ISLAMABAD — The Competition Commission of Pakistan (CCP) has imposed a total penalty of Rs42 million on two pharmaceutical companies for entering into and giving effect to a non-compete agreement.
United Distributors Pakistan Limited (UDPL) and International Brands (Private) Limited (IBL) were found guilty of entering into a restrictive agreement that prevented UDPL from entering the Pakistani distribution market for human pharmaceutical products for three years. In return, IBL paid Rs1.131 billion to UDPL as compensation—an arrangement disclosed by UDPL to the Pakistan Stock Exchange (PSX) without prior regulatory approval.
The CCP concluded that the agreement constituted an illegal market-sharing arrangement that foreclosed competition and was executed in clear contravention of the law. “The intention was to establish a protective barrier around IBL’s operations, secured through a compensation of Rs1.131 billion, in exchange for UDPL to abstain from market participation,” the order noted, adding that such conduct undermines competitive dynamics and harms consumers.
While the agreement included a clause stating that regulatory exemption would be sought from CCP, the parties failed to do so until after the show-cause notices were issued in June 2024. The Commission found this post-facto action insufficient to cure the violation.
As a result, the CCP imposed a penalty of Rs20 million each on UDPL and IBL. An additional penalty of Rs1 million was levied on UDPL for making disclosures to PSX without regulatory clearance.
The order also directs the companies to submit a compliance report within 30 days and warns of additional daily penalties for continued non-compliance. Furthermore, the CCP has referred the matter to the Securities and Exchange Commission of Pakistan (SECP) and PSX for any further action deemed necessary under their respective legal frameworks.
