Background of Case:

The defunct Monopoly Control Authority (MCA) had issued show cause notices to the FFC and the FFBL for 'prima facie' violation of Section 3 of the Monopolies and Restrictive Trade Practices (Control & Prevention) Ordinance 1970 (MRTPO). After promulgation of the Competition Ordinance, the CCP was established on 02 October 2007, as a successor of the MCA. The show cause notices issued to the undertakings were disposed off by the CCP under the provisions of Section 11 of the MRTPO read with Section 59 of the Ordinance, vide its order dated 28 April 2008.

The CCP gave the following directions to the FFC and the FFBL in its order: (i) No individual will be a director of both Fauji Fertiliser Company Limited (FFC) and Fauji Fertilizer Bin Qasim Limited (FFBL) with the exception of (a) Chairman, (b) minority shareholders, (c) individual representing institutions other than the Fauji Group of Companies including but not limited to the FFC & FFBL; (ii) The Chairman of the FFBL will not have a second or casting vote nor shall he hold the office of the Chief Executive Officer, so long he is also the Chairman of FFC; (iii) In order to ensure good corporate governance and transparency, the FFBL shall take necessary measures to ensure there are three independent directors in its board in terms of Para 38 of the Order; (iv) The Commission is agreeable to the proposed time period for the implementation of the aforesaid actions ie, within a period of two years from the date of this Order as this appears to be reasonable. The FFC & FFBL were required to report and confirm due compliance of the order within two years from the date of the issuance of order. Upon expiry of the two years compliance period, the CCP received letters dated 28 April 2010 from the FFC and the FFBL, wherein request for an extension in the compliance period up-to 30 June 2011 was made to the CCP.

The Order:

The Commission in its Order dated 16-07-2010 observed that, “although the reasoning afforded by the FFC & FFBL were not found satisfactory, however, keeping in view the representation made by their counsel, his repeated assurance for the undertakings' commitment to ensure compliance with the order and taking into account the plea for a lenient treatment; asserting determination to resolve the issue and to address the concerns of the CCP, an extension was granted only until 31 December 2010, subject to the following conditions: (i) An unconditional apology for and on behalf of the boards of the FFC and the FFBL on its letter head shall be filed with the CCP, for the delay caused and also the non-compliance of the order; (ii) Commitments on behalf of the boards of the FFC & FFBL to comply with the order dated 29 April 2008 read with this order of the CCP, shall also be filed with the CCP; (iii) The appointment of independent directors in terms of the order shall be carried out forthwith, without further delay, subject to the due time required for completion of corporate procedures, such appointments in any event shall not be later than 31 August 2010; (iv) If the FFC & FFBL fail to comply with any of the above, both the undertakings shall be liable to pay a penalty in the sum of Rs 10,000 per day from the date of first non-compliance of the order i.e. 30 April 2010.

The above conditions were agreed to and accepted by the counsel for and on behalf of the FFC & FFBL on the date of hearing. The parties are also directed that the documents at (i) & (ii) above, shall be up to the satisfaction of the Registrar of the CCP, and shall be filed along with the copy of the relevant board resolutions, within two weeks from the date of this order.

Current Status:

FFBL has complied with the Order; however, FFC has challenged the Order by filing a writ petition in the Lahore High Court Lahore.