Corporate & Commercial

Competition Law in Pakistan: Cartels, Abuse of Dominance, Deceptive Marketing and Merger Control under the Competition Act, 2010

The Competition Act, 2010 is federal law and applies across Pakistan, so a Karachi distributor, a Lahore manufacturer and a foreign investor buying into a listed company all answer to the same Commission in Islamabad. Most businesses meet it in one of three ways: a letter from the CCP asking for information, a show-cause notice alleging price fixing or misleading advertising, or a transaction that cannot close without clearance.

People often look for the best competition lawyer in Pakistan only once a section 36 information request or a show-cause notice is already on the desk, but the choices that shape the outcome, such as how fully to answer, whether to apply for leniency and whether a deal needs pre-merger clearance, are better made before that point. This guide sets out the rules, the procedure and the litigation that still surrounds the Commission's powers.

Who the Act covers and what the CCP can do

The Act regulates any "undertaking", defined in section 2(1)(q) to include natural and legal persons, companies, partnerships, associations, trusts and even government bodies and regulatory authorities, so long as they are engaged in producing, supplying or distributing goods or providing services. Trade associations are expressly within reach, which matters because many Pakistani cartel cases have been built on association minutes and circulars. Section 59 gives the Act effect notwithstanding anything in other laws.

The Commission's investigative toolkit is wide:

• Section 36 lets it call for information by general or special order.
• Section 37 allows enquiries on its own motion, on a Federal Government reference or on a complaint from an undertaking or registered consumer association.
• Section 33 gives it the powers of a civil court to summon witnesses and compel documents.
• Section 34 authorises entry and search of premises, including computers and electronic records, on reasons recorded in writing; under section 35 entry may be forced on a written order signed by two Members, without a court warrant.
• Section 32 permits interim orders where serious or irreparable harm is likely before a final decision.

Formal proceedings start with a show-cause notice under section 30, followed by a hearing and a reasoned order. In September 2023 the Supreme Court, in an appeal arising from an edible-oil pricing enquiry, held that undertakings must comply with information requests under section 36 and that the Commission need not give detailed reasons before opening an enquiry under section 37, because an enquiry is fact-finding rather than adverse action. In April 2026 a Lahore High Court division bench applied the same approach, dismissing an intra-court appeal by an automobile company and holding that writ petitions are generally not maintainable while an enquiry is still running, since the Act provides its own appeal route.

Abuse of dominant position (section 3)

Being large is not unlawful; abusing a dominant position is. Under section 2(1)(e) an undertaking is dominant if it can act to an appreciable extent independently of competitors, customers, consumers and suppliers, and dominance is presumed where its share of the relevant market exceeds forty per cent. The presumption can be rebutted, which is why the definition of the relevant market (the product and the geographic area) is usually the first battleground.

Section 3 lists conduct that counts as abuse, including:

• limiting production or sales, or imposing unreasonable price increases or unfair trading conditions;
• price discrimination between customers without objective justification;
• tie-ins, where buying one product is made conditional on buying another;
• imposing obligations unrelated to the subject of the contract;
• predatory pricing to drive competitors out;
• boycotts, exclusion of competitors and refusal to deal.

A recent illustration of the tie-in theory is the CCP's 2025 action against private school systems that allegedly required parents to buy branded notebooks, workbooks and uniforms only from nominated vendors. For a business with a strong position in a Karachi market, the practical risk areas are exclusive supply or distribution arrangements, loyalty rebates and selective refusal to supply former distributors. Each should be tested against an objective commercial justification before it is put in writing.

Cartels, prohibited agreements and exemptions (sections 4 to 9)

Section 4(1) prohibits any agreement, or any decision of an association of undertakings, that has the object or effect of preventing, restricting or reducing competition in Pakistan. Section 4(2) gives examples: fixing prices or trading conditions, dividing markets or customers, fixing output or quantities, limiting technical development or investment, and collusive tendering or bidding. An agreement that breaches section 4(1) is void under section 4(3), which also affects its enforceability in a civil suit.

