1. Ahmed Qadir
Competition Commission of Pakistan
Competition
in Pakistan

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3. Why is competition important?
Competition is the main driver of innovation
Competition pushes businesses to push for
reforms
Developing countries suffer most from anti-
competitive practices; thus, competition
between countries also works…
90% of managers are not profit (meaning productivity)
maximisers
Fair and intense competition with the best
leaves them the choice between catching up or
giving up
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4. Why is competition important?
 If there is no competition, there would be:
 high prices
 limited choices
 compromise on quality
 inefficient services
 If there is competition, there would be:
 More R&D – enhanced efficiency and reduced production
costs – reduced prices and improved quality – improved
consumer welfare
 More choices – consumer sovereignty

5. Developing Countries are Considerably
Affected by Anti-competitive Practices
 Inadequate Infrastructure
 Poor communications networks lead to segmented markets and local
monopolies
 Segmented markets are more prone to cartel formation and monopolies that
create disparities that lead to market failure
 Access to Capital
 High interest rates and lack of entrepreneurial culture lead to state
monopolies & inefficiencies
 State or private monopolies with excessive rents distort resource allocation,
reduce efficiency, and impair growth of SMEs
 Asymmetry of information
 Consumers unaware of rights
 Total lack of competition culture
 Entrepreneurial capacity does not develop as markets are foreclosed to new
entrants by entrenched and vested interests

6. The Need for Competition Law
Though the benefits of competition are
many, competition can be thwarted
Firms have incentives to acquire market
power by limiting competition by erecting
barriers to commerce
This can result in market failure
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7. The Need for Competition Law
Market failures result in inefficient allocation
of resources and adversely affect economic
welfare
Such market failures, for example, can
enable sellers to deliberately reduce output
to extract a higher price from buyers
Competition law helps to address these
issues 7

8. History of Competition in Pakistan
Competition is not new
■ 1963  Anti-cartel laws study group’s
recommendations led to the MONOPOLIES AND
RESTRICTIVE TRADE PRACTICES ORDINANCE,
1970 [MRTPO, 70]
■ Broad objectives: contain (i) undue concentration of
economic power; (ii) monopoly power; (iii) restrictive
trade practices

9. Competition Law in Pakistan- Then
Monopolies and Restrictive Trade Practices
Ordinance, 1970 (MRTPO)
Salient Features:
 Preventing concentration of wealth– threshold 33%
 Prohibiting restrictive trade practices
 No mandatory merger clearance regime
Established the Monopoly Control Authority
(MCA)
 Comprised of three members – government employees
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10. The Monopoly Control Authority
The MCA’s main functions were to (i)
register undertaking, individuals, agreements
(ii) conduct research on general economic
conditions; (iii) give advice
Discretionary, recommendatory,
investigative, and legislative powers

11. Performance of the MCA
Largely ineffective
■ Nationalisation in the 1970s
■ Budget
■ Staff
■Hence, time for a revamp of the law as
part of the government’s overall STRATEGY
OF REFORMS

12. Market-oriented Reforms need Competition
Rules
Deregulation and Privatisation, FDI
liberalisation, trade liberalisation need
safeguards against anti-competitive
abuses:
 International cartels
 Abuse of dominance by large firms
 Mergers & takeovers monopolising
domestic markets

13. The New Law
 The Competition Ordinance, 2007 was promulgated on 2
October 2007, with the objective to enhance economic efficiency,
consumer welfare and sustainable development in Pakistan by:
 promoting competition in all spheres of commercial and economic
activity, and
 preventing or eliminating anticompetitive practices in the business
environment.
 This was a marked change in the paradigm followed by the
MRTPO, 70, where the objective was to “prevent the
concentration of wealth in the hands of few.”
 The Ordinances were given permanency with the enactments of
the COMPETITION ACT, 2010 on 6 October 2010.

14. Competition Law in Pakistan - Now
 The Ordinance established the COMPETITION
COMMISSION OF PAKISTAN on 12 November 2007,
replacing the MCA.
 Who are we?
 The Competition Commission of Pakistan is a quasi-judicial, quasi-
regulatory, law enforcing agency established as an autonomous statutory
body…
 The Commission works towards:
 Promoting competition in commercial/economic activity
 Preventing or eliminating anti-competitive practices
 The Commission comprises 5 to 7 Members (no more than
2 from government).
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15. The New Law
Pakistan’s competition law has been
inspired by:
 the Treaty of Rome;
 The United Nations Set of Multilaterally Agreed Equitable
Principles and Rules for the Control of Restrictive Business
Practices; and
 the OECD’s recommendations and best practices

16. The New Law
Provides an efficient regulatory framework which promotes
market mechanism;
Promotes the creation of a viable market economy that is
capable of competing in both domestic and global markets
Provides a link between the political system and a
competitive market economy.

