CCP Penalizes United Distributors and International Brands for Anti-Competitive Practices

The Competition Commission of Pakistan (CCP) has determined that United Distributors Pakistan Limited (UDPL) and International Brands (Private) Limited (IBL) engaged in an anti-competitive agreement valued at Rs1.13 billion, according to an official statement.

The CCP has imposed a cumulative fine of Rs42 million on both UDPL and IBL for entering into and implementing a non-compete agreement. The commission stated that this agreement violated Section 4 of the Competition Act, 2010.

The commission’s order stated that both entities were found culpable of engaging in a restrictive agreement. This agreement restricted UDPL from participating in the distribution market for human pharmaceutical products within Pakistan for a duration of three years.

In exchange, IBL compensated UDPL with Rs1.131 billion. UDPL disclosed this arrangement to the Pakistan Stock Exchange (PSX) without obtaining the required regulatory approval beforehand.

The CCP noted that the agreement constituted an unlawful arrangement for market sharing that suppressed competition and was implemented in clear violation of the applicable regulations.

The order stated that the intention was to create a protective boundary around IBL’s operations, guaranteed by a compensation of Rs1.131 billion, in return for UDPL’s abstention from market involvement. Such actions undermine competition and are detrimental to consumers.

Although the agreement incorporated a provision stating that regulatory clearance would be requested from CCP, the parties neglected to do so until after the issuance of show-cause notices in June 2024.

The commission deemed this ex-post action insufficient to rectify the infringement.

Consequently, the CCP levied a penalty of Rs20 million on each of UDPL and IBL for contravening Sections 4(1) and 4(2)(b) of the Act. Additionally, UDPL was fined Rs1 million under Section 38 for making disclosures to PSX without securing regulatory permission.

The order has instructed the companies to provide a compliance report within 30 days and cautioned that failure to comply will result in additional daily fines.

Additionally, the CCP has referred the case to the Securities and Exchange Commission of Pakistan (SECP) and the PSX for any further actions deemed appropriate under their respective legal frameworks.