The Competition Commission of Pakistan (CCP) has warned businesses that dealership, distribution, agency, and wholesale agreements containing restrictive provisions may fall under 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 by the Commission under Sections 5 and 9 of the Act, prior to execution, according to a release issued on Monday.
Exemptions are granted only when the agreements meet the criteria laid down in Section 9 and the Competition (Exemption) Regulations, 2020. This includes enhancing production or distribution, encouraging technical or economic progress, and allowing consumers to fairly share in the resulting benefits.
The Commission reminded businesses that Exemption Orders are conditional. Undertakings must not use them 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.
Undertakings are also 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 failure to seek renewal before expiry, will result in the cancellation of exemptions under Section 6 of the Act and may lead to enforcement proceedings, including financial penalties of up to PKR 75 million or 10% of annual turnover.
The CCP reiterated its commitment to promoting free competition, enhancing economic efficiency, and protecting consumers from anti-competitive behavior.
Stakeholders are encouraged to report violations or non-compliance with exemption conditions via CCP’s online complaint portal atwww.cc.gov.pk or by submitting written complaints to the Commission.
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