Competition Commission approves 59 mergers, acquisitions in 2019/2020

Competition Commission approves 59 mergers, acquisitions in 2019/2020

ISLAMABAD: The Competition Commission of Pakistan (CCP) has processed and granted approval to 59 merger and acquisition applications during fiscal year 2019-2020, against the annual target of 50, showing the CCP’s promising performance to facilitate the local and foreign investors despite the limitations caused by COVID-19 pandemic.

A statement issued on Thursday out of the total 59 approvals, 51 were acquisitions, 5 mergers and 3 joint ventures applications.

The major sectors where these mergers and acquisitions took place include automotive, household products, food, sugar, oil, power, freight, LNG, insurance, agriculture, coal mining, logistics, pharmaceutical, chemicals, petroleum, healthcare, leasing, plastics, textile, hospitality, financial services, digital payments, mobile phone, investment, IT-Hardware, wind power, and microfinance banking.

Moreover, the CCP also processed and granted Exemptions to 43 undertakings under the Section 5 of Competition Act, 2010.

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.

During the outgoing fiscal year, the CCP complete 14 inquiries, issued 78 Show cause notices, and passed 15 orders. An important enquiry was concluded In the matter of alleged bid rigging in the tenders issued by Power Distributions companies for the procurement of Line Hardware material.

Similarly, the CCP issued to the Pakistan Sugar Mills Association and its member sugar mills in 2009 for cartelization.

These sugar mills had not challenged the CCP’s show cause notices, but legal action had not been started against them in the past.

Even in the challenging time of COVID-19 pandemic, the CCP ensured its smooth functioning by extending facilitation to the stakeholders. An Online Merger and Acquisition Application filing system was launched to facilitate the local and foreign investors in filing merger applications online.

Furthermore, to ensure health and safety of the respondents amid COVID-19, the parties have been allowed to respond the show-cause notices issued to them in the hearings using video conference and other online tools.

An online application for granting exemptions has also been prepared and will be launched soon.

The CCP issued a Policy Note to the Securities & Exchange Commission of Pakistan (SECP) asking for an immediate reinstatement of the cost audit of companies (particularly Cement, Sugar, Vegetable Ghee/Cooking Oil, Fertilizers, and Wheat flour companies), so that credible and verified cost information is available to assist in factual (rather than speculative) policy making.

In order to curb the bid rigging in tenders and public procurements, the CCP has prepared an in-house IT-based Bid Rigging Analysis and Detection (BRAD) system to help detect signs of collusion in the bidding process.

On the legal front, the Islamabad and Lahore High Courts have resumed hearings in the cases wherein the CCP’s constitutionality has been challenged by the undertakings. The government, through the Attorney General of Pakistan, has been extending full support to the CCP in resolving the pending issues.

Certain other recent initiative include initiation of online webinars to help educate the business and consumers around Competition Law; launch of draft study on the Competition Concerns in the LPG Sector; and working on the State of Competition report after a pause of 10 years.