The Competition Commission of Pakistan is bound to examine four key areas before working out financial penalties on companies and undertakings under section 38 of the Competition Ordinance, 2007.
According to the policy guidelines issued by the CCP on Friday, a financial penalty imposed by the Commission shall be calculated taking into consideration the seriousness of the infringement; duration of the infringement; aggravating or mitigating factors and other relevant factors, eg deterrent value.
The CCP said that the objective for imposing any financial penalty is to deter undertakings from engaging in anti-competitive practices. The assessment of an appropriate penalty to be imposed for all types of infringements shall depend on the facts of each case.
For imposing the penalty, the gravity of infringement has to be determined by reference to numerous factors, such as circumstances of case, its context and the dissuasive effect of fine. However, it is clarified that there is no binding or exhaustive list of criteria that must be taken into account in every case.
Under section 38 of the Ordinance, the commission may impose financial penalties only after giving the undertaking concerned an opportunity of being heard. The penalty could be imposed if undertaking has been found engaged in any activity prohibited under the Ordinance; failed to comply with an order of the Commission and failed to supply a copy of the agreement or any other document.
The penalty could also be imposed if the company has furnished any information or made any statement to the Commission which such undertaking knows or has reason to believe to be false or found by the Commission to be inaccurate or knowingly abuses, interferes with, impedes, imperils, or obstructs the process of the Commission in any manner.
The Commission can impose the financial penalties for a contravention of any provision of Chapter II of the Ordinance, an amount not exceeding Rs 50 million or an amount not exceeding 15 percent of the annual turnover of the undertaking, as may be decided in the circumstances of the case by the Commission.
For non-compliance of any order, notice or requisition of the Commission an amount not exceeding one million rupees, as may be decided in the circumstances of the case by the Commission;
For knowingly abusing, interfering, impeding and obstructing the process of the Commission in any manner, an amount not exceeding one million rupees as may be decided in the circumstances of the case by the Commission and for a continuing violation of the order of the Commission, penalty of a further sum which may extend to one million rupees for every day after the first such violation could be imposed on the company.
In assessing the amount of financial penalty to be imposed, the Commission may consider any aggravating or mitigating factors. The amount of financial penalty to be imposed may be adjusted, as appropriate, on a case by case basis, to achieve the policy objectives to deter undertakings from engaging in anti-competitive practices.
Other considerations may include, but not limited to, an objective estimate of any economic or financial benefit derived or likely to be derived from the infringement by the infringing undertaking and any other special features of the case, including any gains which might accrue to the undertaking in other product or geographic markets as well as in the relevant market under consideration may be taken into account.
The anti-competitive conduct of an undertaking can be attributed to its parent company where the subsidiary does not independently determine its market behaviour but, mainly because of economic and legal ties has essentially followed its instructions in such instances commission can choose whether to attribute the infringement committed by the subsidiary to it or to the parent company, the CCP added.
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