulam Sabir, Advocate
M/s. ACCA Pakistan Ltd Mr. Arif Masud Mirza, Head of ACCA Pakistan
Mr. Haroon A. Jan, Head of ACCA Lahore
Mr. Rehan Uddin, Head of ACCA Karachi
Ms. Noor Ulain, Head of ACCA, Islamabad2
1. This order shall dispose of the proceedings initiated pursuant to the Show
Cause Notice No 105/2012 dated 17 September 2012 (the „SCN‟) issued to
the Institute of Chartered Accountants of Pakistan (ICAP) for the prima
facie violation of Section 4 of the Competition Act, 2010 (the „Act‟).
2. The SCN was issued against ICAP primarily on the basis of the directive
bearing no. ICAP\DET01855\1174 dated 4 July 2012 (the „July
Directive’) whereby ICAP prohibited its members and chartered accountant
firms from training non-ICAP accountancy students. The said directive was
alleged to be prima facie in violation of Section 4 of the Act as it appeared
to have had the object or effect of preventing, restricting or reducing
competition. However, ICAP among other grounds maintains that pursuant
to the subsequent directive dated 24 October 2012 (the „October
Circular‟), the prohibition was further narrowed down only to such
members and accountancy firms who are approved training organizations of
ICAP, which renders the SCN without basis.
Background and Facts
3. ICAP issued the July Directive wherein ICAP advised all the chartered
accountancy firms as well as its members to …refrain from engaging
trainees of other accounting bodies, particularly trainees of foreign
institutes of chartered accountants or any other accounting body of similar
nature.
4. Concern was raised before the Commission informally from the affected
students pursuing membership of other accountancy bodies contending that 3
the July Directive is barring them from receiving training required for their
profession.
5. The Commission, taking cognizance about the potential violation of the
Act, wrote to ICAP on 16 July 2012, to ascertain the rationale behind the
imposition of the bar under the July Directive on training of non-ICAP
students. The Commission was particularly concerned that the July
Directive could result in the foreclosure of chartered accountants firms as
means of training to non-ICAP students in the field of accountancy.
6. ICAP in its reply dated 12 September 2012 submitted that:
a. ICAP only approves chartered accountant firms
as „training organizations‟ under the Ordinance
[Chartered Accountants Ordinance, 1961] if the
same comply with and fulfill the requirements of
the Ordinance and for the purpose to provide
training to „students‟ which are registered with
ICAP. These approved training organizations
can take any person for training but such person
needs to be registered with ICAP as a student.
Chartered accountant firms which are not
approved „training organization‟ of ICAP may
employ/train any person. However, if such
person performs work which is regulated by
ICAP under the Ordinance, then ICAP can ask
such person or the chartered accountant firm to
comply with the Ordinance in order to regulate
them; and4
b. If a person, including a student of a foreign
accountancy body, fails to meet the eligibility
criteria to work as a trainee in the „training
organization‟ approved by ICAP, he cannot be
equated with student of ICAP who meets the
eligibility criteria. ICAP is authorized under the
Ordinance to require minimum education from
any person to work as trainee/student in the
„training organization‟ approved by ICAP and
regulated under the Ordinance. Requiring
minimum education to work as trainee in the
training organization‟ could not be taken as an
„entry barrier‟ for students of foreign
accountancy bodies who are not qualified to be
the trainees in the „training organizations‟
regulated by ICAP under the Ordinance; and
c. ICAP fully recognizes its responsibilities towards
the students of foreign accountancy bodies who
are pursuing foreign qualification in Pakistan
and desire to obtain training in ICAP‟s approved
„training organizations‟. Considering this, ICAP
does not want to shut its door for such students
provided they comply with the eligible criteria
prescribed under the Ordinance and the Bye
Laws made their under related to „students‟ of
ICAP.
7. The Commission did not find the reply addressing the concerns of the
Commission and issued the SCN to ICAP to clarify its position. As per the
SCN, the comments received from ICAP, prima facie, failed to give any
reasonable justification for the issuance of the July Directive and also failed 5
to address the concerns raised by the Commission for the imposition of
such bar on its members. In addition, whereas the July Directive, in
unambiguous terms, prohibited all members and chartered accountant firms
of ICAP from giving training to non-ICAP students, the reply implied that
„Chartered accountant firms which are not approved „training
organization‟ of ICAP may employ/train any person‟.
8. On 24 September 2012, the Association of Certified Chartered Accountants
(ACCA) filed an application for intervention stating that its students,
required mandatory professional training to obtain membership and the July
Director prohibited accountancy firms in public practice from providing
this service to its students. The application was allowed and permission was
granted to ACCA to become a party to the hearing.
9. On the first hearing scheduled for 4 October, ICAP requested, based on its
recent elections, for a months adjournment to internally deliberate on a
proposal that would address the competition issues raised by the SCN.
ICAP also explained that the July Directive was required to curtail the
decline seen in the training of ICAP students at public practice firms, and to
ensure the quality of training being imparted. As amicable solution in the
given issue was desirous and a preferred option the adjournment was
allowed. The Commission granted a three weeks adjournment with the
consent of the parties and scheduled the next hearing for 01 November,
2012. 6
10. In addition, the Bench required the parties to submit further information to
clarify their position. ACCA and ICAP filed their responses on 17 and 24
October 2012, respectively.
11. ICAP also filed a preliminary reply dated 31 October 2012 along with the
October Circular. The October Circular purportedly narrowed down the
prohibitions only to those members and accountancy firms which are
approved training organizations of ICAP. In its preliminary reply, ICAP‟s
submissions were essentially as follows:
a. due to the issuance of the October Circular, the SCN has lost its
basis;
b. the information requested in the Commission‟s questionnaire
shows that the fact-finding is incomplete and hence the SCN is
unwarranted;
c. the SCN does not define the relevant market;
d. the SCN wrongly treats trainee students as providers of
accounting services;
e. Section 4 of the Act only covers agreements and decision in
respect of the „provision of services‟. It is clear that in so far as
students are the providers of services, no decision has been taken
in respect thereof. Decision with respect to acquisition of service,
including acquisition of services by under training accountancy
students is beyond the scope of the Act;7
f. ICAP is not an association of undertakings but is a statutory body
created by Chartered Accountants Ordinance 1961 (the „CA
Ordinance‟) and has the lawful right to regulate its „training
organizations‟;
g. all professional bodies, such as ICAP, have the right to determine
the content, quality and manner of training to be received by
students pursuing qualification and membership of such bodies.
