CCP Recovers Rs. 40 Million Fine From Two Distributors

The Competition Commission of Pakistan (CCP) has successfully enforced its order by recovering a cumulative penalty of Rs. 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 CCP’s decision by the Competition Appellate Tribunal (CAT), which affirmed the Commission’s findings that the agreement constituted a prohibited market-sharing arrangement restricting 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 removed 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 included a clause requiring regulatory approval, both companies failed to obtain prior exemption from CCP and submitted applications only after the issuance of show-cause notices. The CCP rejected the exemption request, stating that the agreement did not meet statutory criteria and that the violation had already occurred.

Accordingly, 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 implementing the anti-competitive agreement. The Tribunal upheld the penalties, reinforcing the legality and validity of CCP’s enforcement action.

This enforcement highlights CCP’s continued commitment to ensuring compliance with competition law and taking strict action against agreements that distort competition and harm market dynamics.