JURISDICTION OF THE COMPETITION COMMISSION OVER MERGERS

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LEGAL ANALYSES BY OSMANI LEGAL FIRMS

Case Reference

2026 CLD 113 Before: Dr. Kabir Ahmed Sidhu (Chairman), Salman Amin & Abdul Rashid Sheikh (Members) Forum: Competition Commission of Pakistan Case No.: 1434/Merger-CCP/2024 Date of Decision: 30 September 2025

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Optimized Legal Analysis

1. Jurisdiction of the Competition Commission over Mergers Creating No “New” Dominance

[Section 11, Competition Act, 2010]

The Competition Commission reaffirmed that absence of “new dominance” does not bar merger scrutiny. Even where dominance pre-exists, the Commission retains jurisdiction to assess whether a merger substantially lessens competition by strengthening an already dominant position. This interpretation aligns with international merger control principles and expands the analytical scope of Section 11 beyond mere creation of dominance.

Key Holding:

Strengthening of dominance itself can attract regulatory intervention even without creation of a new dominant entity.

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2. Assessment of Buyer Power and Its Constraining Effect on Market Power

[Section 11 – Dominant Purchaser Doctrine]

The Commission recognized that where merging entities transact with dominant purchasers, their market power may be constrained. Buyer power becomes relevant where customers can credibly switch suppliers and exert bargaining pressure.

Analytical Factors Considered:

• Size and strategic importance of customers
• Ability of customers to switch suppliers
• Countervailing buyer power reducing post-merger market power

This approach mirrors EU and US competition jurisprudence on countervailing buyer power.

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3. Relevant Product Market Definition in Retail Mobile Telecommunications

[Section 11 read with Regulation 12, Merger Control Regulations, 2016]

The Commission rejected artificial segmentation of the Retail Mobile Telecommunication (RMT) market into voice, SMS, or data services. It held that voice and data are part of the same broader retail market, given supply-side substitutability and shared network infrastructure.

Key Findings:

• No distinct demand-side or supply-side substitutability proven
• Network technologies (2G/3G/4G) are not separate markets
• Infrastructure entities like towers are inputs, not standalone product markets

Relevant Market Defined As:

National retail market for mobile telecommunication services in Pakistan.

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4. Entry Barriers and Impact on New Market Participants (MNOs & MVNOs)

[Sections 11–13, Competition Act, 2010]

The Commission found that:

• Entry of new Mobile Network Operators (MNOs) is unlikely due to high capital and spectrum costs.
• Entry of Mobile Virtual Network Operators (MVNOs) is feasible but depends on effective regulatory safeguards.

The post-merger reduction in MNOs could discourage MVNO entry, necessitating behavioral remedies to ensure fair and non-discriminatory access.

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5. Risk of Dominance and Reduction in Competitive Intensity

[Retail Mobile Telecommunication Market]

By consolidating subscribers and infrastructure, the merged entity (MergeCo) would acquire substantial market share, potentially reducing rivalry.

The Commission clarified:

• Dominance per se is not illegal
• However, dominance increases the risk of abuse, coordinated conduct, and infrastructure foreclosure

The merger posed no immediate anti-competitive effect, but required ex-ante regulatory vigilance.

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6. Role of Pakistan Telecommunication Authority (PTA) in Post-Merger Oversight

The Commission emphasized the critical role of Pakistan Telecommunication Authority in regulating post-merger conduct through:

• SMP designation
• Approval of Reference Interconnection Offers (RIOs)
• Enforcement of Consumer Protection Regulations, 2009

Such regulatory tools were deemed essential to prevent monopolistic conduct and ensure service quality.

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7. Vertical Concerns in IP Bandwidth and Infrastructure Markets

Given PTCL’s presence in IP bandwidth, the merger raised vertical foreclosure concerns. The Commission warned that preferential treatment to subsidiaries could:

• Disadvantage rival ISPs
• Distort pricing
• Reduce consumer choice

Hence, continuous monitoring and enforceable commitments were mandated.

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8. Efficiency Claims and Their Legal Threshold

[Merger-Specific, Verifiable & Consumer-Benefiting Test]

The Commission applied established competition law principles requiring that efficiencies must be:

• Merger-specific
• Verifiable
• Capable of being passed on to consumers

While efficiencies aligned with global telecom trends, they were not presumed and required independent verification.

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9. Conditional Approval with Behavioral Remedies

The merger involving Pakistan Telecommunication Company Limited and Telenor Pakistan was approved subject to stringent behavioral conditions, including:

• Independent third-party audits
• Arm’s length verification of related-party transactions
• Periodic efficiency reviews
• Mandatory infrastructure access obligations

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10. Separate Opinion on Audit and Compliance Mechanism

The Commission directed appointment of a Category-A Chartered Accountant firm (SBP panel) to ensure:

• True and fair financial reporting
• Arm’s length related-party transactions
• Compliance with investment commitments

Non-compliance would attract regulatory action.

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Summary of the Judgment

2026 CLD 113 is a landmark merger control decision where the Competition Commission of Pakistan clarified that merger scrutiny is not limited to cases of newly created dominance. The Commission adopted a holistic competition analysis encompassing buyer power, entry barriers, vertical foreclosure risks, and efficiency claims. While approving PTCL’s acquisition of Telenor Pakistan and related entities, the Commission imposed robust behavioral remedies, continuous regulatory oversight, and independent audits to ensure that efficiencies are realized and passed on to consumers. The decision reinforces Pakistan’s convergence with international competition law standards and underscores proactive regulatory intervention in highly concentrated telecom markets.

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