Students of foreign bodies have never been allowed to work as
trainees;
h. other accountancy bodies such as ACCA are free to choose
employers other than ICAP‟s approved training organizations;
and
i. those non-ICAP students who fulfill the criteria in the CA
Ordinance and bye laws can register with ICAP and be eligible
for training at ICAP‟s approved training organizations.
12. ICAP filed further comments on 16 November 2012. It contended that:
a. other professional bodies such as ACCA have ample choice
available for training ranging from commercial organizations to
ICAP member firms that are not registered as ICAP training
organizations;
b. no qualification granting body can commandeer the qualification
granting capacity of another qualification granting body and it is
preposterous for ACCA to demand that ICAP is under a legal
obligation to allow ACCA to swamp its training organization to
the detriment of ICAP students. 8
13. The answers to the Commission‟s questionnaire, ACCA also filed its
comments regarding the October Circular on 13 November 2012.
According to ACCA:
a. the regulatory oversight of ICAP is restricted only to their
„training organizations‟ contractual relationship with ICAP
students only and cannot be extended to non-ICAP students;
b. the October Circular merely reinforces the purpose of the July
Directive i.e. to prevent ICAP firms from offering training
services to non-ICAP students, which is detrimental for
competition;
c. requiring non-ICAP students to register with ICAP increases the
economic and academic burden on former and will unfairly
persuade them to choose alternate qualifications;
d. ICAP‟s actions will restrict international accountancy firms‟
ability to operate in Pakistan by affecting how they can hire in
Pakistan.
14. In addition, the Commission sought the opinion of the Institute of
Chartered Accountants of England and Wales (ICAEW) and the Chartered
Institute of Management Accountants (CIMA) on the subject issue.
15. ICAEW provided its comments through a letter dated 22 October 2012,
stating that:9
a. there is a strong demand from practice and business to ensure
that they are able to develop their staff in order to be able to
compete internationally;
b. there is a significant demand from school leavers and graduates
in Pakistan to gain an internationally recognized professional
qualification;
c. ICAP‟s directive appears to place protectionism above both the
professional and national interests and we would suggest that
these are better served by strengthening the profession in
Pakistan through maintaining an open environment to encourage
continual investment and improvement.
16. These comments were also provided to ICAP vide Commission‟s letter
dated 19 November 2012. Most of the information requested from the
parties was also furnished to the Commission.
Issues
17. In the given facts, the primary issues that require determination are:
a. Whether the July Directive issued by ICAP can be termed as a
decision of an association of undertakings?
b. Whether with the issuance of the October Circular, the SCN has
lost its basis?; and if not
c. Whether the July Directive, read with the October Circular, is a
decision in relation to provision of services and is anticompetitive in terms of Section 4 of the Act? 10
Nature of July Directive
18. In order to address the first issue, we need to look at the nature of the July
Directive to determine whether it is a decision by an association or not. In
2009, while considering a price fixing directive issued by ICAP (In re:
Institute of Chartered Accountants of Pakistan) we held that ICAP is an
association of undertakings regardless of its public law nature. We followed
the principle laid down in Wouters v Algemene Roaad can de Nederlandse
Orde can Adcovaten (C-309/99) ECR I-1577 (hereinafter „Wouters‟),
wherein it was observed:
58 When it adopts a regulation such as the 1993
Regulation, a professional body such as the Bar of
the Netherlands is neither fulfilling a social function
based on the principle of solidarity, unlike certain
social security bodies (Poucet and Pistre, cited
above, paragraph 18), nor exercising powers which
are typically those of a public authority (Sat
Fluggesellschaft, cited above, paragraph 30). It acts
as the regulatory body of a profession, the practice of
which constitutes an economic activity].
19. In the same decision Commission referred to the Architects‟ Association
Decision:
18. In the Architects’ Association EU Commission’s
Decision of 24 June, 2004: “[T]he fact that under the
Act of 26 June 1963 establishing an Architects‟
Association the Association has the task of drawing up
a code of ethics and ensuring that it is complied with 11
cannot take this professional organization outside the
scope of Article 81 of the Treaty.
The public-law status of a national body such as the
Association does not preclude the application of Article
81 of the Treaty.” (Emphasis added)
20. In relation to the ICAP‟s status, the Commission in the subject order further
observed:
19. … there is no dispute that the Appellant acts as a
regulatory body of a profession, the practice of which
constitutes an economic activity. As per Appellant‟s
own website, it is a body of Chartered Accountants in
Pakistan and represents accountants employed in
public practice, business and industry, and the public
and private sectors. Its objective inter alia, is to
maintain professional standards and to promote
professional values and ethics. Even “a public law
status of a national body” such as enjoyed by the
Appellant does not, in our view, precludes the
application of Section 4 of the [Competition]
Ordinance. As manifest from the quoted definitions
and the cited case law, the voluntary aspect or the
regulatory status is not material in regarding an
entity as an „association‟…
21. However, in the instant case, for the purposes of application of Section 4(1)
of the Act, we have to establish that while issuing the July Directive, ICAP
acted as an association of undertakings. In this connection, we refer to the
test used by the European Court of Justice in Pavlov v Stichting
Pensioenfnonds Medische Specialisten (C-180/94 to C-180/98) [2000] ECR 12
I-6451 and Wouters which we find persuasive and instructive.
