Two firms found guilty of Rs1.13bn anti-competitive pact in pharmaceutical sector

The Competition Commission of Pakistan (CCP) has found two companies, United Distributors Pakistan Limited (UDPL) and International Brands (Private) Limited (IBL), guilty of Rs1.13 billion anti-competitive agreement, according to a CCP statement released on Wednesday.

The CCP imposed a total penalty of Rs42 million on UDPL and IBL for entering into and giving effect to the non-compete agreement that the commission said had violated Section 4 of the Competition Act, 2010.

“In a detailed order, the commission found both companies guilty of entering into a restrictive agreement that prevented UDPL from entering the distribution market of human pharmaceutical products in Pakistan for three years.

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In return, IBL paid Rs1.131 billion to UDPL as compensation—an arrangement disclosed by UDPL to the Pakistan Stock Exchange (PSX) without prior regulatory approval,“ the CCP statement read.

The CCP said the agreement had constituted an illegal market-sharing arrangement that foreclosed competition and had been executed in clear contravention of the law.

“The intention was to establish a protective barrier around IBL’s operations, secured through a compensation of Rs1.131 billion, in exchange for UDPL to abstain from market participation,” the order noted, adding that such conduct undermined competitive dynamics and harms consumers.

While the agreement included a clause stating that regulatory exemption would be sought from CCP, the parties “failed to do so until after the show-cause notices were issued in June 2024”.

“The commission found this post-facto action insufficient to cure the violation.”

As a result, the CCP imposed a penalty of Rs20 million each on UDPL and IBL for violating Section 4(1) and 4(2)(b) of the Act. An additional penalty of Rs1 million was levied on UDPL under Section 38 for making disclosures to PSX without regulatory clearance.

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The order also directed the companies to submit a compliance report within 30 days and warns of additional daily penalties for continued non-compliance.

Furthermore, the CCP referred the matter to the Securities and Exchange Commission of Pakistan (SECP) and the PSX for any further action deemed necessary under their respective legal frameworks.