The Competition Commission of Pakistan (CCP) has issued a show cause notice to Nestlé Pakistan Limited for alleged violation of Section 3 of the Competition Act, 2010 for unreasonably raising the prices of its infant and baby food products, Lactogen and Cerelac, over the past two years. Section 3 of the Competition Act prohibits dominant undertakings from abusing their positions in the market. This matter is of particular significance as the products are for infants between the ages of 0-24 months and parents are significantly affected by price fluctuations. Through the show cause notice, Nestle has been asked to respond in writing within fourteen days and to avail an opportunity of being heard on 18 June 2015. The show cause notice follows an enquiry by CCP into allegations regarding an unreasonable increase in the prices of Lactogen and Cerelac products by Nestlé over a period of two years. The enquiry report identified two relevant markets; one for domestically produced infant formula & follow-on milk; and the other for domestically-produced packaged cereal-based baby products. Nestle is a dominant undertaking in both markets on basis of its Lactogen and Cerelac products, respectively. The enquiry report found that Nestlé increased the prices of Lactogen and Cerelac by 38% and 32%, respectively over two years, which did not correspond to the increase in costs nor was based on any justifiable business reasons. The report concluded that by unreasonably raising the prices of its products, Nestlé has, prima facie, abused its dominant position in the market thus violating the Competition Law. CCP is mandated by the Competition Act to, inter alia, protect consumers from anti-competitive behavior.
The Competition Commission of Pakistan (CCP) has issued a show cause notice to Nestlé Pakistan Limited for alleged violation of Section 3 of the Competition Act, 2010 for unreasonably raising the prices of its infant and baby food products, Lactogen and Cerelac, over the past two years. Section 3 of the Competition Act prohibits dominant undertakings from abusing their positions in the market. This matter is of particular significance as the products are for infants between the ages of 0-24 months and parents are significantly affected by price fluctuations. Through the show cause notice, Nestle has been asked to respond in writing within fourteen days and to avail an opportunity of being heard on 18 June 2015. The show cause notice follows an enquiry by CCP into allegations regarding an unreasonable increase in the prices of Lactogen and Cerelac products by Nestlé over a period of two years. The enquiry report identified two relevant markets; one for domestically produced infant formula & follow-on milk; and the other for domestically-produced packaged cereal-based baby products. Nestle is a dominant undertaking in both markets on basis of its Lactogen and Cerelac products, respectively.
The enquiry report found that Nestlé increased the prices of Lactogen and Cerelac by 38% and 32%, respectively over two years, which did not correspond to the increase in costs nor was based on any justifiable business reasons. The report concluded that by unreasonably raising the prices of its products, Nestlé has, prima facie, abused its dominant position in the market thus violating the Competition Law.
CCP is mandated by the Competition Act to, inter alia, protect consumers from anti-competitive behavior.
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