Summarizing the test used in these two cases, Paul Gorecki in a case
comment titled „A Decision of an Association of Undertakings: Reflections
on a recent Irish Supreme Court decision, Hemat v The Medical Council‟
states:
The European Court has adopted a two step
methodology in determining whether an association
of undertakings is subject to competition law: are the
members of the association/body undertakings? What
is the nature of the decision of the association of
undertakings?
22. Thus, when dealing with professional bodies, in order to distinguish
whether such body acted as an association taking an economic decision
rather than a public body, taking a regulatory measure, the following two
aspects need to be established:
a. That an overwhelming majority of the members of such a body
taking the decision consists of undertakings; and
b. That the decision taken by such a body pertains to the sphere of
economic activity.
23. Consequently, we will look at both; the organizational composition as well
as the nature of the decision. ICAP‟s institutional structure is composed of
two main organs: i) the general body comprising all the members who are
chartered accountants, and ii) ICAP‟s council which is vested with
management powers and comprises of elected members and nominees of
the Federal Government. 13
24. The plain reading of Sections 3 and 4 of the CA Ordinance clearly
demonstrates that only those related to the accountancy profession can
become members of the general body of ICAP. These members are known
as chartered accountants in terms of Section 7 of the CA Ordinance.
Section 9 of the CA Ordinance sets out the composition of ICAP‟s council
that is vested with the management powers. The relevant portion reads:
9. Constitution of the Council of the Institute
(1) There shall be a Council of the Institute for the
management of the affairs of the Institute and for
discharging the functions assigned to it under this
Ordinance.
(2) The Council shall be composed of the following
persons, namely,-
(a) the prescribed number of persons, not being less
than twelve, elected from the two prescribed
regional constituencies by the members of the
Institute belonging to such constituencies from
among such members of at least five years’ standing,
the number of members to be elected from each such
constituency being such as may be prescribed:
…
(b) not more than four persons nominated by the
Federal Government
25. From the above, it is evident that all members of the general body of ICAP
are professional accountants engaged in providing various accountancy
services in the public and private sectors. There is absolutely no doubt that 14
chartered accountants are undertakings as per the definition provided in
Section 2(1) (q) of the Act. The ICAP‟s council currently comprises 15
elected members and 4 ex-officio government nominees. As per the CA
Ordinance, elected members from the accountancy profession would always
outnumber the government nominees in the ratio, at least 3:1. In such a
setting, decision-making is naturally being done by ICAP members. Where
all members of the general body and the overwhelming majority of the
council members are primarily undertakings, we have no doubt in our mind
that ICAP clearly comes out as an association of undertakings.
26. The second aspect is to consider whether the July Directive pertains to the
sphere of economic activity or is characterized as the exercise of the powers
generally exercised by a public authority e.g. prescribing ethical standards,
ensuring procedural standardization, or serving a similar public purpose.
27. The July Directive seeks to bar ICAP members from training non-ICAP
students. These accountancy bodies represent competitors of ICAP
members, for the provision of many accountancy services such as
assurance, due diligence, taxation etc. other than the statutory audit
services. The members and their accountancy firms provide training to
accountancy students as a requirement for membership of various
accountancy bodies.
28. It is important to recognize here that the provision of these training services
is on part of the public practice firm or other commercial organization to 15
the accountancy students. The trainer/approved accountancy firms of ICAP
provide practical experience to the students and offer mentorship and
guidance in developing and polishing the professional skills of these
students. In return for these training services, the students‟ accountancy
skills\services are to be utilized by the trainer\accountancy firms or
organizations.
29. Production of goods and provision of services would fall within the
purview of „economic activity‟. The training services offered by the
approved chartered accountancy firms are one of the services offered by
such firms in the market to the accountancy students in general. These
firms, as stated above are undertakings in term of clause (q) of subsection
(1) of Section 2 of the Act and so are the trainees or interns (whether ICAP
or non-ICAP students) who are directly or indirectly engaged in the
provision of services pertaining to accountancy profession. Therefore, the
provision of accountancy training services offered to accountancy students
is an economic activity and it is evident that the decision to bar ICAP‟s
members from providing training opportunities to non-ICAP students is a
decision that falls in the sphere of economic activity and would therefore be
subject to competition law.
30. It is also pertinent to add that while the July Directive relied upon Section
22 of the CA Ordinance, no explanation whatsoever has been offered as to
how the said section is applicable. For ease of reference Section 22 of the
CA Ordinance is reproduced below.16
22. Penalty for using name of the Council,
awarding degree of Chartered Accountancy, etc. –
(1) No person shall-
(i) use a name or a common seal which is identical
with the name or the common seal of the Institute or
so nearly resembles it as to deceive or as is likely to
deceive the public;
(ii) award any degree, diploma or certificate or
bestow any designation which indicates or purports
to indicate the possession or attainment of any
qualification or competence possessed by a person by
virtue of his being a member of the Institute; or
(iii) seek to regulate in any manner whatsoever the
profession of chartered accountants.
(2) Any person contravening the provisions of subsection (1) shall, without prejudice to any other
proceedings which may be taken against him, be
punishable with fine which may extend on first
conviction to one thousand rupees, and on any
subsequent conviction with imprisonment which may
extend to six months, or with fine which may extend
to five thousand rupees, or with both.
31. Going by the plain and ordinary meaning of the referred provision, we are
at a complete loss as to how the training of non-ICAP students could be
prohibited by Section 22 of the CA Ordinance. Section 22(1)(i) prohibits
the use of the name or the common seal belonging to ICAP. Section 17
22(1)(ii) prohibits the award of any qualification or designation which may
indicate that a person is a member of ICAP. Section 22(1)(iii) prohibits any
person other than ICAP from seeking to regulate the profession of chartered
accountants.
