CCP warns firms over anti-competitive practices, cites Rs75m penalty risk

KARACHI: The Competition Commission of Pakistan (CCP) has issued a public warning to businesses entering restrictive agreements without regulatory clearance, cautioning that violators may face penalties of up to Rs75 million or 10 per cent of annual turnover.

In a statement issued on Friday, the CCP flagged concerns over vertical agreements -- those between entities at different stages of the supply chain -- that may contain clauses restricting competition. These include resale price maintenance, market allocation, and non-compete arrangements.

The commission noted that such agreements, unless exempted, are void ab initio under Section 4(2) of the Competition Act, 2010. “These provisions are likely to restrict competition by limiting the ability of businesses to operate freely in the market,” the CCP stated, adding that refusal to deal with non-dealers is a commonly observed infraction.

Firms may apply for exemptions under Section 5, which are assessed in accordance with Section 9. The commission considers whether agreements contribute to improving production or distribution, foster technical or economic progress, or offer efficiency gains that outweigh their anti-competitive effects.

The CCP urged all undertakings to seek exemption prior to entering such agreements to mitigate the risk of regulatory action.