The Competition Commission of Pakistan (CCP issues advisory) cautioning businesses against restrictive clauses in dealership, distribution, agency, and wholesale agreements. These agreements may fall under prohibited practices defined in Section 4 of the Competition Act, 2010, and are considered void unless exempted by the Commission.
The CCP highlighted that exemptions under Sections 5 and 9 of the Act are granted only when agreements meet strict criteria. These include enhancing production or distribution, promoting technical or economic progress, and ensuring consumers receive a fair share of resulting benefits. The Commission emphasized that exemptions are conditional and must not be misused for anti-competitive conduct.
Businesses are reminded to strictly follow all conditions outlined in Exemption Orders. Companies must notify the CCP about any amendments to agreements, market changes, or other developments. Periodic compliance reports demonstrating efficiency gains and consumer benefits are also required. Failure to comply may lead to cancellation of exemptions and enforcement action, including financial penalties of up to PKR 75 million or 10% of annual turnover.
In its warning, the Commission underscored that exemptions cannot be used as a shield for anti-competitive practices, transfer pricing, or economic rents. Undertakings must ensure all agreements align with consumer welfare and fair competition standards.
Experts say the CCP issues advisory to encourage transparency and lawful business conduct, ensuring that market competition is preserved and consumer interests are protected. The guidance also serves to prevent misunderstandings regarding exemption orders and to promote compliance across industries.
The Commission’s move marks a proactive step to regulate market agreements and prevent anti-competitive behavior. With the advisory in place, businesses are urged to review their agreements carefully and ensure they adhere to all legal requirements.
The CCP issues advisory as part of its ongoing efforts to maintain fair market practices and support sustainable economic growth in Pakistan.
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