32. In our considered view, in terms of Section 22(1)(i), neither the non-ICAP
students nor the concerned accounting firms are using the name or the
common seal belonging to ICAP. Similarly, in terms of Section 22(2)(ii),
the non-ICAP students are clearly distinguishable from ICAP students in
terms of their qualifications, and their categorization while working with
ICAP members and their firms. As acknowledged in the minutes of ICAP‟s
annual general meeting referred below, non-ICAP students undertake
internships which are then certified as training to their respective
accountancy body. In contrast, ICAP students are registered as trainee
students under the relevant bye-laws to complete their required articles.
Neither these non-ICAP students nor the firms they work in are
representing them as ICAP students. Coming to Section 22(1)(iii), none of
the parties are trying to regulate the profession of chartered accountancy by
providing training opportunities. The issue of prohibiting training for nonICAP students, therefore, does not pertain to the aspects falling within the
purview of Section 22 of the CA Ordinance. Even otherwise, if there were
such provisions, the same had to be read subject to Section 59 of the Act
which confers an overriding effect to the provisions of the Act
notwithstanding anything to the contrary contained in any other law.18
33. ICAP itself admits to distinction between ICAP and non-ICAP students in
its internal discussion. We referred to the Minutes of Meetings of the 50
th
Annual General Meeting (AGM) of ICAP held on 16 September 2011
wherein this matter was brought up for discussion. The relevant portion,
from Page 7, available at:
http://www.icap.org.pk/userfiles/reports/Minutes_50th_AGM.pdf
Excerpts of the minutes, for ease of reference are reproduced below
(emphasis added).
S. No. Members’ Observations &
Comments
Response given
5. Students are taking the route
of ACCA and ICAEW and
are using firms of Chartered
Accountants for articles. We
ourselves are giving our
competitors access to the
market.
Students of ACCA and
ICAEW are not doing
registered articles at
CA firms. Instead, they are
just doing internships at CA
firms and technically it is
not a violation of the ByeLaws. At the completion of
the internship, a general
internship completion
certificate is issued to the
student which he/she then
presents to ACCA and
ICAEW as evidence of
completion of his/her
mandatory training period.19
34. Whereas, ACCA contended before the Commission that:
ACCA trainees are not required to register with
ICAP for their training under any law or regulation.
Most of the chartered accountancy firms run two
parallel training programmes. One is for ICAP
students and the other for ACCA trainees. However,
some firms, on their own, require ACCA trainees to
register with ICAP and put them into ICAP‟s articles
purely in order to bind them with the firm for three
years. However, internationally firms are well
diversified and they recruit trainees belonging to
different professional accounting qualification e.g.
ACCA, ICAEW, ICAS, ICAI etc. ACCA wants the
same global practices to be adopted by firms in
Pakistan under no compulsion or restrictions from
the local accounting bodies.
Therefore in our view, upon comparison of both stances, one thing is clear
i.e. whether we term non-ICAP students „trainees‟ or „interns‟; technically
it qualifies them to use the certificate as evidence of completion of their
mandatory training period. As per ICAP‟s AGM minutes this is not in
contravention of any of the bye-laws of ICAP. We also note that this
practice has been in place for the last many years since 2004.
35. ICAP in its arguments also relied on Hemat v The Medical Council [2006]
IEHC 187 (hereinafter „Hemat‟). Since ICAP has failed to establish the
relevance of Section 22 of the CA in this instance, therefore the reliance on
the Hemat is misplaced and misconceived. As for the excerpt from Hemat,20
referred to by ICAP, the same cannot be taken in isolation and has to be
read in the context. In Hemat case, the primary issue decided was that the
medical council in issuing the Guide on Ethical Conduct and Behavior was
held not to be an undertaking or association of undertakings for purposes of
competition law. Dr. Hemat, the plaintiff in the said case, was a qualified
medical doctor who had advertised the availability of his services in
contravention of the ethical guidelines prescribed by the medical council
and the council/defendant took disciplinary action by suspending his
membership for a month for such conduct.
36. ICAP further contends that it, along with any other professional body, has
the right to regulate its trainers and the content, quality and manner of
training to be received by students pursuing its qualification. Prohibiting a
trainer from providing training to a competitive bodies‟ member is not a
regulatory matter but rather an economic one. ICAP is free to set stringent
quality standards for its own students and their trainers in so far as it relates
to their own students, but cannot forcefully apply the same to the students
of other accountancy bodies in the garb of regulating, quality, content or
manner of training. Such a measure is an attempt to drive competitors out
of market and to protect its monopoly through cornering the market.
37. The example given about Pakistan Medical and Dental Council, teaching
hospitals and foreign qualified medical students, is quoted out of context.
There can be variance across accepted industry practices in different
professions. The need for scrutiny and regulation maybe exponentially 21
higher in the medical profession where safety and integrity of the
professional services is paramount. The same level of stringent scrutiny
may not be required in other instances, for example, in case of lawyers and
accountants. Also, the two situations can also be differentiated on the
grounds that while house job training in the medical field only commences
after the completion of the academic program, the training for accounting
students is a simultaneous process along with academics.
38. During the hearing, ICAP counsel also argued that it can regulate the
training of accountancy students. In this regard, scrutiny of Section 15 of
the CA Ordinance reveals that ICAP can regulate the engagement and
training of students under Section 15(2)(b). However the definition of a
„student‟ provided in Section 2(1)(gg) of the CA Ordinance, read with Bye
Law 97 of the Chartered Accountants Bye-Laws, 1983 does not include
non-ICAP students. To be considered a „student‟ for purposes of regulation,
a person must be registered with ICAP after fulfilling their established
criteria under Bye Law 97. Since non-ICAP students either do not fulfill
ICAP‟s criteria or are not registered with ICAP, they cannot be considered
to be „students‟ upon which the regulations of ICAP can be imposed.
Therefore, ICAP does not appear to have any statutory powers to regulate
the training of non-ICAP students who are not affiliated with ICAP.
