Competition Commission of Pakistan (CCP)

The Competition Act, 2010 (CA ’10) is a state of the art modern law which gives the Competition Commission of Pakistan (CCP) legal and investigative instruments and powers to engender free competition in all spheres of commercial and economic activity, enhance economic efficiency, and to protect consumers from anti-competitive behavior.

The Competition Act, 2010 applies to all undertakings in Pakistan regardless of their public or private ownership and to all actions or matters that can affect competition in Pakistan. Although essentially an enabling law, it briefly sets out procedures relating to review of mergers and acquisitions, enquiries, imposition of penalties, grant of leniency and other essential aspects of law enforcement.

Briefly, the law prohibits situations that tend to lessen, distort, or eliminate competition such as actions constituting an abuse of market dominance, competition restricting agreements, and deceptive marketing practices.

Abuse of Dominant Position. §3 of the Act prohibits the abuse of a dominant position through any practice that prevents, restricts, reduces, or distorts competition in the relevant market. These practices include, but are not limited to, reducing production or sales, unreasonable price increases, charging different prices to different customers without objective justifications, tieins that make the sale of goods or services conditional on the purchase of other goods or services, predatory pricing, refusing to deal, and boycotting or excluding any other undertaking from producing, distributing or selling goods, or providing any service.
Prohibited Agreements. §4 of the Act prohibits undertakings or associations from entering into any agreement or making any decision in respect of the production, supply, distribution, acquisition or control of goods or the provision of services, which have the object or effect of preventing, restricting, reducing, or distorting competition within the relevant market. Such agreements include, but are not limited to, market sharing and price fixing of any sort, fixing quantities for production, distribution or sale; limiting technical developments; as well as collusive tendering or bidding and the application of dissimilar conditions. The Commission is authorised, however, to issue either individual or block exemptions under §5-9 of the Act.
Deceptive Marketing. The Act prohibits deceptive marketing practices, in other words, any advertising or promotional material that misrepresents the nature, characteristics, qualities, or geographic origin of goods, services or commercial activities. An Office of Fair Trade (OFT) has been created within CCP specifically to oversee consumer protection issues under §10 of the Act.
Approval of Mergers. The law prohibits mergers that would substantially lessen competition by creating or strengthening a dominant position in the relevant market. The Act requires prior notice of proposed mergers or acquisitions that meet the notification thresholds stipulated in §4 of the Competition (Merger Control) Regulations 2007. If the Commission determines this to be the case, it can prevent mergers or acquisitions, set conditions or require divestitures. The Act does not distinguish between horizontal and vertical mergers. The term merger in §11 also covers joint ventures, therefore they are subject to the Commission’s approval provided that they meet the notification thresholds.
§28 of the Act states that the functions and powers of the Commission are to: (a) initiate proceedings and make orders; (b) conduct studies for promoting competition; (c) conduct enquiries; (d) give advice to any undertaking which has asked for it in relation to the consistency of its proposed actions in relation to the law; (e) engage in competition advocacy; and (f) take all other actions necessary for implementing the Act.