Islamabad, Aug 22: Due to their suspected involvement in Resale Price Maintenance (RPM), GM Cables & Pipes (Pvt) Ltd. and Newage Cables (Pvt) Ltd. have received show cause notices from the Competition Commission of Pakistan (CCP).
Resale price maintenance, or RPM, is a contract between a manufacturer and its distributors that requires the distributors to sell the product at set rates; if the prices are not maintained, the producer has the right to cancel business, according to a statement released by CCP on Thursday. By limiting dealers’ capacity to offer lower pricing, this approach stifles competition and ultimately disadvantages customers.
Suo motu notice of circulars from both corporations prohibiting their dealers in different locations from granting discounts greater than a specific percentage on credit and cash purchases prompted the CCP to launch an investigation. The letter also stated that these circulars forbade dealers from selling below the designated discounts and mandated that they adhere to the specified rate restrictions.
The findings indicated that GM Cables and Newage Cables, both of which operate across the country via a vast dealer network and online platforms, had implemented a strategy for maintaining resale prices through their respective circulars. August 2021 saw the release of a “Notice for Rate Control” by GM Cables and a “Retail Discount Policy” by Newage Cables, both of which imposed stringent pricing guidelines on their dealers. These regulations came with consequences, like as fines and dealership closures for noncompliance, which strengthened the businesses’ hold on market pricing.
The CCP’s investigation further revealed that the wide-ranging effects of this anti-competitive action are due to the fact that cable products are manufactured and distributed across the country, with regional variations in sales volumes. Consequently, the market as a whole is affected by these restrictive policies.