39. On a similar note, ICAP suggests that any non-ICAP student which fulfills
its criteria can register with it and hence become eligible for training at
ICAP‟s trainers. This path has always been available for non-ICAP 22
students, and does not remedy the situation created by the July Directive or
the October Circular. ICAP cannot compel its competitors‟ students to
register and submit themselves to its jurisdiction. We find merit in the
submission of ACCA in this regard that requiring non-ICAP students to
register with ICAP increases the economic and academic burden on former
and may unfairly persuade them to choose alternate qualifications. In our
view, this has element of rent seeking rather than serving any constructive
purpose.
40. ICAP lastly contends that no qualification granting body can commandeer
the qualification granting capacity of another qualification granting body
and it is preposterous for ACCA to demand that ICAP is under a legal
obligation to allow ACCA to swamp its training organization to the
detriment of ICAP students. As for the first part of the argument, we could
not have framed it any better. Indeed, ICAP cannot commandeer the
qualification granting capacity of its competitors by exclusively keeping the
best training avenues for their own students. As for the second part, ICAP‟s
training organizations are bound by ICAP‟s regulations only to the extent of
ICAP‟s students. Towards that end, ICAP may require them to provide any
resources or standards it may determine. However, to prohibit them from
offering training programs for non-ICAP students is apart from being in
violation of the Act also appears to be beyond the scope of ICAP‟s
jurisdiction.23
Effect of October Circular on the SCN
41. ICAP contends that the October Circular, by narrowing the scope of the
original ban to only the voluntary training organizations of ICAP, has
rectified the situation which led to the issuance of the SCN. However,
ACCA does not agree and contends that in essence the situation remains
unchanged as most of the ICAP approved training organizations are in fact
also approved trainers for other professional bodies and the July Directive
in fact was only applicable to the approved accounting firms as other firms
could not have offered such training.
42. On comparison, it is clear that the July Directive had a wider scope and
placed an absolute bar on all members of ICAP engaging trainees of other
accounting bodies. However, the October Circular only clarifies that the
July Directive was only applicable to such members that were allowed the
status of “training organizations” for ICAP. The additional aspect pursuant
to the October Circular was that the approved “training organizations” of
ICAP can only train students of ICAP; therefore, these organizations may
train students of other accountancy bodies including foreign accountancy
bodies if such trainees register themselves as students of ICAP.
43. The net effect of the October Circular is to remove in-house ICAP members
as well as the accountancy firms not enjoying approved training
organization setup. As for the narrowing down of the scope from „all
members‟ to approved training organizations, such a position was neither
tenable legally nor even intended as clarified in the said Circular itself.24
44. The fact is that the October Circular continues to foreclose access to nonICAP students to a large segment of the relevant market i.e. the ICAP
approved accountancy firms as alleged in the SCN. Given the existing
overlap of public practice firms as trainers for both ICAP and non-ICAP
students, the ban imposed by the October Circular is not be materially
different from the one imposed by the July Directive.
45. In any event, the approved trainers for ICAP comprise the top tier
accountancy firms in Pakistan. After the October Circular, competitors of
ICAP can at best hope for training at second or third tier accountancy firms.
During the hearing the counsel for ICAP asserted that there is no
compulsion for the chartered accountancy firms to become approved
training organizations. However, if they opt and qualify for this status, they
are bound to comply with the October Circular. Given the clear „either-or‟
choice by ICAP, it would not make strategic, or professional, sense for
ICAP members or their firm to become an approved employer for other
accountancy bodies at the cost of abandoning their status as approved
training organizations of ICAP. And it is not unlikely that being regulatees
of ICAP, the abandonment may entail additional consequences for such
firms.
46. In view of the foregoing, we do not find merit in ICAP‟s contention that
subsequent to the October Circular, the SCN has lost its basis. 25
Whether July Directive is in Relation to Provision of Services and is AntiCompetitive
47. Now that we have determined that the July Directive is in fact a decision of
an association of undertakings which pertains to the sphere of economic
activity, and that the SCN has not lost its basis after the October Circular;
the next step is to see whether this decision of ICAP is in relation to
provision of services and is in violation of Section 4 of the Act.
48. In this regard, we would like to examine the objections taken by ICAP.
These are primarily as follows:
3. Without prejudice to the foregoing, Paragraph 14
of the Show Cause Notice under reply has described
the ICAP‟s Circular of 4 July, 2012 as “foreclosing
access to such students to a large segment of the
relevant market”. The said paragraph 14 or the
Show Cause Notice under reply in general does not
define or describe the envisaged “relevant market”.
If the words “relevant market” are meant to refer to
the market for accountancy services, it is not
understood how access of under training students to
a large segment of the market has been foreclosed
by the Circular of 4 July. 2012. Under training
students are not supposed to offer accountancy
services to the end users of such services. In any
case, the Circular of 4 July, 2012 does not in its own
terms bar unqualified, under training students of
accrediting bodies other than ICAP, including 26
foreign accrediting bodies, from accessing the
market for accountancy services
4. In maintaining that, prima facie, access of under
training students to a large segment of the relevant
market has been foreclosed, the Show Cause Notice
under reply treats such students as providers of a
service. Furthermore, the Show Cause Notice under
reply appears to treat all entities that may avail of
the services of such students as the relevant market.
The ICAP Letter of 4 July, 2012 is seen as
prohibiting ICAP member firms who are acting as
training organizations for ICAP from acquiring the
services of such students. It is only in this
prospective that the access of students to the
relevant market can be said to have been, prima
facie, foreclosed.
5. It may be noted that Section 4 of the Act of 2012
makes a distinction in its treatment of goods on the
one hand and services on the other. As regards
goods, Section 4 covers all agreements or decisions
in respect of production, supply, distribution,
acquisition or control of goods. However, as
regards services, the said Section only covers
agreements or decisions in respect of the “provision
of services”. It is clear that in so far as students are
the providers of services no decision has been taken
with respect to the provision of the service provided
by them. A decision with respect to acquisition of a
service, including acquisition of services provided
by under training accountancy students is beyond
the scope of Section 4 of the Act of 2010.27
6. Given that the Show Cause Notice under reply is
based on the alleged foreclosure of access to the
under training accountancy students to a “large
segment of the relevant market” the said Notice is
beyond the scope of Section 4 of the Act of 2010 in
so far as the said Section does not cover any
agreement or decision with respect to the
acquisition of any service.
