A three member Bench of the Competition Commission of Pakistan (CCP) comprising of Mr. Khalid A. Mirza, Chairman of CCP, Mr. Abdul Ghaffar, Member (Cartels, Monopolies and Trade Abuses) and Ms. Rahat Kaunain Hassan, Member (Legal/OFT), vide its Order dated 16 July 2010, disposed off the show cause notices issued to M/s Fauji Fertilizer Company Limited (FFC) and M/s Fauji Fertilizer Bin Qasim Limited (FFBL) for non-compliance of the CCP’s earlier Order dated 28 April 2008. The defunct Monopoly Control Authority (MCA) had issued show cause notices to FFC and 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, CCP was established on 02 October 2007, as a successor of MCA. The show cause notices issued to the Undertaking, were disposed off by CCP under the provisions of Section 11 of MRTPO read with Section 59 of the Ordinance, vide its Order dated 28 April 2008. CCP gave the following directions to FFC and FFBL in its Order: (i) No individual will be a director of both Fauji Fertilizer Company Limited (FFC) and Fuji 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 FFC & FFBL; (ii) The Chairman of 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, FFBL shall take necessary measures to ensure that there are three independent directors on 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 i.e., within a period of two years from the date of this Order as this appears to be reasonable. FFC & FFBL were required to report and confirm due compliance of the Order within two years from the date of the Order. Upon expiry of the two years compliance period, CCP received letters dated 28 April 2010 from FFC and FFBL, wherein request for an extension in the compliance period up-to 30 June 2011 was made, to CCP. However, there was no mention of any effort made by the Boards of FFC and FFBL for compliance or even achieving partial compliance of the Order; CCP did not find the request satisfactory. Hence issued show cause notices to both FFC & FFBL on 03 June 2010, for non-compliance of the Order in violation of Section 19 of MRTPO read with Section 59 of the Ordinance. FFC and FFBL were also required to file their written reply to the show cause notices on or before 15 June 2010 and an opportunity of hearing was also provided to them on 16 June 2010. The Bench expressed its discontent and disappointment towards the non-serious approach of both the undertakings vis-à-vis the implementation of the Order passed by the Commission. The unintentional delay caused in compliance of the Order was deeply regretted by the Counsel for FFC & FFBL. It was urged that the undertakings in all earnestness intended to comply and shall comply with the directions of CCP. Although the reasoning afforded by FFC & FFBL were not found satisfactory, however, keeping in view the representation made by the 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 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 FFC and FFBL on its letter head shall be filed with CCP, for the delay caused and the non-compliance with the Order; (ii) Commitments on behalf of the Boards of FFC & FFBL to comply with the Order dated 29 April 2008 read with this Order of CCP, shall also be filed with CCP; (iii) The appointment of the 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 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 FFC & FFBL on the date of hearing. The Parties are also directed that the documents at (i) & (ii) above, shall be to the satisfaction of the Registrar of CCP, and shall be filed along with the copy of the relevant board resolutions, within two weeks from the date of this order.
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