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MONOPOLIES AND RESTRICTIVE TRADE PRACTICES (CONTROL AND PREVENTION)

ORDINANCE, 1970
(V OF 1970)

An Ordinance to provide for measures

against undue concentration of economic power,

growth of unreasonable monopoly power and unreasonably restrictive trade practices

 26th February, 1970

The following Ordinance made by the President on the 21st February, 1970, is hereby published for general information:-

Whereas the undue concentration of economic power, growth of unreasonable monopoly power and unreasonable restrictive trade practices are injurious to the economic well-being, growth and development of Pakistan :-

 

And whereas it is expedient to provide for measures against such concentration, growth and practices and for matters connected therewith or incidental thereto;

 

And whereas the national interest of Pakistan in relation to the economic and financial stability of Pakistan requires [Federal] legislation in the matter;

 

Now, therefore, in pursuance of the Proclamation of the 25th day of March, 1969, read with the Provisional Constitution Order, and in exercise of all powers enabling him in that behalf, the President is pleased to make and promulgate the following Ordinance:-

 

CHAPTER I

PRELIMINARY

Short title, extent and commencement.-(1) This Ordinance may be called the Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970.

(2) It extends to the whole of Pakistan.

(3) It shall come into force on such date as the [Federal Government] may, by notification in the official Gazette, appoint.

Definitions.– (1) In this Ordinance, unless there is anything repugnant in the subject or context,”

(a) “agreement” includes any arrangement or understanding whether or not in writing and whether or not it is or is intended to be legally enforceable;

(b) “associated undertakings” means any two or more undertakings interconnected with each other in the following manner, namely:-

(i) if a person who is the owner or a partner,  of an undertaking or who directly or indirectly holds or controls shares carrying not less than [Thirty] per cent of the voting power in such undertaking, is also the owner or a partner,  or another undertaking or, directly or indirectly, holds or controls shares carrying not less than [thirty] per cent. of the voting power in that undertaking [or];

(ii) if the undertakings are under common management or common control or one is the subsidiary of another:

(c) “Authority” means the Monopoly Control Authority constituted under section 8;

(d) “control”, in relation to an undertaking, means the power to exercise a controlling influence over the management or the policies of the undertaking, and, in relation to shares, means the power to exercise a controlling influence over the voting power attached to such shares;

(e) “individual” includes a Hindu undivided family:

(f) “market” in relation to any goods or services, means the geographic region “in “which competition in the production or sale of such goods or the provision of such services takes place;

(g) “Monopoly power” means the ability of one or more sellers in a market to set non-competitive prices or restrict output without losing a substantial share of the market or to exclude others from any part of the market;

(h) “price”, in relation to the sale of any goods or to the provision of any services, includes every valuable consideration, whether direct or indirect which in effect relates to the sale of any goods or the provision of any services;

(i) “Retailer”, in relation to the sale of any goods means a person who sells the goods to any other person otherwise than for re-sale.

(j) “service” means provision of hoard, lodging transport, entertainment or amusement, or of facilities in connection with the supply of electrical or other energy, purveying of news, banking, insurance or investment;

(k) “trade” means any business, industry, profession or occupation relating to the production, supply or distribution of goods or the control of production, supply or distribution of goods, or to the provision or control of any service;

(l) “trade practice” means any, act or practice relating to the carrying on of any trade or business;

(m) “undertaking” means any concern, institution, establishment or enterprise engaged in the production, supply or distribution of goods, or in the provision or control of any service;

(n) “unreasonable restrictive trade practice” means a trade practice which has or may have the effect of unreasonable preventing, restraining or otherwise lessening competition in any manner;

(o) “value of assets”, in relation to an undertaking, means the value of assets of the undertaking at cost less depreciation at the normal rates at which depreciation is calculated for purpose of assessment of income-tax;

(p) “wholesaler”, in relation to the sale of any goods, means a person who purchases goods and sells them to any other person for re-sale; and

(q) “words and expressions” used but not defined in this Ordinance and defined in the Companies Acct, 1913 (VII of 1913), have the meanings respectively assigned to them in that Act.

(2) For the purposes of this Ordinance an individual shall he deemed to own, hold or control a thing if it is owned, held or controlled by the individual or his spouse, or by a brother or sister of the individual or by any of the lineal ascendants or descendants of the individual.

 

CHAPTER II
UNDUE CONCENTRATION OF ECONOMIC POWER, ETC. PROHIBITED

Undue concentration of economic power, etc. prohibited.– There shall be no undue concentration of economic power, unreasonable monopoly power or unreasonable restrictive trade practices.

