ISLAMABAD: The Competition Commission of Pakistan (CCP) has imposed a penalty of Rs5 million on Reliance Paints Pakistan for fixing a minimum resale price of its products and making its dealers adhere to a price fixing agreement that is a violation of Section 4 of the Competition Act, 2010.

The complaint was lodged by Akzo Nobel Pakistan Ltd to CCP alleging that Reliance Paint was fixing the minimumresale price for its products and also monitoring and penalising the dealers/distributors/retailers for non-compliance with its price directives.

The CCP`s inquiry found that Reliance Paints was in an agreement with its dealers to maintain the resale price through a price control list.

The company would cancel the supply of its products and even fine the dealers if they did not sell products at prescribed prices.

A circular sent by Reliance Paints to its dealers, retailers,and distributors stated that those who would sell the products at prices fixed by the company would get 8 per cent monthly discount on the total quantity purchased from Reliance Paints.

However, the company would stop the 8pc monthly discount on the first complaint against a dealer for any variation with the prescribed price.

The second complaint would result in an annual discount of 5pc only the third complaint would result in the termination of the dealership agreement.

The circular also told dealersnot to sell its products to other dealers except to those authorised by Reliance Paints.

The enquiry report concluded that these practices were restricting competition not only between the dealers and retailers but also between Reliance and its competitors as the retail price became inflexible and no discounts could be offered by dealers to consumers for Reliance`s products.

Apart from the penalty the company was directed to immediately stop the practice of price fixing.