Competition Tribunal Upholds CCP Penalty on Reliance Paints For Price Fixing Tactics

The Competition Appellate Tribunal has upheld the decision of the Competition Commission of Pakistan (CCP) against M/s Reliance Paints Pakistan for fixing the retail prices of its products, in violation of Section 4 of the Competition Act, 2010. The CCP initiated an inquiry after receiving a formal complaint from Akzo Nobel Pakistan Ltd, which alleged that Reliance Paint was fixing the minimum resale price for its products and also monitoring and penalizing the dealers/distributors/retailers for non-compliance with its price directives. The CCP’s inquiry report concluded that these practices were restricting competition not only between the dealers and retailers but also between Reliance and its competitors as the retail price became inflexible and no discounts could be offered by dealers to consumers for Reliance’s products. The Commission observed that the agreements/arrangements enforced by Reliance Paints restricted intra-brand competition amongst its dealers or distributors/retailers, which impairs their ability to compete on prices in the sale and distribution of Reliance Paint’s products. Consequently, the CCP imposed a penalty of Rs. 5 million on Reliance Paints. Reliance Paints appealed against the CCP’s order with the Competition Appellate Tribunal. The Tribunal upheld the Commission’s findings regarding Reliance Paint’s violations of Section 4 of the Act. However, it reduced the penalty to Rs. 2.5 million.