ISLAMABAD: The Competition Commission of Pakistan (CCP) has imposed a cumulative penalty of Rs 42 million on United Distributors Pakistan Limited (UDPL) and International Brands (Private) Limited (IBL) for entering into a non-compete arrangement that violated Section 4 of the Competition Act, 2010.
In a detailed ruling issued on Tuesday, the CCP found that the two companies had entered into an anti-competitive agreement that barred UDPL from distributing human pharmaceutical products in Pakistan for a period of three years. In exchange, IBL paid Rs1.131 billion to UDPL—an arrangement that was publicly disclosed by UDPL to the Pakistan Stock Exchange without obtaining prior regulatory approval.
The Commission determined that the agreement amounted to an illegal market-sharing arrangement that restricted competition and created entry barriers. The CCP noted that the compensation was effectively a safeguard for IBL’s business operations, designed to ensure UDPL stayed out of the market.
Although the agreement included a clause requiring regulatory clearance, both companies failed to seek the Commission’s exemption until after receiving show-cause notices in June 2024. The CCP found this post-facto application insufficient to address the violation.
The Commission has imposed penalties of Rs20 million each on UDPL and IBL for violating Sections 4(1) and 4(2)(b) of the Act. An additional Rs1 million fine was levied on UDPL for breaching Section 38, relating to disclosures made to the PSX without regulatory clearance.
Both companies have been directed to submit a compliance report within 30 days. The CCP has also warned of additional daily penalties for non-compliance and referred the matter to the Securities and Exchange Commission of Pakistan (SECP) and the Pakistan Stock Exchange for further action under their respective legal frameworks.