Circumstances constituting undue concentration of economic power. -Under concentration of economic power shall be deemed to have been brought about, maintained or continued if –

(a) there is established, run or continued an undertaking the total value of whose assets is not less than [fifty million] or such other amount as the Authority may by rule prescribe, and which is-

(i) not owned by a public company, or

(ii) is owned by a public company in which any individual holds or controls shares carrying not less than fifty per cent., or such other percentage as the Authority may by rule prescribe, of the voting power in the. undertaking;

(b) there are any dealings between associated undertakings which have or are likely to have the effect of unfairly benefiting the owners or shareholders of one such undertaking to the prejudice of the owners or shareholders of any other of its associated undertakings.

5. Circumstances constituting unreasonable monopoly power.– (1) Unreasonable monopoly power shall be deemed to have been brought about, maintained and continued if-

(a) there has been created or maintained any such 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 in such market;

(b) there has been any acquisition by one person or undertaking of the stock or assets of any other person or undertaking, or any merger of undertakings, where the effect of the acquisition or merger is likely to create monopoly power or to substantially lessen competition in any market, including any acquisition which creates any such relationship as is referred to in clause(a);

(c) any loan is granted by a hank or insurance company to any of the associated undertakings of amounts greater or on terms more favorable than for loans made available to other undertakings in comparable situations, or any loan is granted by a bank or insurance company to a person undertaking not associated with it on the condition or understanding that the borrower or any of its associated undertakings will make any loan to a person or undertaking associated with the lender.

(2) No such relationship, acquisition, merger or loan as is referred to in subsection (1) shall be deemed to have the effect of bringing about, maintaining or continuing unreasonable monopoly lower if it is shown:

(a) that it contributes substantially to the efficiency of the production or distribution of goods or of the provision of services or to the promotion of technical progress or export of goods;

(b) that such efficiency or promotion could mot reasonable have been achieved by means less restrictive of competition; and

(c) that the benefits of such efficiency or promotion clearly outweigh the adverse effect of the absence or lessening of competition.

Unreasonably restrictive trade practices.– (1) Unreasonably restrictive trade practices shall he deemed to have been resorted to or continued if there is any agreement-

(a) between actual or potential competitors for the purpose or having the effect of:

(i) fixing the purchase or selling prices or imposing any other restrictive trading conditions with regard to the sale or distribution of any goods or the provision of any services;

(ii) dividing or sharing of markets for any goods or services;

(iii) limiting the quantity or the means of production, distribution or sale with regard to any goods or the manner or means of providing any services;

(iv) limiting technical development or investment with regard to the production, distribution or sale of any goods or the provision of services;

(v) excluding by means of boycott any other person or undertaking from the production, distribution or sale of any goods or the provision of any services;

(b) between a supplier and a dealer of goods fixing minimum resale prices, including:

(i) an agreement with a condition for the sale of goods by a supplier to a dealer which purports to establish or provide for the minimum prices to he charged on the resale of the goods in Pakistan; or

(ii) an agreement which requires as a condition of supplying goods to a dealer to the making of any such agreement;

(c) which subjects the making of any agreement to the acceptance by suppliers or buyers of additional goods or services which are not by their nature or by the custom of the trade, related to the subject-matter of such agreement.

(2) No such agreement as is referred to in sub-section (1) shall he deemed to constitute an unreasonably restrictive trade practice if it is shown-

(a) that it contributes; substantially to the efficiency of the production or distribution of goods or of the provision of services or to the promotion of technical progress or export of goods;

(b) that .such efficiency or promotion could not reasonably have been achieved by means less restrictive of competition; and

(c) that the benefits from such efficiency or promotion clearly outweigh the adverse effect of the absence or lessening of competition.

Other circumstance constituting concentration of economic power, etc.– (1) Without prejudice to the provisions of sections 4, 5 and 6, the Authority may by General Order prescribed the circumstances in which and the condition under which undue concentration of economic power or unreasonable monopoly power shall be deemed to exist and the practice which shall he deemed to he unreasonably restrictive trade practice.

(2) Where the Authority is of opinion that. the making of a General Order under subsection (1) may he in the public interest, it shall conduct an inquiry affording the persons or undertakings likely to be affected by such order such opportunity of being heard and of placing before it relevant facts and material as it may deem fit.

(3) Before making any Genera) Order under subsection (1), the Authority shall—

(a) publish in the official Gazette and in such other manner as in its opinion will bring it to the notice of all persons and undertakings likely to he affected thereby a draft of the proposed General Order together with a notice inviting suggestions or objections to he submitted before a date specified therein;

(b) consider any objection or suggestion which may he received by it from any person or undertaking with respect to the draft; and

(c) where it deems appropriate, afford an opportunity to any such person or undertaking of being heard and of placing before it facts and material in support of the objection or suggestion.

 

CHAPTER III
MONOPOLY CONTROL AUTHORITY

Constitution of Authority.– (a) For the purpose of this Ordinance the [Federal Government] shall by notification in the official Gazette, constitute a monopoly Control Authority consisting of not less than three members appointed by it one of whom shall be appointed to be the Chairman.

(2) No person shall be appointed as, or continue to be, a member of the Authority if he has or acq