Exploring the Distinction between Object and Effect in the Notion of Competition Restriction within the Framework of the Competition Act 2010

Abstract

The Competition Act 2010 addresses the vital concept of “restriction of competition” and its implications for various types of agreements. To comprehend the concept, the Competition Commission of Pakistan, under Section 4 of the Competition Act 2010, distinguishes between “restriction by effect” and “restriction by object” when assessing agreements’ impact on competition. Such a distinction is of utmost significance in competition law enforcement. The analysis of “object-category agreements” is a practical and cost-effective mechanism for enforcing Section 4 of the Competition Act 2010. It allows the Competition Commission of Pakistan to expeditiously identify agreements inherently harmful to competition, reducing the need for in-depth market definition and analysis of market players’ standings. This approach offers legal certainty by classifying certain agreements as anti-competitive by their very nature. In contrast, the “effect-category agreements” require a more comprehensive evaluation. Determining their anti-competitive effects involves assessing factors like market structure and economic context. This procedure entails intricacies and difficulties, necessitating the Competition Commission of Pakistan to evaluate agreements on an individual basis using a rule of reason or quick look approach. The Competition Commission of Pakistan’s attempt to define the “restriction of competition” draws guidance from the European Union competition rules. Both jurisdictions emphasize the importance of distinguishing between agreements that restrict competition by object and those that do so by effect. This adherence to international precedents assist in establishing a uniform and cohesive framework for competition law in Pakistan, providing guidance and legal certainty to all parties engaged in agreements covered by the relevant provisions of the Competition Act 2010.