Activities of distributors of their products: CCP asks companies to remain vigilant

ISLAMABAD: The Competition Commission of Pakistan (CCP) has directed companies to remain vigilant regarding the activities of distributors of their products to avoid violations of the competition law by the distribution chain.

According to an order issued by the CCP in the matter of a show cause notice No 55/2020 (SCN) issued to M/s Qasim Iron Works, the companies have a duty to remain vigilant regarding the activities of the distributors of its products, which are essentially acting on its behalf as its representatives and agents.

The respondent company was clearly negligent on this account and only acted once the complainant (M/s Dadex Eternit Limited) had served the legal notice dated September 7, 2019.

The respondent company failed to ensure proper training and establish procedures for its distributors in order to make them aware of what may constitute violation of competition laws and to ensure that its distributors do not transgress the law.

Rather the respondent has tried to get away with violation of Section 10 of the Act, which has been established in the present case merely on the pretext that the said violation has not been carried out by it, but rather by one of its distributors.

The CCP bench is, however, also cognisant that the respondent had promptly acted after receiving the complainant's legal notice and had initiated an internal inquiry and ensured removal of the deceptive videos from its platforms.

The respondent company shall obtain written commitments from all its present and future (if any) distributors and agents, which are involved in the sale and marketing of the respondent's products, stating that they will not produce and/or disseminate any information in relation to the respondent's products, which may constitute violation of Section 10 of the Act, and that in case they failed to abide by the said commitments their distributorships will be cancelled by the respondent.

The respondent shall submit before the registrar of the commission a list of all its present distributors and agents along with their written commitments, the CCP added.

Copyright Business Recorder, 2021