2025 CLD 1673 COMPETITION COMMISSION OF PAKISTAN

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VS Ss. 4, 37 & 38---Competition (Exemption) Regulations, 2020---Unfair market practice---Non-compete agreement---Prior exemption, non-obtaining of---Effect---Authorities initiated proceedings against respondent companies for entering into non-compete agreement for distribution, marketing and sales of human pharmaceutical products---Validity---One respondent company recognized a large sum of amount in its financial statements and disclosure to Pakistan Stock Exchange without obtaining an exemption from the Commission which constituted a breach of legal requirements---Such recognition was also inconsistent with agreement in question which expressly envisaged that respondents shall seek an exemption prior to the enforcement---Respondents did not comply with Competition Act, 2010 and the agreement which had materially aggravated anti-competition conduct against their obligations---Arrangement between respondents both in its object and implementation constituted a violation of S.4(1) of Competition Act, 2010---Existence of anti-competitive object was sufficient to establish contravention, regardless of timing or completion of any consideration payment---By excluding potential competitor from market, the respondents engaged in conduct that had prevented and restricted competition, thereby breaching prohibitions set out under S. 4 of Competition Act, 2010---There were multiple aggravating factors including deliberate implementation of Non-solicitation of employees and Customers Covenants (NCC) without obtaining prior exemption, the receipt and recognition of heavy sum of amount as consideration and its disclosure to Pakistan Stock Exchange, all carried out without Competition Commission's approval of NCC---While the respondents eventually filed an exemption application which was done only after issuance of show-cause notice by the Commission---Competition Commission imposed penalty upon respondents for violating provision of Ss. 4(1), 4 (2)(b), 38 (1)(d) & 38 (2) of Competition Act, 2010---Show-cause notice was disposed of accordingly. Citation Name: 2025 CLD 1673 COMPETITION COMMISSION OF PAKISTANBookmark this Case VS Ss. 2(1)(b) & 4---agreement---Scope---Term "agreement" under Ss.2(1)(b) and 4 of Competition act, 2010 includes any type of contract, understanding or arrangements whether formal or informal that results in any form of cooperation or coordination between parties in a way that could hinder competition---This can include both horizontal (between competitors) and vertical (between different levels of supply chain) agreements.

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