Business Recorder
The Competition Commission of Pakistan (CCP) has imposed an aggregate penalty of Rs265 million on two cable manufacturers for engaging in resale price maintenance (RPM) practices in violation of the Competition Act, 2010. In a statement on Tuesday, the regulator said it fined Newage Cables (Pvt.) Ltd. Rs75 million and GM Cables & Pipes (Pvt.) Ltd. Rs190.22 million for restricting dealers from offering discounts beyond prescribed limits. The CCP initiated an enquiry after receiving information, supported by documentary evidence, including policy circulars issued by the companies. These documents revealed that dealers were barred from selling below fixed discount thresholds, with punitive measures such as termination of dealership agreements for non-compliance. READ MORE: CCP seeks rationalisation of protections to boost competition in Pakistan’s auto sector Following a preliminary probe, the Commission authorised a formal enquiry under Section 37(1) of the Act, concluding that both firms had prima facie violated Section 4 by imposing minimum resale price restrictions. According to the findings, Newage enforced its retail discount policy through dealership agreements, while GM Cables implemented similar restrictions via rate control notices and related communications. Acting on the enquiry committee’s recommendations, the CCP issued show-cause notices to the companies. After hearings and detailed examination of evidence, the Commission determined that the practices constituted a restriction “by object” as they curtailed intra-brand price competition through vertical agreements. In its order, the CCP observed that the conduct of the companies eliminated price competition among dealers of the same brand and adversely impacted consumer choice. The restrictions were formalised through circulars and enforced through coercive measures, including threats of suspension or termination. While determining penalties, the Commission noted that Newage adopted a cooperative approach during proceedings. In contrast, GM Cables continued its infringing conduct even after the initiation of the enquiry and attempted to deny documented evidence. Consequently, GM Cables was fined 5% of its annual turnover for FY2023-24, amounting to Rs190.22 million. The CCP directed both companies to deposit the penalties within 60 days, warning that failure to comply would result in an additional fine of Rs500,000 per day. The firms have also been ordered to immediately cease RPM practices, withdraw restrictive instructions issued to dealers, ensure independent price setting, and submit compliance reports within stipulated timelines. Newage has further been instructed to remove discount cap provisions from its dealership agreements. The order underscores the regulator’s commitment to promoting fair competition and safeguarding consumer interests in the market.
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