49. We will address these objections point wise. The objection that the
„relevant market‟ is not defined in general or in paragraph 14 of the SCN is
not correct. We note that paragraph 4 of the SCN clearly defines the
relevant market in the following terms:
4. AND WHEREAS, in accordance with Section 2(1)
(k) of the Act, the relevant product/service market for
the subject proceedings is the market for the
provision of professional training to the students,
pursuing membership of domestic or foreign
accountancy bodies, while the relevant geographic
market is the territory of Pakistan;
50. Accordingly, the assumption that the „relevant market‟ is the market for
accountancy services or that the July Directive does not bar students of
foreign accountancy bodies from accessing such a market is totally
misconceived, and hence irrelevant.
51. The foreclosure of a large segment of the relevant market in the SCN
clearly refers to the chartered accountancy firms that offer training to the 28
accountancy students and are known as approved training organizations of
ICAP. If we look at the numbers there are 174 accountancy firms that are
approved training organizations of ICAP. ACCA has only 147 accountancy
firms as approved employers out of a total of 325. It was not denied by
ICAP that most of these 147 ACCA approved employers are also approved
training organizations of ICAP. Thus there is direct foreclosure of a large
number of ACCA approved trainers in addition to those of ICAP.
52. Since, the understanding of the „relevant market‟ as defined in the SCN is
misconceived by ICAP; hence, the argument based on such premise is also
flawed. It is not a question before the Commission whether the service of
the students can be availed by all entities in the market. The issue is
whether the accountancy firms can be barred from providing training
opportunities to the students pursuing the qualification or membership of
foreign accountancy bodies. By merely terming this aspect as „acquisition
of services‟, the application of Section 4 of the Act cannot be avoided. As
explained above, and also in paragraph 27, the subject matter of the SCN is
the provision of accountancy training services to the non-ICAP students not
the services rendered by such students to the chartered accountancy firms.
53. In order to further illustrate as to how the July Directive forecloses the
relevant market and also the ancillary market for provision of accountancy
services. It needs to be appreciated that professional accountancy training is
a part and parcel of obtaining membership of any professional accountancy
body be it ICAP or otherwise. Naturally such trainings allow students to be 29
exposed to the practical aspects of various accountancy services. Depending
on the professional body in question, this training can be obtained from
approved training organizations which can include public practice
accountancy firms and commercial organizations.
54. Normally, each accountancy body has a list of public practice firms and/or
commercial organizations, which are recognized for imparting training
necessary to complete the requirements for getting membership of the
institute. These recognized trainers then accept accountancy students and
certify that experience gained by the students at the requisite times during
or at the conclusion of the training period. It would be pertinent to mention
here that the one public practice firm or commercial organization can
typically become a recognized trainer for more than one professional
accountancy body by maintaining parallel programs and allocating distinct
resources.
55. It is important to recognize that training through a public practice
accounting firms is a valuable form of training for accountancy students.
While there are other avenues such as in-house training at commercial
concerns in public or private sector, accountancy firms offer a greater
exposure and experience to students on a broader range of subjects which is
not substitutable to any training or experience offered by other approved
employers of ACCA. 30
56. In our considered view such prohibition on accountancy firms forecloses,
shuts out and precludes not only a large segment of the relevant market for
non-ICAP students but also the most valuable segment. The accountancy
firms are restricted in their choice and freedom to engage a trainee while at
the same time it deprives the non-ICAP students, both quantitatively and
qualitatively, from gaining such experience practically from the most
prestigious segment of the training market. This adversely impacts the
accountancy firms as well as the value of the qualification offered by direct
competitors of ICAP. Thereby restricting, preventing and reducing
competition in the relevant market.
57. It is relevant to mention here that ICAP is not the first association of
chartered accountants that has tried to shield itself from competition
through such anti-competitive measures in the professional training market.
In May 2010 Portuguese Competition Authority has fined the Chamber of
Certified Accountants (COCA) in the tune of 229,300 euros for anticompetitive practice, involving the obligatory training of certified
accountants. COCA artificially segmented the training market, reserved a
third of the obligatory training exclusively for itself, and stipulated
particular criteria for the admission of other training bodies and the
approval of their training courses. While the case itself maybe different on
factual aspects from the one before us and the provision invoked maybe
distinct (as in the Portuguese case it was a case of abuse of dominance as
well as anti-competitive decision making by the professional body), the
broader principles in both case converge at the same point which is to 31
disallow protectionist behavior of professional bodies that also serve as
regulators for their profession when it harms competition.
58. In this regard, consider the example of the legal profession for comparison.
Currently, fresh law graduates or even law students pursuing local and
foreign qualifications are hired by law firms for training. These include
graduates from local public universities, local private universities, foreign
universities, and distant learning programs. Bar members from many
common law jurisdictions are allowed to work with law firms in Pakistan
courts. This approach has helped the country in improving the quality of
legal services available within the country. It would not be hard to imagine
what the repercussions would be if the local bars in the country decided not
to allow engaging any foreign law degree holders or students pursuing such
degree from working or receiving training at law firms or the top law firms
for that matter.
59. Secondly, the July Directive is also creating a barrier for these students
seeking entry in the market for provision of accountancy services in
Pakistan in terms of paragraph 15 of the SCN. This ancillary market for
accountancy services pertains to provision of assurance, taxation, due
diligence services etc. We are aware that ICAP already enjoys monopoly
vis-à-vis statutory audits under the Companies Ordinance, 1984.
