Islamabad, May 24, 2025 – The Competition Commission of Pakistan (CCP) has issued a strong caution to all undertakings engaging in prohibited agreements without securing prior exemption, warning that such violations may lead to severe financial penalties of up to Rs75 million or 10% of the annual turnover, whichever is higher.
In a public statement released on Saturday, the CCP expressed concern over a growing trend where undertakings enter into agreements with wholesalers, dealers, agents, and retailers that may include restrictive clauses. According to the CCP, such arrangements often amount to a refusal to deal with non-affiliated parties and may violate Section 4(2) of the Competition Act, 2010.
The CCP emphasized that these vertical agreements—agreements between parties at different levels of the supply chain—may include anti-competitive provisions such as resale price maintenance, market allocation, non-compete clauses, or other restrictive conditions. Unless formally exempted by the CCP, such agreements are considered void ab initio due to their potential to restrict, prevent, or distort market competition.
To ensure legal compliance and market transparency, the CCP reiterated that all undertakings must submit exemption applications under Section 5, which are reviewed based on the criteria laid out in Section 9 of the Act. The CCP may grant exemptions only if the agreement in question leads to improved production or distribution, enhances technical or economic progress, or generates efficiency gains that outweigh any negative impact on competition.
The CCP strongly urged all businesses to consult the Commission before formalizing any vertical agreements that may contain restrictive conditions. Failure to do so may trigger investigations and result in substantial financial sanctions.
As the regulatory authority mandated under the Competition Act, 2010, the CCP plays a pivotal role in maintaining fair competition across all sectors of Pakistan’s economy. Its broader mandate includes tackling anti-competitive behaviors such as cartelization, abuse of dominant market positions, deceptive marketing practices, and anti-competitive mergers.
The CCP’s latest advisory underscores its commitment to fostering a competitive environment that benefits consumers and businesses alike. It serves as a timely reminder that compliance with competition laws is not optional, and undertakings must seek proper guidance to avoid regulatory action.