"Agreement" is read broadly. A price list circulated through a trade association, a WhatsApp group in which competitors share future prices, or a shared decision to delay a crushing season can all qualify. The CCP's 2025 enforcement included show-cause notices to sugar mills over an alleged joint decision on crushing dates and cane prices, penalties on steel producers for coordinated pricing and exchange of sensitive information, and orders against urea manufacturers, day-old chick hatcheries and goods transporters' associations. It also carried out search operations over suspected bid rigging in supplies to power distribution companies.

Not every restrictive agreement is unlawful. Sections 5 to 9 allow individual exemptions on application (section 5) and block exemptions for categories of agreements (section 7). The test is in section 9: the agreement must contribute substantially to improving production or distribution, or to technical or economic progress, while allowing consumers a fair share of the benefit, and its benefits must clearly outweigh its adverse effects on competition. The applicant bears the burden of proof, and the procedure is in the Competition Commission (Exemption) Regulations, 2020. Exemptions can be time-limited, conditional and cancelled under section 6 if circumstances change or the information supplied was misleading.

Deceptive marketing (section 10)

Section 10 is the provision most consumer-facing businesses meet first. It prohibits:

• distributing false or misleading information capable of harming another undertaking's business interests;
• giving consumers false or misleading information about price, character, method or place of production, properties, suitability for use or quality, including claims that lack a reasonable basis;
• false or misleading comparison of goods in advertising; and
• fraudulent use of another's trademark, firm name, or product labelling or packaging.

The "reasonable basis" limb is the one that catches most advertisers: a claim about fuel efficiency, product category, certification or project approvals must be supportable when the claim is made, not reconstructed after a complaint. CCP orders in 2024 and 2025 covered real estate, food and dairy products, automobiles and tractors, paints, education and medical devices, and in August 2026 the Commission held an open hearing under section 29 on misleading claims, hidden charges and misrepresented approvals in real estate.

Section 10(2)(d) overlaps with trademark law, so a business facing a look-alike product can sometimes complain to the CCP as well as sue; our guide to trademark infringement actions explains the civil route. Consumers' individual claims for refunds or damages belong under provincial consumer law instead, covered on our consumer protection page.

Merger control and pre-merger notification (section 11)

Section 11 prohibits a merger that substantially lessens competition by creating or strengthening a dominant position. "Merger" (section 2(1)(h)) covers acquisitions of shares or assets, amalgamations and combinations, and the CCP treats joint ventures as within the section. Where the thresholds are met, the parties must apply for clearance as soon as they agree in principle or sign a non-binding letter of intent, and in any case before completion; they may not close until the CCP clears the deal.

The thresholds are in regulation 4 of the Competition (Merger Control) Regulations, 2016, as amended. For parties other than asset management companies, the current text published by the CCP requires a filing where:

Limb	Threshold in regulation 4(2)
Assets	Gross assets of the undertaking (excluding goodwill) of at least Rs 300 million, or combined assets of the parties of at least Rs 1 billion
Turnover	Preceding-year turnover of the undertaking of at least Rs 500 million, or combined turnover of at least Rs 1 billion
Transaction value	Acquisition of shares or assets worth Rs 100 million or more
Voting shares	An acquisition that takes the acquirer above 10 per cent of the voting shares

The regulation joins these limbs with a mixture of "or" and "and", and its drafting is not tidy; where a deal is close to any limb, the safer course is an early informal approach to the CCP or a filing. Separate tests apply to asset management companies under regulation 4(3), and capital market transactions must be filed within fifteen days of the transaction under regulation 4(1A). The CCP may revise thresholds by gazette notification, so check the current text before relying on the table.

Regulation 5 exempts certain transactions from filing, including intra-group restructurings between a holding company and its subsidiaries, inheritance and family gifts of shares, underwriting in the ordinary course and rights issues that do not increase percentage holdings, though the CCP keeps the power to review them substantively. Under section 11, Phase I lasts thirty days, after which the CCP clears the deal or opens a Phase II review, which must be concluded within ninety days of receiving the information requested. Filing fees follow the CCP's official schedule. The Commission reported reviewing 159 mergers in 2025. Build the filing into your acquisition due diligence timetable rather than treating it as a closing formality.

