United Distributors Pakistan Limited (PSX: UDPL) and International Brands (Private) Limited (IBL) have announced that they are reviewing the recent order by the Competition Commission of Pakistan (CCP) and exploring legal remedies after being fined Rs42 million for entering into a non-compete agreement deemed anti-competitive.
In a notice to the Pakistan Stock Exchange (PSX) on Friday, UDPL acknowledged that CCP proceedings had been initiated in connection with the agreement between the two companies, which included a Rs1.13 billion consideration paid by IBL to UDPL to abstain from distributing human pharmaceutical products for a period of three years.
The CCP concluded that the arrangement violated Sections 4(1) and 4(2)(b) of the Competition Act, 2010, calling it a market-sharing agreement that hindered competition in the pharmaceutical sector. A Rs20 million penalty was imposed on each company, with an additional Rs1 million fine on UDPL for disclosing the agreement to PSX without prior CCP clearance under Section 38 of the Act.
In its statement, UDPL emphasised that the company had made several disclosures about the agreement under applicable law, the most recent being on May 15, 2024. The company noted that the implementation of the restrictive arrangement was contingent on obtaining an exemption from the CCP, which was delayed due to internal factors.
“Regrettably, due to certain internal delays in obtaining the necessary information, the company and IBL were unable to file the exemption application in a timely manner,” UDPL stated. The exemption application was later submitted and remains under CCP review.
The company asserted that its disclosures were transparent and that the parties had acted in good faith. “UDPL has always been transparent in its disclosures, demonstrating its intention to comply with all applicable laws,” the notice read.
Following the CCP’s July 2 order, received a day later, UDPL stated that both companies are now “reviewing the order and seeking advice regarding appropriate remedies.” UDPL and IBL believe there are “cogent grounds” to support their case and challenge the penalties.
The matter has drawn significant attention in regulatory and business circles, particularly given the scale of the consideration involved and the implications for competition in the pharmaceutical sector.
