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Tag: Competition Commission of Pakistan

  • 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.

  • Investigation launched against 88 housing schemes

    Investigation launched against 88 housing schemes

    ISLAMABAD: Competition Commission of Pakistan (CCP) has initiated investigation against around 88 housing schemes for deceptive marketing practices.

    In a statement on Monday, the CCP said that it had launched the enquiry while taking notice of the widespread concerns and complaints regarding the prima facie deceptive market practices by various housing schemes in Punjab.

    The CCP said that the Lahore Development Authority (LDA) informed through a letter that 88 housing schemes in Lahore and its adjacent district of Kasur, Sheikhupura and Nankana Sahib were luring investors and the general public through print and TV advertisements to invest in their schemes, without meeting the legal requirements and in violation of the pertinent laws.

    The LDA has sought a ban on the advertising campaign of these schemes to save the citizens from financial losses.

    The CCP took suo moto notices and authorized an enquiry team to thoroughly probe the housing schemes and submit the report to the Commission.

    As part of the investigation the team had visited 62 housing schemes to see the situation on ground and was scheduled to visit the remaining housing schemes.

    The team also met the Director General LDA and other concerned officials to enlighten itself about the pertinent issues and explore the ways to cooperate and coordinate in the areas of shared interests.

    The CCP said that Section 10 of the Competition Act prohibits businesses from indulging in deceptive market practices, which also include the distribution of false or misleading information lacking reasonable basis, deceiving the consumers, and harming the business interest of the other undertakings.

    If the violation of Section 10 is proved against the housing schemes, the CCP may issue show cause notices to them, according to the statement.

    The CCP is mandated under the Competition Act to ensure free competition in all spheres of commercial and economic activity, to enhance economic efficiency and to protect consumers from anti-competitive behavior including deceptive market practices.

  • CCP imposes penalty of Rs75 million on flour mills association for anti-competitive activities

    CCP imposes penalty of Rs75 million on flour mills association for anti-competitive activities

    ISLAMABAD: The Competition Commission of Pakistan (CCP) has imposed a penalty of Rs75 million on Pakistan Flour Mills Association (PFMA) for providing a platform to share commercially sensitive information and fixing the quantities of production of wheat flour.

    The commission took the notice on reports suggesting unusual price hike of wheat flour or wheat atta across Pakistan and carried out raids on PFMA premises.

    “The enquiry in the matter concluded that PFMA is providing a platform to its members for settling of prices of wheat flour to avoid any form of competition which is in violation of the laws.”

    After hearing the parties, the CCP’s bench comprising of the Chairperson Ms. Vadiyya Khalil and Members Dr. Muhammad Saleem and Dr. Shahzad Ansar passed the order.

    The commission observed that under Article 38 of the Constitution the State is responsible to ensure the provisions of food and basic necessities at fair prices along with social and economic benefits to its citizens.

    Accordingly, Provincial Food Departments set a maximum cap of the wheat flour price under the Foodstuffs (Control) Act, 1958; as wheat is Pakistan’s dietary staple and used by consumers belonging to all socio-economic groups.

    The wheat flour currently contributes 72 percent of Pakistan’s daily caloric intake with per capita wheat consumption of around 124 kilograms per year, one of the highest in the world.

    The commission observed that having a maximum cap in the essential food item benefits the consumer to bargain for a lower price and prevents retailers from overcharging consumers. This also enables retailers to discount the product in order to increase their sale.

    “PFMA in complete derogation of the aforesaid objective, deliberately fixed the rates of wheat flour by conducting meetings and discussing the prices as well as the quantities to be produced and supplied by flour mills in violation of Section 4 of the Competition Act.”

    The CCP also observed that discussion, deliberation and decision regarding purely business concerns like current and future pricing, production and marketing are anti-competitive and should be avoided at all costs by the association.