BACKGROUND:

The matter dealt with three issues, firstly, whether the Minimum Cover Price Formula issued by the All Pakistan Newspapers Society (“APNS”) to all its members constitutes price fixing thereby violating Section 4(1) of the Competition Ordinance, 2007. Secondly, whether the decision of Subcommittee on Cover Prices of APNS to set minimum prices and subsequent formula constitutes Newspaper price fixing, thereby violating Section 4(1) of the Ordinance. Lastly, whether the agreement of the All Pakistan Akhbar Farosh Federation with APNS to ensure that no Newspaper violating the Minimum Price Formula constitutes a restrictive trading condition with regard to the sale of the Newspapers, thereby violating Section 4(1) of the Ordinance.

For the purposes of this matter, the Commission determined that all newspapers constitute the relevant product market and the geographic market was defined as Pakistan. The Commission held that the horizontal agreements – those entered into by competitors at the same level of production or distribution chain to cooperate with each other – which in this case were the agreement to fix minimum cover price of newspapers by APNS sub-committee and the issuance of the minimum cover price formula by APNS to its members, are, inter alia, avoiding competition with each other in the market place.

Moreover, the Commission also held that the vertical agreements – those entered into between buyers and sellers operating at different levels of the production or distribution chain – which in this case was the agreement between APNS and Akhbar Farosh to enforce the minimum price for resale price maintenance, were held to eliminate brand competition by fixing price. The Commission acknowledged that certain vertical agreements were permissible where they stimulated competition among the parties, but that was not the case here.

ORDER:

The matter was disposed of vide Order dated 23-04-2009. Since all the Undertakings have filed Commitments pursuant to Part IV of the Competition Commission (General Enforcement) Regulations, 2007, therefore, a lenient view was taken by not imposing any penalty on the undertakings under Section 38 of the Ordinance.

However, APNS and its Subcommittee were directed to issue a press release containing the following information:

“The Minimum Cover Price Formula issued on April 29, 2008 and May 2, 2008 should not be considered a directive of APNS. APNS and any of its committees do not have the power to direct its members to fix a certain price for their respective Newspapers, nor can it enforce recommendations regarding cover prices of Newspapers. The formula was just recommendatory in nature. The individual Newspapers should set their Newspapers independently and that the decision to set minimum cover price is unlawful and therefore withdrawn”.

The press release should appear in all leading Newspapers within 7 days of the receipt of the rder, failing which a penalty of Rs. 200,000 per day shall be recovered from APNS under Section 40 of the Ordinance, for the non-compliance of the Commission’s Order.

All concerned parties i.e. APNS, Akhbar Farosh and the Subcommittee are warned that in case they are found guilty of violating the Ordinance in the future, major penalties under the law shall be imposed on them without any leniency.

CURRENT STATUS:

Compliance by the undertaking