Additionally, not being able to get trainings at approved accountancy firms,
the non-ICAP students would be placed at a competitive disadvantage vis-
à-vis their ICAP counterparts. We reiterate that training with other 32
approved employers, in the case of ACCA for instance, is not a substitute
for the training at approved accountancy firms by ICAP. It appears that
instead of competing, ICAP seems to be unlawfully leveraging its statutory
monopoly to other related fields of accountancy.
60. It is relevant to refer back to the minutes of the 50
th
AGM of ICAP in its
relevant part to illustrate the reason behind the July Directive.
The Chairman then invited members to comment on
the Council Report and the audited Financial
Statements for the year ended June 30, 2011. The
comments on the Council Report and the audited
financial statements and the responses given by the
Chairman and other officials are elaborated below:
S. No. Members’ Observations &
Comments
Response given
2. It seems that the Institute
does not have clear action
plan to counter tough
challenge from competitive
qualifications. It is high time
to take solid assuring steps
in this regard.
ICAEW gives far more
weightage to ACCA as
compared to ICAP but on
the other hand we want to
replicate ICAEW syllabus.
The Council is very well
aware of the challenges
faced by the profession in
the country and it does
recognize that other
competitive qualifications
being offered in Pakistan
and are a big challenge.
The problems identified are
all related and the Council
definitely has an action plan
and is actively working on
it. ICAP is actively pursuing 33
What is the logic in this
contradictory stance?
ICAEW for 100%
recognition of its
qualification for the benefit
of the members. In addition
to this, the Institute is
working to restructure its
syllabus and examination
structure to achieve this
objective.
3. It was pointed out that there
are certain audit firms
providing training to
students of other
professional Institutes and
majority of the members
were in favour of curbing
this practice. The members
felt that the Institute can use
its regulatory powers or if
not given in the Bye Laws
even amendments in Bye
Laws may be made for the
purpose This would ensure
that CA firms would register
ICAP students only.
As per the prevailing bye
laws and training
guidelines, there is no
specific restriction on
practicing members to
engage in such practice.
Further, we should not act
in haste as it might result in
litigations. The President
informed the house that the
Council is aware of the
issue and it would be
deliberating on the issue for
appropriate action/strategy
in the light of the views
expressed by members.
61. The above is self explanatory with the thrust that the predominant concern
is to counter the growing competitive challenge faced by ICAP and its
members and to achieve this end.34
62. During the course of the hearing, ICAP contended that the purpose of the
July Directive was to ensure the „quality of training‟ being imparted to
ICAP‟s accountancy students by ensuring that resources meant for ICAP
students was not used for non-ICAP students. According to ICAP, the bye
laws and policies allow one firm to train only a select number of students.
In furtherance of its argument, ICAP relied on extracts from Wouters
reproduced below:
97. However, not every agreement between
undertakings or every decision of an association of
undertakings which restricts the freedom of action of
the parties or of one of them necessarily falls within
the prohibition laid down in Article 85(1) of the
Treaty. For the purposes of application of that
provision to a particular case, account must first of
all be taken of the overall context in which the
decision of the association of undertakings was
taken or produces its effects. More particularly,
account must be taken of its objectives, which are
here connected with the need to make rules relating
to organisation, qualifications, professional ethics,
supervision and liability, in order to ensure that the
ultimate consumers of legal services and the sound
administration of justice are provided with the
necessary guarantees in relation to integrity and
experience (see, to that effect, Case C-3/95
Reisebüro Broede [1996] ECR I-6511, paragraph
38). It has then to be considered whether the
consequential effects restrictive of competition are
inherent in the pursuit of those objectives.
…35
105. The aim of the 1993 Regulation is therefore to
ensure that, in the Member State concerned, the
rules of professional conduct for members of the Bar
are complied with, having regard to the prevailing
perceptions of the profession in that State. The Bar
of the Netherlands was entitled to consider that
members of the Bar might no longer be in a position
to advise and represent their clients independently
and in the observance of strict professional secrecy
if they belonged to an organisation which is also
responsible for producing an account of the
financial results of the transactions in respect of
which their services were called upon and for
certifying those accounts.
…
107. A regulation such as the 1993 Regulation could
therefore reasonably be considered to be necessary in
order to ensure the proper practice of the legal
profession, as it is organised in the Member State
concerned.
…
110. Having regard to all the foregoing
considerations, the answer to be given to the second
question must be that a national regulation such as
the 1993 Regulation adopted by a body such as the
Bar of the Netherlands does not infringe Article 85(1)
of the Treaty, since that body could reasonably have
considered that that regulation, despite the effects
restrictive of competition that are inherent in it, is
necessary for the proper practice of the legal
profession, as organised in the Member State
concerned.36
63. We believe that ICAP‟s reliance on the case dicta is misplaced. The
Wouters case and the case at hand can be distinguished at many levels. The
1993 Regulations mentioned in the Wouters were concerned with the
restriction placed on the associations‟ own members to create partnerships
with anyone apart from lawyers. We discussed this case previously in the
matter of price fixing by ICAP. The relevant portion is reproduced below:
54 …the controversy in Wouters relates to a
regulation adopted by the Netherlands Bar
Association on joint professional activity regarding
partnerships between lawyers and other
practitioners. Under this regulation, certain
professionals (such as notaries, tax consultants and
patent agents) were allowed to integrate their
activities with those of lawyers, while accountants
were prevented from entering partnerships with
lawyers.
In the case before us, the prohibition contained in the July Directive is on
the provision of training to a competitor association‟s accountancy
students.
64. The objective in the Wouters 1993 Regulations was held to ensure the
proper practice of the legal profession. On the other hand, in this case, the
facts on record, clearly suggest that the July Directive was issued to protect
the interest of ICAP and its members rather than the accountancy profession
as a whole. Also, it is aimed at restricting competition offered by students
of rival accounting bodies in the relevant market. 37
65. ICAP need not ban its members from training students of other accountancy
bodies to purportedly improve the quality of training for their own students.
