The Competition Commission of Pakistan (CCP) has imposed a total penalty of Rs. 42 million on United Distributors Pakistan Limited (UDPL) and International Brands (Private) Limited (IBL) for entering into and giving effect to a non-compete agreement that violated Section 4 of the Competition Act, 2010.
In a detailed order, the Commission found both companies guilty of entering into a restrictive agreement that prevented UDPL from entering the distribution market of human pharmaceutical products in Pakistan for three years, said a press release issued here on Wednesday.
In return, IBL paid Rs. 1.131 billion to UDPL as compensation-an arrangement disclosed by UDPL to the Pakistan Stock Exchange (PSX) without prior regulatory approval.
The CCP concluded that the agreement constituted an illegal market-sharing arrangement that foreclosed competition and was executed in clear contravention of the law. “The intention was to establish a protective barrier around IBL’s operations, secured through a compensation of Rs 1.131 billion, in exchange for UDPL to abstain from market participation,” the order noted, adding that such conduct undermines competitive dynamics and harms consumers.
While the agreement included a clause stating that regulatory exemption would be sought from CCP, the parties failed to do so until after the show-cause notices were issued in June 2024.
The Commission found this post-facto action insufficient to cure the violation. As a result, CCP imposed a penalty of Rs. 20 million each on UDPL and IBL for violating Section 4(1) and 4(2)(b) of the Act. An additional penalty of Rs. 1 million was levied on UDPL under Section 38 for making disclosures to PSX without regulatory clearance.
The order also directs the companies to submit a compliance report within 30 days and warns of additional daily penalties for continued non-compliance. Furthermore, the CCP has referred the matter to the Securities and Exchange Commission of Pakistan (SECP) and PSX for any further action deemed necessary under their respective legal frameworks.