Tribunal Upholds CCP Fine on UDPL IBL

ISLAMABAD: (Web Desk) – The Competition Appellate Tribunal has upheld a cumulative penalty of PKR 40 million imposed by the Competition Commission of Pakistan on United Distributors Pakistan Limited and International Brands Private Limited for entering into an anti-competitive non-compete agreement in violation of Section 4 of the Competition Act, 2010.

In its ruling, the Tribunal agreed with the CCP’s findings that the agreement amounted to a prohibited market-sharing arrangement that restricted competition. The companies had effectively acknowledged the nature of the deal as a non-compete arrangement through their own conduct.

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The case originated after UDPL disclosed to the Pakistan Stock Exchange that it had signed a three-year non-compete agreement with IBL. Under the arrangement, UDPL agreed to stop distributing human pharmaceutical products in Pakistan in exchange for PKR 1.131 billion from IBL.

The CCP concluded that the agreement removed UDPL as a market competitor and created barriers to entry, with the substantial payment serving as a financial incentive for market exit. Although the agreement included a clause subjecting it to regulatory approval, both companies failed to secure prior exemption from the CCP and only applied after receiving show-cause notices. The exemption request was rejected on the grounds that the legal requirements were not met and the violation had already taken place.

As a result, the CCP imposed a fine of PKR 20 million on each company under Section 38 of the Competition Act, 2010. The Tribunal upheld both the violation finding and the penalties, noting that the companies did not pursue further legal remedies after their exemption application was dismissed, effectively implying acceptance of the contravention.