Despite being a developing country, Pakistan is in the process of swift modernisation and change. It is important that competitiveness is upheld so that the economy flourishes and consumers benefit. To that end, the Competition Commission administers the law and is established under the Competition Act 2010.
The Act gives the Commission legal and investigative power to ensure that free competition in all spheres of commercial and economic activity prevails. It aims to enhance economic efficiency, and to protect consumers from anti-competitive behaviour.
The Act applies to all undertakings in Pakistan irrespective of their public or private ownership and to all actions or matters that can affect competition in Pakistan. Although essentially an enabling law, it briefly sets out procedures relating to review of mergers and acquisitions, enquiries, imposition of penalties, grant of leniency and other essential aspects of law enforcement.
Under the Act, situations that tend to lessen, distort, or eliminate competition (such as actions constituting an abuse of market dominance, competition-restricting agreements, and deceptive marketing practices) are prohibited. Central features of the Act can be recalled as:
• Under section 3, the Act prohibits the abuse of a dominant position through any practice that prevents, restricts, reduces, or distorts competition in the relevant market. These practices include, but are not limited to, reducing production or sales, unreasonable price increases, charging different prices to different customers without objective justifications, tie-ins that make the sale of goods or services conditional on the purchase of other goods or services, predatory pricing, refusing to deal, and boycotting or excluding any other undertaking from producing, distributing or selling goods, or providing any service.
• Under section 4, the Act prohibits undertakings or associations from entering into any agreement or making any decision in respect of the production, supply, distribution, acquisition or control of goods or the provision of services, which have the object or effect of preventing, restricting, reducing, or distorting competition within the relevant market. Such agreements include, but are not limited to, market sharing and price fixing of any sort, fixing quantities for production, distribution or sale; limiting technical developments; as well as collusive tendering or bidding and the application of dissimilar conditions. The Commission is authorized, however, to issue either individual or block exemptions under sections 5 to 9 of the Act.
• Moreover, the Act prohibits deceptive marketing practices, in other words, any advertising or promotional material that misrepresents the nature, characteristics, qualities, or geographic origin of goods, services or commercial activities. The Office of Fair Trade(OFT) has been created within the Commission specifically to oversee consumer protection issues within the meaning of section 10 of the Act.
• The law prohibits mergers that would substantially lessen competition by creating or strengthening a dominant position in the relevant market. The Act requires prior notice of proposed mergers or acquisitions that meet the notification thresholds stipulated in regulation 4 of the Competition (Merger Control) Regulations 2007. If the Commission determines this to be the case, it can prevent mergers or acquisitions, set conditions or require divestitures. The Act does not distinguish between horizontal and vertical mergers. The term merger in 11 also covers joint ventures, therefore they are subject to the Commission’s approval provided that they meet the notification thresholds.
• Under section 28 of the Act, the functions and powers of the Commission are to: (a) initiate proceedings and make orders; (b) con-duct studies for promoting competition; (c) conduct enquiries; (d) give advice to any undertaking which has asked for it in relation to the consistency of its proposed actions in relation to the law; (e) engage in competition advocacy; and (f) take all other actions necessary for implementing the Act.
• Section 30 establishes rules for proceedings in case of contravention, stipulating that before making an order the Commission shall: (a) give notice of its intention stating reasons; and (b) give the undertaking(s) involved an opportunity to be heard and to bring be-fore the Commission facts and material in support of its (their) contention.
• Section 31 deals with the Commission’s orders in cases pertaining to abuse of dominant position, prohibited agreements, deceptive marketing practices, and mergers. The Commission has the power to issue interim orders if the final decision will take time and the actual or imminent situation can cause harm.
• Section 33 establishes that the Commission shall, for the purpose of a proceeding or enquiry, have the same powers as are vested in a civil court for: (a) summoning and enforcing the attendance of any witness, (b) discovery and production of any document as evidence, (c) accepting evidence on affidavits, (d) requisitioning of any public record form any court or office, and (e) issuing of a commission for the examination of any witness or document. Any proceeding before the Commission shall be deemed to be a judicial proceeding and the Commission shall be deemed to be a civil court for the purposes of offences relating to documents given in evidence.
• Section 34 grants the Commission the power to enter and search premises and should any undertaking refuse without any reasonable grounds, section 35 grants the power of forcible entry.
• Section 38 empowers the Commission to direct any undertaking or individual to pay by way of penalty a sum specified in an order, if it determines that such an undertaking or individual has been found to have engaged in any prohibited activity, has failed to comply with an order of the Commission, has failed to supply documents and information to the Commission, or has furnished any document or information believed to be false, inaccurate or that knowingly and negatively interferes in the work of the Commission.
• Section 39 permits the Commission to be lenient and impose a lesser penalty on an undertaking that is alleged to have violated the law if it has made a full and true disclosure in respect of the alleged violation. There is also a possibility of a full exemption. Leniency is possible only for the first undertaking that makes a full disclosure. The Commission, though, may revoke leniency in case of failure to comply with the leniency conditions or false evidence.
Should you require any advice or representation in relation to the Commission or the OFT or any of the related rules, regulations and guidelines, Khan & Co Barristers-at-Law shall only be too delighted to assist you in your legal affairs. We will gladly accept instructions in either bringing or defending proceedings in the Commission. Our expertise in European Union and UK competition law will allow us to advise you from a truly global competition law perspective and help us provide you with robust local remedies and relief.