Penalties, leniency and current enforcement priorities

Under section 38, the Commission may impose a penalty for a contravention of the prohibitions in Chapter II (sections 3 to 11) of up to ten per cent of the undertaking's annual turnover or a fixed statutory sum, as it determines. Separate penalties apply for failing to comply with orders or requisitions, for obstruction and for each day a violation of an order continues, and failing to comply with a Commission order is also a criminal offence punishable with imprisonment of up to one year, a fine or both. Orders under section 31 can also require an undertaking to annul or amend an agreement, restore competition or withdraw misleading claims.

Section 39 allows the Commission to impose a lesser penalty on a party to a prohibited agreement that makes a full and true disclosure. The CCP's own explanation of the Act states that leniency is available only to the first undertaking to come forward, and the procedure is set out in the Competition (Leniency) Regulations, 2019. The CCP also runs a reward scheme for informants under regulations made in 2014. Leniency can be withdrawn if the applicant fails to cooperate or gives false evidence, so an application is a commitment, not a tactic.

Two developments shape the current climate. First, the CCP has been more aggressive since 2023, with search operations in advertising, power-sector supplies and fan manufacturing during 2025, and it reports reducing its court backlog substantially. Second, in an August 2026 judgment on an appeal by a vanaspati manufacturers' association, the Supreme Court described penalties as a measure of last resort and encouraged the CCP to use advocacy first, while confirming that it must enforce where there is a clear contravention. Undertakings facing a first-time, borderline allegation can rely on that reasoning in their reply.

Appeals, and the long-running challenges to the CCP's powers

The appeal ladder is set by sections 41 to 44:

Order made by	Appeal to	Time limit
A single Member or authorised officer	Appellate Bench of the Commission (section 41)	30 days
Two or more Members, or the Appellate Bench	Competition Appellate Tribunal (section 42)	60 days from communication of the order
Competition Appellate Tribunal	Supreme Court of Pakistan (section 44)	60 days

Section 43 constitutes the Tribunal with a chairperson who is a former Supreme Court judge or retired High Court Chief Justice and two technical members, and asks it to decide appeals within six months. For a period the Tribunal had no chairperson, which pushed many businesses into writ petitions; it was reconstituted and, according to the CCP, had disposed of more than half of its pending appeals by mid-2025. Its decisions include remanding the large sugar-industry cartel case to the Commission after finding the Chair's casting vote invalid.

The constitutional challenges are older. Industries from cement and sugar to telecom and LPG argued that competition became a provincial subject after the Eighteenth Amendment and that the CCP and Tribunal were an unlawful parallel judiciary. A three-judge bench of the Lahore High Court rejected those arguments in October 2020, and the Islamabad High Court upheld the Act as intra vires in September 2021. According to the CCP, 171 cases challenging its mandate were clubbed for a single hearing before the Supreme Court by July 2025. We have not been able to confirm a final apex-court ruling on those clubbed matters as of October 2026, and with constitutional jurisdiction now shared with the Federal Constitutional Court, the forum for any remaining constitutional questions should be checked on the current cause lists. Our note on Supreme Court and FCC appeals explains that split. The practical point is that the pending challenges do not suspend CCP proceedings: any stay is case-specific, and the High Courts have repeatedly declined to interfere at the show-cause stage.

A compliance checklist for Pakistani businesses

1. Trade association meetings: circulate an agenda in advance, keep minutes, and leave the room if prices, margins, production plans or tender strategies come up.
2. Distributor and supply contracts: review exclusivity, resale price conditions and territorial restrictions, particularly if your market share may be near forty per cent.
3. Advertising claims: keep the test results, approvals or data behind each claim on file before the campaign runs.
4. Deal planning: run the regulation 4 thresholds at term-sheet stage and allow for Phase I and possible Phase II review in the long-stop date.
5. Dawn-raid readiness: nominate who receives CCP officers, how the authorisation is checked and how copies of seized material are logged under section 34.
6. Information requests: answer section 36 letters fully and on time, seeking extensions in writing; incomplete answers carry their own penalties.

Our corporate and commercial practice advises on CCP replies, exemption and merger filings, and appeals to the Tribunal.

Common questions

This article is general information about Pakistani law and procedure, not legal advice for any specific matter. If this touches on something you're currently facing, get in touch and we'll advise on your facts directly.