Competition Commission creates Department of Cartels and Trade Abuses - International Law Office

The Competition Commission of Pakistan has formed the Department of Cartels and Trade Abuses to conduct enquiries and investigations into possible contraventions of Sections 3 and 4 of the Competition Act 2010.

Under Section 3 of the act, a dominant undertaking (one with more than a 40% share in the relevant market) may be deemed to be engaging in abusive trade practices if it:

• limits production and sales and unreasonably increases prices or imposes other unfair trading conditions;
• engages in price discrimination by charging different customers different prices for the same goods or services without objective justification;
• creates tie-ins that make the sale of goods or provision of services conditional on the purchase of other goods or services;
• makes the conclusion of contracts subject to other parties accepting add-on terms which - by their nature or according to general commercial usage - are unrelated to the subject of the contracts;
• applies different conditions to equivalent transactions, thus placing trading parties at a competitive disadvantage;
• applies predatory pricing that tends to monopolise a market, by either driving competitors out of the market or preventing new entries;
• boycotts or excludes an undertaking from the production, distribution and sale of goods or from the provision of services; or
• refuses to deal.

Under Section 4 of the act, no undertaking or association of undertakings may enter into an agreement or - in the case of an association of undertakings - make a decision regarding the production, supply, distribution, acquisition or control of goods or the provision of services, whose purpose is to prevent, restrict, reduce or distort competition within the relevant market, unless exempt under Section 5.

The publication includes arrangements for:

• fixing the purchase or selling price or imposing any other restrictive trading conditions on the sale and distribution of goods or the provision of services;
• dividing or sharing markets for goods or services by:
  • territory;
  • volume of sales or purchases;
  • type of goods or services; or
  • any other means;
• fixing or setting the quantity of production, distribution or sale of goods, or the manner or means of providing services;
• limiting technical development or investment in the production, distribution and sale of goods or the provision of services;
• collusive tendering or bidding for the sale, purchase or procurement of goods or services;
• applying different conditions to equivalent transactions, thus placing trading parties at a competitive disadvantage; and
• making the conclusion of contracts subject to other parties accepting add-on terms that - by their nature or according to general commercial usage - are unrelated to the subject of the contracts.

The Department of Cartels and Trade Abuses intends to:

• focus on relatively unexplored areas of public procurement, bid rigging, collusive tendering and other similar violations of Section 4;
• be vigilant when assessing the conduct of:
  • dominant undertakings for potential violations of Section 3; and
  • trade associations for suspected cartelisation;
• concentrate on capacity building, especially in the following areas:
  • detection of cartels;
  • digital evidence gathering; and
  • quantitative analysis and other investigative skills; and
• build up a coordination and information-sharing mechanism with other competition/antitrust organisations.

For further information on this topic please contact Samiya Fikree or Ferzeen Bhadha at Vellani & Vellani by telephone (+92 21 3580 1000), fax (+92 21 3580 2120) or email (samiya.fikree@vellani.com or ferzeen.bhadha@vellani.com).