Background Facts:

Packages Limited was acquiring certain % of sharing of Tri-pack Films from Mitsibishi Corporation, and the acquisition required the approval of the Commission in line with the Competition Act, 2010 and the Merger Regulations, 2016. The Commission passed an order dated 23.08.2021 concluding the Phase I Review, thereby initiating Phase II Review in the instant matter.

Order:

The broad concerns related to the Transaction included the following:

1. After the proposed merger, the Acquirer’s shareholding in the Target Company may further increase if the Acquirer acquired the shared as may be offered through Public Offer in accordance with the provisions of the take-over laws in Pakistan.

2. The Acquirier has numerous subsidiaries / associated companies in the downstream packaging market and therefore, the inrease in shareholding may increase the market power of the Acquirer and put it in a position where it could foreclose the downstream market and affect competition through anti-competitive practices.

3. The Acquirer / Target Company may also, post Transaction, impose unilateral effects, when the merged group is able to profitably reduce the value for money, choice or innovation through its own acts without the need for cooperative response from the competitors. Such conduct may include stopping supplies to competitors of its subsidiaries / associated companies in Related Market.

4. The Relevant Markets are highly concentrated with few companies competing therein.

5. The Transaction raises the likelihood that, following the merger, merging parties and their competitors will be able to possibly coordinate their behavior in an anti-competitive manner, as there are only three big players in the Relevant Market.

Based on the submissions, the Commission concluded that the Transaction is not likely to substantially lessen competition in the Relevant Markets and it neither creates nor strengthens a dominant position as the Acquirer’s position of control remains the same in effect as:

1. The Acquirer was originally, and always in charge of the management of the affairs of the Target Company, and after the proposed merger, the Acquirer’s role in managing the affairs of the Target Company would not change.

2. The products manufactured by the Target Company do not form part of the supply chain of the products manufactured by the associated companies of the Acquirer.

3. There was no history of collusion or any other anti-competitive practices in the Relevant Market.