BACKGROUND:

Section 3 of the MRTPO, 1970, inter alia, prohibited the undue concentration of economic power, unreasonable monopoly power and unreasonable restrictive trade practices. In this regard, the creation or maintaining of any relationship between two or more undertakings as makes them associated undertakings where they are competitors in the same market and together produce, supply, distribute or provide not less than one-third of the total goods or services, as the case may be, is deemed to be unreasonable monopoly power in terms of Section 5(1)(a) of the MRTPO, 1970. In this backdrop, the combined market share of the undertaking (FFC) and its associated undertaking (FFBL) was ascertained to be 47% in Phosphetic and 49% in Nitrogenous fertilizers which was more than 1/3rd of the fertilizer’s product market and such situation, prima facie, constitutes unreasonable monopoly power, as aforementioned.

ORDER:

The matter was disposed of vide Order dated 29-04-2008 with a direction to FFC and FFBL to submit an undertaking assuring the Commission that the Order will be complied within 2 years from its date and the following conditions will be followed/implemented:

i) No individual would be a director of both FFC and FFBL with the exception of a) the Chairman, b) minority shareholders, and c) individuals representing institutions other than the Fauji Group of Companies;

ii) The Chairman of FFBL will not have a second or casting vote nor shall he hold the office of the CEO so long as he is Chairman of FFC;

iii) FFBL to take necessary step to ensure the presence of 3 independent directors on its board;

• The action was initiated under the provisions of Monopolies and Restrictive Trade Practices (Control & Prevention) Ordinance, 1970 (MRTPO, 1970) by the defunct Monopoly Control Authority (MCA). However when the MRTPO, 1970 was repealed the order was passed by the Competition Commission of Pakistan as the successor MCA under Section 59 of the Competition Ordinance, 2007.

CURRENT STATUS:

2 Years time given by CCP for compliance ends in April 2010