CCP to probe carmaker's 'monopolistic practices'

The Competition Commission of Pakistan (CCP) is set to resume an inquiry into alleged monopolistic practices of Honda Atlas Cars after the Lahore High Court (LHC) dismissed a petition filed by the auto company against the anti-competition watchdog.

Honda Atlas had submitted the petition for halting the CCP inquiry. However, the LHC dismissed the plea and ruled that the CCP should make best endeavours to conclude the probe, preferably within six months.

Justice Raheel Kamran, in a detailed judgement, said that the CCP has clear powers under Sections 36 and 37 of the Competition Act, 2010 to collect data, examine market conduct and investigate anti-competitive behaviour.

The court observed that Honda Atlas had initially participated in the proceedings before challenging the CCP jurisdiction — a move the court said was intended to stall the inquiry. The CCP inquiry, initiated in November 2018, focused on allegations of "own-money" payments, delayed deliveries and price hikes after booking.

Between 2018 and 2022, the commission issued at least five notices, seeking details of production, pricing, localisation ratios and dealer arrangements. Honda repeatedly sought extensions but failed to fully comply.

The company raised technical objections, questioning the legality of the inquiry and the commission's quorum. In June 2023, it approached the LHC and obtained a stay order that effectively froze the investigation for nearly three years.

Justice Kamran rejected Honda's claim that the CCP lacked jurisdiction after the 18th Constitutional Amendment, saying that the Competition Act is a federal law applicable throughout Pakistan.

Referring to the Supreme Court's Dalda Foods case, the judge emphasised that providing information to the CCP is not an adverse action but a legal duty necessary to ensure fair competition.

"The petitioner's claim of being unaware of the reasons for the inquiry is, therefore, entirely misplaced. The summary of reasons or justification that the petitioner demands was, in fact, communicated to it at the very inception of the inquiry. The petitioner's persistence on this ground is thus untenable," the court observed.

The challenge to the impugned notices of 2022, on the basis that they have no nexus with the subject matter, is equally without merit, the court noted, adding that the notices are merely in continuation of the pending inquiry initiated by the CCP.

Additionally, the impugned notices are not a final order. They do not determine any of the petitioner's rights, nor do they impose any penalty. The court noted that they are simply notices for information.

In essence, the inquiry conducted under Section 37 is at a preliminary stage aimed at collecting information and evidence. If this process indicates a possible breach of Chapter II of the 2010 Act, the CCP may then take further action.

However, conducting such an inquiry is not a mandatory prerequisite for proceedings against an undertaking. If the CCP is satisfied, based on the information already available, that a contravention of Chapter II has occurred, it may proceed directly without conducting an inquiry, the court noted.

For the foregoing reasons, this petition is found to be devoid of any merit and is accordingly dismissed, it ruled.

Honda did not reply to a request for comment.