17. The Competition Act, 2010
The Act provides for “free competition in all spheres of
commercial and economic activity to enhance economic
efficiency and to protect consumers from anti competitive
behaviour.”
The Act applies to all undertakings, which include:
 all natural or legal persons,
 governmental and corporate bodies including regulatory authorities,
partnerships, associations, trusts, associations of undertakings, and
 any entities that in any way are engaged, directly or indirectly, in the
production, supply, distribution of goods or provision or control of services.
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18. Five Pillars
 Section 3: Abuse of dominant position
 Section 4: Prohibited agreements
 Section 10: Deceptive marketing
practices
 Section 11: Merger control
 Section 29: Competition advocacy

19. The Act Prohibits
• Abuse of dominant position in
relevant market
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20. Abuse of Dominant Position
An undertaking is presumed to have a dominant
position if its market share exceeds 40 per cent, or if
it has the ability to behave appreciably independent
of competitors, customers, consumers, and suppliers
This is generally the case when other firms have no
choice but to deal with this company
The larger the market share, the more careful an
undertaking must be in certain practices
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21. Two broad types of business conduct are
considered as abusive:
Exploitative
 unfair trading conditions
 price discrimination that is not objectively justified
 sale of goods or services being tied to other goods or services,
 conclusion of contracts linked to acceptance of unconnected supplementary
obligations,
Exclusionary
 predatory pricing,
 boycott or exclusion of other undertakings from production, distribution or
sale of goods or provision of services, or
 refusals to deal/supply.
Abuse of Dominant Position
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22.  Prohibited agreements (cartelisation)
The Act Prohibits
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23. Prohibited Agreements
The form of agreement is not important.
 Both written agreements and/or verbal agreements or so-called co-ordinated
policies, i.e. deliberate and intended collaboration between individual
companies for the purpose of eliminating or restraining competition in a
certain market, are deemed to come within the scope of competition law
Restraints of competition are divided into two types:
 Horizontal restraints mean agreements or co-ordinated policies
between companies acting on the same marketing stage, e.g.
agreements with competing manufacturers.
 Vertical restraints mean agreements or co-ordinated policies
between companies acting on different marketing stages, e.g.
agreements with distributors and customers, licensees, suppliers
or licensors that restrict the competitive freedom of the partners or
third companies.
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24. Horizontal Agreements
Normally, agreements or co-ordinated policies between
competitors which affect the terms on which they do
business raise the most serious competition law
concerns. These include:
 Prices and conditions of supply
 Market sharing
 Limiting production
 Allocation of customers
 Boycotts
 Bid rigging
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25. Vertical Agreements
Agreements with vertical business partners that include
distributors, customers, licensees, licensors, and
suppliers. These include:
 Resale price maintenance: you can recommend a price but you cannot
insist
 Restrictions on resale or use: you may not prohibit your customers from
reselling products they have purchased from you to whomever they
wish, or otherwise apply any conditions that determine what they do
 Tying makes the supply of a product subject to the acceptance of
supplementary obligations to buy other goods and/or services which,
either by their nature or according to commercial usage, have no
connection with the subject of the contract
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26. • Deceptive marketing
FRESH FROM
THE RIVER
The Act Prohibits
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27. Deceptive Marketing Practices
Make sure that you are not involved in:
 the distribution of false or misleading information that may
harm the business of another undertaking,
 the distribution of information to consumers that lacks a
reasonable basis,
 making false or misleading comparison of goods in
advertisements, and
 the fraudulent use of another trademark, firm name,
product labeling or packaging.
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28. • Also review mergers/acquisitions which
(could) substantially lessen competition by
creating or strengthening a dominant
position
Pre-merger
Post-merger
The Act
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29. Clearance of Mergers
 The merger of companies, the acquisition and sale of businesses
and the establishment of joint ventures is subject to (prior) control
by competition authorities.
 This is the case if certain thresholds, set under the merger
regulations, are met.
 Often, these thresholds are based upon sales, the monetary value of
the transaction and/or the market share of the companies involved.
 The main criteria applied by the authorities in reviewing mergers,
acquisitions and the formation of joint ventures is that their
operation must not lead to the creation or reinforcement of a
dominant position or that the transaction under review should not
have the potential to substantially lessen competition.
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30. The Act
Stresses upon deepening the “culture of
competition” through advocacy activities –
in fact, this has been made part of the Act
(§29)
The Commission must undertake activities
to increase awareness of the law and its
benefits

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Thank you for your patience and
attention