The Competition Commission of Pakistan (CCP) has completed an inquiry and issued a show cause notice to Pharma Bureau for engaging in collusive activities in violation of the Competition Act, and directed it to file a reply to the allegations within fourteen days.
The Commission took suo motu notice and conducted the inquiry against Pharma Bureau and its members for prima facie unreasonably increasing the prices of various medicines through collusive practices. Pharma Bureau is an association of multinational pharmaceutical companies and is part of the Oversees Investors’ Chamber of Commerce and Industry.
As part of the inquiry, the Commission also conducted a search and inspection of Pharma Bureau early this year under Section 34 of the Competition Act during which the Bureau fully cooperated with the inspection team of the CCP and handed over the relevant records for examination.
The enquiry report concluded that the Pharma Bureau and its members appear to have been involved in sharing of strategic and commercially sensitive information, providing updates and overview of prices, cost, profits, demand, and the industry as a whole. This information was used to deliberate upon and prepare recommendations, agreements and decisions on increase in prices of various pharmaceutical products by the companies through the platform of Pharma Bureau.
It would be pertinent to mention here that Section 4 of the Act, inter alia, prohibits trade associations from taking decisions on commercial matters of its members such as pricing, production, and sales etc. As per the inquiry report, the sharing of above information by Pharma Bureau and its members constitute prima facie violation of Section 4 of the Act.
It is a well-established principle of competition law that not only formal and informal price-fixing agreements, understandings and decisions, but also exchange of commercially sensitive information and setting prices, among other things, between the competitors by themselves or through the medium of their association(s) reduces uncertainty for each of the participant as to the conduct of their competitors, which results in restriction of competition by object and ultimately, consumer harm.
