ISLAMABAD: The Competition Commission of Pakistan (CCP) has cautioned undertakings that dealership, distribution, agency, and wholesale agreements containing restrictive provisions may fall within the scope of prohibited agreements under Section 4 of the Competition Act, 2010.
Such agreements are void ab initio under Section 4(3) unless specifically exempted, prior to execution, by the Commission under Sections 5 and 9 of the Act. Exemptions are granted only when agreements meet the criteria laid down in Section 9 and the Competition (Exemption) Regulations, 2020— namely, when they enhance production or distribution, encourage technical or economic progress, and allow consumers a fair share of resulting benefits.
The Commission reminded businesses that Exemption Orders are conditional. Undertakings must not be used as a cover for anti-competitive conduct, transfer pricing, economic rents, or practices harmful to consumer welfare.
Agreements must strictly adhere to the conditions of the Exemption Order, with undertakings required to notify the CCP of any amendments, market changes, and to submit periodic compliance reports demonstrating efficiencies and consumer benefits.
Failure to comply, or to seek renewal before expiry, will render exemptions liable to cancellation under Section 6 of the Act and may invite enforcement proceedings, including financial penalties of up to PKR 75 million or 10% of annual turnover.
The CCP reaffirmed its commitment to promoting free competition, enhancing economic efficiency, and protecting consumers from anti-competitive behaviour. Stakeholders are encouraged to report violations or non-compliance of exemption conditions through CCP’s online complaint portal at www.cc.gov.pk or by submitting written complaints to the Commission.
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