CCP slaps Rs265m penalty on cable makers over price fixing practices

The Competition Commission of Pakistan has imposed combined penalties of Rs265 million on two cable manufacturers after finding them guilty of enforcing resale price maintenance (RPM) arrangements that restricted dealers from offering discounts, in violation of the Competition Act, 2010.

In its decision issued on Tuesday, the competition watchdog fined GM Cables & Pipes (Pvt.) Ltd. Rs190.22 million, equivalent to 5 percent of its annual turnover for FY2023-24, while Newage Cables (Pvt.) Ltd. was penalised Rs75 million for implementing policies that prevented dealers from selling products below specified discount thresholds.

The case originated from information received by the regulator, supported by documentary evidence such as policy circulars issued by the companies. These documents showed that dealers faced punitive actions, including suspension or termination of dealership agreements, if they failed to comply with prescribed pricing limits.

Following an initial review, the Commission authorised a formal investigation under Section 37(1) of the law. The enquiry concluded that both firms had prima facie breached Section 4, which prohibits anti-competitive agreements, by imposing minimum resale price restrictions through vertical arrangements with dealers.

According to the findings, Newage enforced its pricing discipline through clauses embedded in dealership agreements, while GM Cables relied on rate control notices and related communications to maintain uniform pricing across its distribution network.

After issuing show-cause notices and conducting hearings, the Commission determined that the conduct amounted to a restriction “by object,” as it effectively eliminated price competition among dealers of the same brand and limited consumer choice in the market.

While assessing penalties, the regulator noted that Newage cooperated with the investigation process. In contrast, GM Cables continued the prohibited conduct even after the enquiry began and attempted to dispute documented evidence, which contributed to the higher financial penalty.

The Commission has directed both companies to deposit the fines within 60 days, warning that failure to comply will trigger an additional penalty of Rs500,000 per day. The firms have also been ordered to immediately discontinue resale price maintenance practices, withdraw restrictive instructions issued to dealers, allow independent price setting, and submit compliance reports within specified timelines.

Separately, Newage has been instructed to remove discount cap provisions from its dealership agreements as part of corrective measures.

The ruling underscores the regulator’s continued enforcement drive to curb anti-competitive conduct and protect consumer interests in Pakistan’s manufacturing and distribution sectors.