Chapter 18: Competition Act & Arbitration Act-Theory

Question 1

What is objective of Competition Act?

Answer 1

Objective of Competition Act, 2010 is “to ensure free competition in commercial activities” regulated by Competition Commission of Pakistan (CCP).

Question 2

Define Goods.(Competition Act)

Answer 2

Goods include any raw material, product or by-product which is sold for consideration.

Question 3

Define Wholesaler. (Competition Act)

Answer 3

A person who purchases goods and sells them to other persons (i.e. retailers) for resale.

Question 4

Define Retailers. (Competition Act)

Answer 4

A person who purchases goods and sells them to other persons (i.e. consumers) for consumption i.e. not for resale.

Question 5

Define Relevant Market. (Competition Act)

Answer 5

Relevant market includes:
- Geographic Market: Area in which undertakings are involved in supply of goods or services and in which conditions of competition are similar.
- Product Market: It means all those products and/or services which are regarded as interchangeable or substitutable by the consumer.

Question 6

Define “Abuse of dominant position”.(Competition Act)

Answer 6

An undertaking shall not abuse his dominant position in market i.e. he shall not engage in practices which prevent or restrict competition in the market.

Question 7

Undertaking shall not engage in practices which restrict competition in market. Which activities are included in term “practices”? (Competition Act)

Answer 7

Expression “Practices” includes following activities:
- Limiting production, sales and unreasonable increase in price.
- Price discrimination (i.e. charging different prices to different consumers for same product/service) without justification.
- Predatory pricing to drive competitor out of market to monopolize the market.
- Boycotting or excluding any other undertaking from production or sale of goods/services.
- Refusing to deal.
- Tie-ins i.e. sale of goods/service is made conditional on purchase of other goods/services.
- Applying dissimilar conditions to equivalent transactions with other trading parties.
- Making contract dependent on acceptance of supplementary unrelated obligations by other
parties.

Question 8

List down all Prohibited agreements mentioned in Competition Act.

Answer 8

No undertaking shall make any agreement with other undertakings to make decisions regarding
production, supply, sale of goods/services which shall prevent, or reduce competition in market (unless exempted by law). Any such agreement will be void e.g.
1. Dividing or sharing markets for the goods or services (e.g. by territories, by volume of sales,
by type of goods).
2. Fixing the quantity of production, distribution or sale.
3. Collusive tendering or bidding for sales or purchase.
4. Fixing the purchase or sale price or imposing other restrictive trading conditions.
5. Limiting technical development or investment with regard to production, distribution or sale of goods/services.
6. Applying dissimilar conditions to equivalent transactions with other trading parties.
7. Making contract dependent on acceptance of supplementary unrelated obligations by other parties.

Question 9

List down all Deceptive Marketing Practices mentioned in Competition Act.

Answer 9

An undertaking shall not engage in deceptive marketing practices.
Deceptive marketing practices include:
1. Distribution of false or misleading information that may harm the business interest of other undertakings.
2. Distribution of false or misleading information relating to different features of own good/service (e.g. price, quality, suitability).
3. False or misleading comparison of goods in advertisement.
4. Fraudulent use of another’s trademark, firm name, labelling or packaging.

Question 10

What is Arbitration Act?

Answer 10

Arbitration (a mode of Alternate Dispute Resolution) is a method by which parties resolve their disputes outside the court of law.
Arbitration is used particularly in trade and commercial matters.

Question 11

Define Arbitration Agreement.

Answer 11

It means a written agreement to refer present or future disputes to Arbitration.
Arbitrator may or may not be named in the agreement.

Question 12

Define Umpire.

Answer 12

Umpire means a third party appointed by arbitrator to settle difference between arbitrators.

Question 13

Define Legal Representative (Under arbitration act)

Answer 13

It means a person who represents the estate of a deceased person,
and includes the person to whom the estate devolves on the death of party.

Question 14

Define Reference (Under arbitration act)

Answer 14

Reference means act of submitting a case to authority under arbitration (i.e. Arbitrators or Umpire or Court).

Question 15

List down all Provisions applied in Arbitration Agreement.

Answer 15

An Arbitration Agreement is deemed to include following provisions (unless agreed otherwise):
1. There will be sole-arbitrator.
2. If there are even number of arbitrators, arbitrators shall appoint an umpire within 1 month of their appointment.
3. Authority of arbitrator/umpire shall be irrevocable, except with permission of Court.
4. Arbitrators shall make award (i.e. decision) within 4 months after they are referred case in writing by any party. Such period may be extended by Court.
5. If time is expired without making a decision or arbitrators have expressed in writing their inability to reach a decision to parties or umpire, Umpire shall enter on the reference (i.e.
case) in place of arbitrators.
6. Umpire shall make award (i.e. decision) within 2 months after entering. Such period may be extended by Court.
7. Parties to the case and other persons:
a. shall produce before the arbitrators or umpire all books, accounts and documents in their possession which may be required, and
b. shall do all other things which arbitrators or umpire may require.
8. Award shall be final and binding on parties.
9. Arbitrators or Umpire may direct about cost of the case i.e. by whom and to whom such cost
shall be paid.

Question 16

List down Powers of Arbitrator/Umpire.

Answer 16

Arbitrator has powers to:
1. Take oath from parties and witnesses.
2. Make interrogation of parties, as may be necessary.
3. make award conditional, or in alternative.
4. State a special case (or award) for the opinion of the Court.
5. Correct clerical mistakes in the award (due to accidental error or omission).

Question 17

According to Arbitration Act, Can parties appoint third party as arbitrator?

Answer 17

Appointment of Arbitrator by a third party:
Parties may agree that arbitrator shall be appointed by a third party who is mentioned in the agreement by Name or as Holder of an Office e.g. Chairman of Chamber of Commerce of Lahore.

Question 18

Can parties apply for arbitration during a suit

Answer 18

If parties to a suit agree to settle the matter through arbitration, they may apply to Court in writing for such order, anytime before judgment is pronounced.