ISLAMABAD: The Competition Commission of Pakistan (CCP) has revamped Competition Exemption Regulations 2020 to ensure transparency in granting exemptions to different kinds of agreements including horizontal as well as vertical agreements between competitors and also among dealers/distributors of companies to avoid anti-competitive practices within the corporate sector.
In this regard, the Competition Exemption Regulations 2020 have been notified to repeal the old rules.
The old Exemption Regulations of 2014 were only restricted to vertical agreements besides lacking in clarity with regard to various definitions. The Regulations have been revisited in terms of the clarity of procedure to be followed by the CCP as well as the applicants.
The CCP grants exemptions to notified agreements between companies from the prohibition of Section 4 of the Competition Act, on the basis of an individual assessment. Restrictive agreements qualify for exemption if their benefits to general welfare (product improvement, technical or economic progress, benefits to consumer) outweigh their restrictive effects on competition.
According to the Competition (Exemption) Regulations, 2020 issued by the CCP, the regulations shall apply to all the undertakings that are party to a prohibited agreement, whether incorporated in Pakistan or not.
Under these Regulations the Commission may grant following types of the exemptions:
(a) Individual Exemptions: Agreement which attracts the provision of Section 4 of the Act may be granted individual exemption, provided the agreement meets the criteria given for exemption in Section 9 of the Act.
(b) Template Exemptions: Vertical Agreements entered into by and between the manufacturer and supplier or distributor which attracts the provisions of Section 4 of the Act may be granted exemption in a template form, provided they meet the criteria given for exemption under Section 9 of the Act.
(c) Block Exemptions: Agreements which fall within the particular category of agreements, which inter alia satisfies the following criteria may be considered for granting of block exemption: (i). The market share of the concerned undertakings does not exceed 40%.
The agreement does not contain any of the hardcore restrictions. Moreover, the agreement does not contain non-compete clauses, and the agreement improves the production or distribution channels, or promotes technical or economic progress, while allowing consumers a fair share of the resulting benefit; and benefits thereof clearly outweigh the adverse effect of absence or lessening of competition.
The applicant has to specify before the CCP that the application is being made to seek exemption, for an Agreement as provided in Section 4 of the Act, explain how the agreement contributes to improving production or distribution. It contributes to promoting technical or economic progress, and how consumers will be allowed a fair share of the resulting benefit, and each restriction imposed under the agreement is indispensable to the attainment of those objectives and the benefit of the that clearly outweigh the adverse effect of absence or lessening of competition.
As per regulations, the undertakings concerned i.e. any party to the prohibited agreement through a duly authorized representative, shall, as soon as they agree in principle vis-à-vis the agreement, shall file an application on the prescribed Form under the Schedules to these Regulations. Provided that in case of Block Exemption, the Commission may on its own, if it is of the opinion that it is necessary in the public interest, may issue the Block Exemptions to any category of agreements. The CCP has repealed the Competition (Exemption) Regulations, 2014.
Copyright Business Recorder, 2020
Comments
Comments are closed.