CCP warns firms on restrictive trade agreements, cites heavy penalties

The Competition Commission of Pakistan (CCP) has reaffirmed its commitment to safeguarding consumer welfare and promoting fair competition, warning businesses against using dealership, distribution, agency, and wholesale agreements with restrictive provisions that may breach the Competition Act, 2010.

The regulator stressed that such agreements are void ab initio under Section 4(3), unless specifically exempted by the Commission prior to execution under Sections 5 and 9 of the Act. Exemptions are granted only if the agreements meet criteria set out in Section 9 and the Competition (Exemption) Regulations, 2020 — namely, enhancing production or distribution, encouraging technical or economic progress, and ensuring consumers receive a fair share of resulting benefits.

The CCP reminded undertakings that Exemption Orders are conditional and must not be used to justify anti-competitive practices, transfer pricing, or rent-seeking behaviour. Businesses are required to comply strictly with exemption conditions, notify the Commission of amendments or market changes, and submit regular compliance reports demonstrating efficiencies and consumer benefits.

Failure to comply, or to seek timely renewal before expiry, will render exemptions liable to cancellation under Section 6 of the Act and may invite enforcement proceedings. Penalties include fines of up to PKR 75 million or 10% of annual turnover.