The Competition Commission of Pakistan (CCP) has recovered a total 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.
The case arose when UDPL publicly disclosed to the Pakistan Stock Exchange that it had agreed not to distribute human pharmaceutical products in Pakistan for three years. In return, IBL paid PKR 1.131 billion to UDPL.
CCP determined that the agreement removed UDPL as a competitor, reduced market competition, and created barriers for new entrants. The financial payment was seen as a direct incentive to limit competitive pressure and distort market dynamics.
Both companies failed to seek prior exemption from CCP, despite the agreement including a regulatory approval clause. Applications for approval were submitted only after the CCP issued show-cause notices. The commission rejected the requests, noting the agreement did not meet statutory requirements and the violation had already occurred.
Under Section 38 of the Competition Act, 2010, CCP imposed a penalty of PKR 20 million each on UDPL and IBL. The Tribunal later upheld these fines, reinforcing the legality of CCP’s enforcement action.
This enforcement highlights CCP’s commitment to ensuring fair competition in Pakistan. Authorities emphasized that agreements that limit competition or harm market dynamics will face strict penalties.
The case also sends a clear message to businesses: compliance with competition law is mandatory, and prior approval must be obtained for agreements that could affect market competition. CCP’s action demonstrates its active role in protecting consumer interests and maintaining a competitive business environment.
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CCP continues to monitor market practices to prevent anti-competitive behavior. This case is a reminder of the importance of transparency and adherence to competition regulations in Pakistan’s growing economy.
