The Competition Commission of Pakistan has levied a total of Rs265 million in penalty against two cable manufacturers after determining that they were guilty of enforcing resale price maintenance (RPM) practices that prohibited dealers from providing discounts, thereby breaching the Competition Act of 2010.
In a decision released on Tuesday, the competition authority imposed a fine of Rs190.22 million on GM Cables & Pipes (Pvt.) Ltd., which corresponds to 5 percent of its annual turnover for the fiscal year 2023-24.
Meanwhile, Newage Cables (Pvt.) Ltd. was fined Rs75 million for adopting policies that restricted dealers from selling products below certain discount thresholds.
This case emerged from information received by the regulatory body, supported by documentary evidence such as policy circulars distributed by the companies.
These documents indicated that dealers were subject to punitive measures, including the suspension or termination of dealership agreements, should they fail to adhere to the established pricing limits.
The Commission granted permission for a formal investigation in accordance with Section 37(1) of the law after an initial assessment.
The inquiry revealed that both companies had prima facie violated Section 4, which forbids anti-competitive agreements, by enforcing minimum resale price restrictions through vertical arrangements with dealers.
The findings indicated that Newage implemented its pricing strategy through clauses included in dealership agreements, whereas GM Cables depended on rate control notices and associated communications to uphold consistent pricing throughout its distribution network.
Subsequent to the issuance of show-cause notices and the conduct of hearings, the Commission concluded that the behavior constituted a restriction “by object,” as it effectively eradicated price competition among dealers of the same brand and curtailed consumer choice in the marketplace.
In evaluating penalties, the regulator acknowledged that Newage had cooperated with the investigation process.
GM Cables persisted in the prohibited conduct even after the inquiry commenced and sought to contest documented evidence, which led to a more substantial financial penalty.
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