ISLAMABAD: The Competition Commission of Pakistan (CCP) has successfully enforced its order by recovering a cumulative penalty of PKR 40 million from United Distributors Pakistan Limited (UDPL) and International Brands (Private) Limited (IBL) for entering into an anti-competitive non-compete agreement in violation of Section 4 of the Competition Act, 2010.
The enforcement follows the upholding of the CCP’s decision by the Competition Appellate Tribunal (CAT), which affirmed the Commission’s findings that the agreement constituted a prohibited market-sharing arrangement that restricted competition in the relevant market.
The case originated from a public disclosure made by UDPL to the Pakistan Stock Exchange, revealing that it had entered into a non-compete agreement with IBL. Under the agreement, UDPL agreed not to distribute human pharmaceutical products in Pakistan for a period of three years in exchange for a payment of PKR 1.131 billion from IBL.
CCP determined that the arrangement effectively eliminated UDPL as a competitor in the relevant market. The substantial payment was identified as a financial incentive to secure UDPL’s exit, thereby reducing competitive pressure, distorting market dynamics, and creating barriers to entry.
Although the agreement contained a clause requiring regulatory approval, both undertakings failed to obtain prior exemption from the CCP and applied only after the issuance of show cause notices. CCP rejected the exemption application because the agreement did not meet the statutory criteria for exemption and that the violation had already taken place.
Accordingly, the CCP imposed a penalty of PKR 20 million each on UDPL and IBL under Section 38 of the Competition Act, 2010, for entering into and giving effect to the anti-competitive agreement. The Tribunal upheld the penalties, reinforcing the legality and soundness of the CCP’s enforcement action.
This enforcement underscores CCP’s continued commitment to ensuring compliance with competition law and taking firm action against agreements that distort competition and harm market dynamics.