It can always prescribe higher standards, and already has a quality control
review mechanism in place. It can even demand a parallel program for
ICAP students from its approved trainers; however, this does not mean that
it has to be at the cost of barring non-ICAP students to get training at such
accountancy firms. Indeed, such measures can not ensure quality of training
to ICAP students.
66. In view of the above, we are of the considered view that the relevant market
in the SCN has been correctly defined, and also that the July Directive is in
violation of Section 4 of the Act.
67. As it stands, the CA Ordinance grants exclusive auditing rights to ICAP
members alone. If ICAP is allowed to restrict competition in the remaining
accountancy services barring its accountancy firms from offering training
services to accountancy students, it may eventually mean the end of any
meaningful competition; both in the relevant as well as the ancillary market
for provision of accountancy services.
68. In fact, we find merit in ICAEW submissions that ICAP‟s directive appears
to place protectionism above both the professional and national interests
and that these are better served by strengthening the profession in Pakistan
through maintaining an open environment to encourage continual 38
investment and improvement. The accountancy market in Pakistan would
be strengthened not by protectionism but by allowing free competition.
69. All over the world, public practice run multiple parallel training programs
for students affiliated with various professional accountancy bodies and in
our considered view ICAP should act in sync with the industry norm rather
than carving out an exception or creating a hegemony for itself with such
protectionist‟s approach. Upon review of various regimes the position that
emerges is that while this profession is a regulated domain in the majority
of the countries, such behavior is certainly not the industry norm nor has
ICAP been able to substantiate its stance to justify regulating its members in
such a manner.
70. While taking measures such as these may be in the interest of ICAP (not
necessarily in the interest of accountancy profession) and these involve,
resorting to unlawful practices which are in contravention of Section 4 of
the Act. As discussed, we are of the considered view that the July Directive,
as well as the October Circular, has effect of preventing, restricting and
reducing competition in the relevant market by foreclosing the public
practice component of the relevant market for non-ICAP students and
raising barriers to entry in the ancillary market for provision of accountancy
services, is in violation of Section 4 of the Act and the same are therefore
without any legal force. 39
71. The importance of the accountancy profession in the economy of Pakistan
has also to be taken into consideration. Public practice and in-house
accountancy services have become an integral part of the business
environment. Various aspects of accountancy, including auditing,
assurances, taxation etc. are crucial for any business. Under the various
financial sector laws of the country, including the Companies Ordinance
1984, the corporate sector has to maintain accounting procedures and
conduct fiscal audits. Accountants and public practice accountancy firms
provide such services. The steady supply of qualified accountants is
therefore almost a pre-requisite for a healthy business environment.
Professional accountancy bodies such as ICAP, ACCA, and ICEAW
contribute towards ensuring that quality standards are maintained in the
profession. The route towards gaining suitable accounting qualification
involves the mandatory training of accountancy students with approved
training organizations including the accountancy firms.
72. According to ACCA, public practice accountancy firms typically offer
training opportunities to ACCA students in March/April and
September/October. Similarly, ICAP students are generally inducted by
public practice firms in May and September. Both, however, also submit
that there can be slight deviance from this trend occasionally. For ACCA,
there are almost 325 approved trainers including 147 public practice firms.
For ICAP, there are 174 approved trainers, all of which are the public
practice firms. ICAP states that approximately 55,000 people are registered
with them as students; out of which 23,000 are considered active, and that 40
average in take of students is 4000 a year with 900 students becoming
eligible every year to seek training. Similarly, ACCA states that 35,000
people are currently registered with them 3,500 who have passed the exam
but have not completed the required training. On average 9,000 new
students register every year.
73. Without getting into the accuracy of numbers, it can safely be inferred that
the registered number of students pursuing ACCA qualification is on the
rise and that there is growth in the number of the potential new entrants to
the accountancy profession. The majority of these new entrants are citizens
of Pakistan pursuing their qualification within Pakistan; hence, it is
immaterial whether these students are pursuing membership of foreign
accountancy body or a local one.
74. The fact that subsequent to the July Directive, ACCA has seen an almost
55% decline in registration of students is also alarming. Competitors who
have legitimately established themselves in global market should not be
subjected to such barriers.
75. In our considered view, ICAP ought not to discourage, discriminate or
otherwise unequally treat growing number of a human resource essential for
a vibrant economy. As a natural corollary of competition in the market, the
increase in the number of such professionals in the past has provided and
should continue to provide, the businesses and other consumers not only
with a greater choice but also improved quality and reduced costs for
accountancy services.41
76. We can appreciate that ICAP is inclined to act with a view to protect its
members but such action, as mentioned has to be within the bounds laid
down by law and cannot be premised on ethos espousing attitude eroding
fair market conditions. The fact the market is responding to such qualified
personnel, is in itself evidence that there is growing need and recognition of
such expertise. Thus, as for the loss of business or career opportunities to
the accountancy firms, accountancy bodies, students thereof or any other
affectee; the proper course of action to be pursued is compensation before
the courts of competent jurisdiction.
77. As for the penalty and remedy under Act, taking into consideration all the
above facts and circumstances including: the relevance of the accountancy
profession for businesses, keeping in view that the subject matter pertains to
a professional body, bearing in mind that such practices are to be strongly
condemned and discouraged in the interest of justice we hereby:
a. hold and declare the July Directive and October Circular to be in
violation of Section 4 of the Act and to be without any legal
force. Accordingly, the subject accountancy firms are free to
engage non-ICAP students as interns/trainee;
b. impose a penalty of PKR 25 Million on ICAP; and
c. restrain ICAP, from issuing similar directives/circulars in future
having the effect of barring its approved training organizations
from engaging non-ICAP students for training. 42
78. In the event that ICAP continues the subject practice in violation of this
order, it will be liable to pay a penalty of PKR 1 Million everyday for such
violation in terms of Sub-Section 3 of Section 38 of the Act.
(Rahat Kaunain Hassan) (Abdul Ghaffar) (Dr. Joseph Wilson)
Chairperson Member Member
Islamabad, the 10
th
January, 2013.