ISLAMABAD: The Competition Commission of Pakistan has successfully recovered Rs40 million in penalties from United Distributors Pakistan Limited (UDPL) and International Brands (Private) Limited (IBL) after both companies were found to have entered into an anti-competitive non-compete agreement that violated Section 4 of the Competition Act, 2010.
The case began when UDPL itself disclosed to the Pakistan Stock Exchange that it had signed a non-compete agreement with IBL. Under the terms, UDPL agreed to stop distributing human pharmaceutical products in Pakistan for three years. In exchange, IBL paid UDPL Rs. 1.131 billion.
The CCP investigated and concluded that the arrangement effectively removed UDPL as a competitor from the pharmaceutical distribution market. The Rs. 1.131 billion payment was identified as a financial incentive to secure UDPL’s exit, reducing competitive pressure, distorting market dynamics, and creating barriers for other entrants.
Although the agreement included a clause requiring regulatory approval, both companies failed to seek prior exemption from CCP. They only submitted applications after the Commission issued show-cause notices, a sequence the CCP treated as confirmation that the violation had already occurred.
The CCP rejected the exemption request, ruling that the agreement did not meet the statutory criteria. It then imposed a penalty of Rs. 20 million on each company under Section 38 of the Competition Act.
Both companies appealed to the Competition Appellate Tribunal. The Tribunal upheld the CCP’s findings in full, affirming that the agreement constituted a prohibited market-sharing arrangement and that the penalties were justified and lawful. The Tribunal also noted that after their exemption request was rejected, neither company pursued any further legal remedy, which it interpreted as implicit acceptance of the violation.
The recovery is part of a broader enforcement push by the CCP, which recovered Rs. 932.56 million in penalties during 2025 and reduced its litigation backlog by nearly 70% after the current management took charge in August 2023. The Commission issued 47 show-cause notices last year across sectors including pharmaceuticals, sugar, steel, telecom, and education.
The case is notable less for the size of the Rs. 40 million fine, which is modest relative to the Rs. 1.131 billion that IBL paid UDPL to exit the market, and more for the precedent it reinforces. Companies that structure anti-competitive deals and disclose them publicly cannot retroactively seek regulatory cover after enforcement proceedings begin.
The CCP’s willingness to pursue and recover penalties through the appellate process signals that the competition framework in Pakistan, often criticized as toothless, is developing enforcement capacity it previously lacked.
