Inside Financial Markets

Competition Commission Of Pakistan issues show cause notice to Pharma Bureau

The pharmaceutical sector has come under scrutiny of the anti-trust watchdog as a comprehensive inquiry has been completed and the Pharma Bureau has been served with show cause notice by the Competition Commission of Pakistan (CCP) for prima facie engaging in collusive activities.

Sources told Business Recorder here on Wednesday that a search and inspection of the Pharma Bureau had also been carried out by the CCP early this year wherein the Bureau fully co-operated with the inspection team and handed over the relevant record to the CCP for examination. Pharma Bureau is part of the Overseas Investors Chamber of Commerce & Industry and represents the multinational pharmaceutical companies in Pakistan.

The inquiry report of the CCP available with this scribe revealed that Pharma Bureau and its member undertakings (MPCs) increased prices of medicines effective by or before March/April 2015 and onwards as a pre-set arrangement. Such an arrangement is a violation of Section 4 of the Competition Act, 2010, therefore the inquiry proposed that the Commission may consider initiating proceedings against Pharma Bureau and its member undertakings (MPCs) for prima facie infringement of section 4 of the Act.

As per the inquiry report, it appear that since at least 2007, Pharma Bureau and its member undertakings (MPCs) have been sharing strategic data and commercially sensitive information, in particular, concerning pricing and market and have agreed upon and adopted common policies and decisions, which have been unanimously accepted by all of them. Such practices have apparently facilitated co-ordination and resulted in collusion between and amongst the member undertakings (MPCs) of Pharma Bureau in the form of recent price increases of various therapeutic drugs in Pakistan, which is a prima facie violation of Section 4 of the Act.

Moreover, there has been regular information exchange resulting in common policies in the form of discussions, agreements and decisions adopted by Pharma Bureau and its member undertakings pertaining to the market and prices, cost structures and profitability thresholds, production and sale volume forecasts, among other things, constituting a prima facie violation of Section 4 of the Act. It further appears that such practices continue to exist in the relevant pharmaceutical market and prima facie amount to an act of cartelization, said the inquiry report.

After analysing the facts and legal issues, the inquiry report concluded that Pharma Bureau and its member undertakings (MPCs) have prima facie infringed Section 4 of the Act. Broadly speaking, it appears that the anticompetitive practices adopted by Pharma Bureau and endorsed by its member undertakings (MPCs) led to a reduction in strategic uncertainty relating to information that is usually treated as confidential and/or likely to affect significantly each participant’s future market conduct. This must be viewed in the backdrop and context of competition law, which contemplates that even a single exchange of strategically significant commercial information, is likely to be sufficient to constitute a violation of Section 4 of the Act.

Baqar Hussain

A Wannabe CFO, just had stepped in the corporate sector, willing to explore every aspect here and learn as mush as i can, awareness for those who dont, get the info where ever possible and stay up to date always.

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Inside Financial Markets was a joint publication of Pakistan Stock Exchange (PSX)and Society of Technical Analysts Pakistan (STAP)