CCP Slaps Rs265 Million Penalty on Two Cable Firms for RPM Violations

(CCP) has penalized Newage Cables (Pvt.) Ltd. and GM Cables & Pipes (Pvt.) Ltd., imposing penalties totaling PKR 265.22 million for violating Section 4 of the Competition Act, 2010.

The CCP conducted an inquiry after receiving evidence including policy circulars from both companies that restricted dealers from offering discounts beyond specified limits and prescribed punitive measures like termination of dealership agreements for non-compliance.

Following its initial probe, the Commission authorized a detailed enquiry under Section 37(1) of the Act. The enquiry concluded that both respondents had prima facie violated Section 4 by imposing minimum resale price restrictions on their dealers. Newage’s retail discount policy and dealership agreements prohibited dealers from selling products below prescribed discount levels, while GM Cables imposed similar restrictions through rate control notices.

The Commission issued show cause notices to both undertakings for alleged conduct restricting intra-brand price competition through vertical agreements establishing minimum resale prices. After hearing the parties and analyzing evidence, the Commission concluded that both had engaged in RPM practices, a restriction “by object” under Section 4 of the Act.

In its order, the Commission noted that these practices eliminated intra-brand competition and adversely affected consumer choice. The violations were formalized through widely disseminated circulars and enforced with coercive measures like threats of suspension or termination. Newage demonstrated cooperation during proceedings, while GM Cables continued infringing despite initiation of enquiry and attempts to deny evidence.

The CCP imposed a PKR 75 million penalty on Newage Cables (Pvt.) Ltd., equivalent to 5% of annual turnover for FY 2023-24, on GM Cables & Pipes (Pvt.) Ltd. Penalties must be deposited within sixty days; failure to do so incurs an additional PKR 500,000 per day penalty.

Both companies have been directed to cease minimum resale price restrictions, withdraw related instructions from dealers, ensure independent resale pricing determination, and submit compliance reports by prescribed timelines. Newage has also been instructed to remove discount cap provisions from its dealership agreements.