The Competition Appellate Tribunal (CAT) has officially upheld a cumulative Rs. 40 million penalty against two prominent medicine distributors. Yesterday, the tribunal validated the Competition Commission of Pakistan (CCP) penalty against the two medicine distributors, namely United Distributors Pakistan Limited (UDPL) and International Brands (Private) Limited (IBL).
Both companies openly violated Section 4 of the Competition Act, 2010. Consequently, they face severe penalties for executing a prohibited, anti-competitive non-compete agreement.
The Rs. 1.13 Billion Market Exit
The regulatory scrutiny began after UDPL made a formal disclosure to the Pakistan Stock Exchange. UDPL revealed an agreement to completely halt the distribution of human pharmaceutical products in Pakistan for a three-year period. In exchange for stepping away, IBL paid UDPL a staggering Rs. 1.131 billion.
The CCP immediately initiated proceedings. Regulators determined that this massive payout served as a direct financial incentive to eliminate a competitor from the relevant market. Furthermore, this arrangement actively shielded IBL from competitive pressure and established strict barriers to market entry. Ultimately, the CCP classified the deal as an illegal market-sharing arrangement.
Regulatory Failures
Both companies completely failed to secure proper legal clearance beforehand. Although their contract included a clause requiring regulatory approval, UDPL and IBL ignored the requirement to obtain a prior exemption from the CCP.
Instead, the distributors only applied for an exemption after the CCP issued official show-cause notices. The CCP swiftly rejected this application, noting that the legal violation had already occurred. Following this rejection, the companies failed to pursue any further legal remedies. The Tribunal explicitly viewed this inaction as an implicit acceptance of guilt.
As a result, the Tribunal upheld the CCP’s initial findings. It ruled that the penalties imposed under Section 38 of the Competition Act, 2010, remain entirely justified and lawful.
CCP Penalty & Agreement Breakdown
| Entity / Detail | Amount |
| UDPL Penalty | Rs. 20 Million |
| IBL Penalty | Rs. 20 Million |
| Total Upheld Penalty | Rs. 40 Million (Rs. 4 Crore) |
