 Dean and Sam Winchester are two free market activists out to make a name

for themselves. They come to find that through fraud, Crowley, a sole
proprietor, has acquired a dominant market share in soles, and intends to abuse
this newly acquired position in the shoe market. Wishing to keep the market
and innocent consumers safe from this dire threat, the Winchesters are out to
stop Crowley. They turn to you, a trusted friend, wondering whether to
approach the CCP, or to take the issue to Court, or both. In detail, set out the
steps and procedure for each option. Finally, with reasoning, what would you
suggest.Furthermore, as Crowley has bought shares in a number of companies,
the Winchesters feel it is likely a good number of these should be shut down.
Is this possible, and if so, how? (30 Marks)

As per section 28 C of the competition act, CCP can conduct inquiries into the affairs of any
undertaking as may be necessary for the purpose of competition act which prohibits abuse
of dominant position. Since Crowley has fraudulently acquired dominant market share in
soles to abuse this position, They should firstly approach Competition Commission of
Pakistan to look into this matter and simultaneously file a petition with Court for dissolving
Crowley i.e a sole proprietorship on the basis of fraudulent activities and intention of abuse
of its position in the market being against public interest at large.

Approaching Competition Commission of Pakistan

Since Crowley has fraudulently acquired share in soles making its position a dominant one in
the relevant market, an appeal should be put forward to the Competition Commission of
Pakistan as it would fall under the merger framework of CCP. Crowley should have sought
approval of CCP prior to acquiring dominant shares in soles.

The Dominant Position in a relevant market would mean that Crowley has the ability to
behave independently of competitors, customers, consumers and suppliers and their share
of the relevant market exceeds forty percent.

Under section 11 of the act, it is imperative that:

No undertaking shall enter into a merger which substantially lessens competition by

creating or strengthening a dominant position in the relevant market.

Äs per the act, “any undertaking that intends to acquire the shares or assets of another
undertaking, or two or more undertakings intend to merge the whole or part of their
businesses, and meet the pre-merger notification thresholds, stipulated in regulations
prescribed by the Commission, such undertaking or undertakings shall apply for clearance
from the Commission of the intended merger”and such application shall be submitted to
the CCP at a stage where the said undertaking agree in principal or sign a non binding
memorandum of understanding to proceed with the intended transaction.
Since Crowley did not seek CCP approval while it was acquiring shares in numerous
companies to achieve a dominant position in the market, such acquisition would make its
dominant market share in Soles in question by CCP which can pass an order exercising its
powers to undo such acquisition. However, CCP before making any such order will give
Crowley a chance to be heard.

The commission would at first determine, if the above acquisition of dominant share in
Soles by Crowley has breached the underlying thresholds as stated below that would have
required CCP approval in that case.

(a) the value of gross assets of the Crowley, excluding value of goodwill, is not less than
three hundred million rupees and/or the combined value of the Crowley and acquired
undertaking, the shares of which have been acquired or merged, is not less than one billion
rupees; or

(b) annual turnover of the Crowley in the preceding year is not less than five hundred
million rupees and/or the combined turnover of the Crowley and acquired/merged
undertaking is not less than one billion rupees; and

(c) The transaction relates to acquisition of shares or assets of the value of one hundred
million rupees or more; or

(d) in case of acquisition of shares, if Crowley has acquired voting shares, which taken
together with voting shares, if any ,held by Crowley shall entitle the Crowley to hold more
than 10% voting shares in the acquired/merged undertaking.

If there has been a breach of any of the above thresholds, CCP would be entitled to pass
order against such acquisition by Crowley. Furthermore, if it is found upon inquiry by CCP,
that no such breach was made and Crowley remained under the radar, hence approval of
Commission was not required for such acquisition, then CCP can still ensure that the abuse
of dominant market position by Crowley cannot be made.

The Dominant Position in a relevant market would mean that Crowley/Soles have the ability
to behave independently of competitors, customers, consumers and suppliers and their
share of the relevant market exceeds forty percent.

The abuse of dominant position intended by Crowley may be practiced through the
following among other things which prevent, restrict, reduce, or distort competition in the
relevant market:

 Limiting production, sales and unreasonable increases in price or other unfair trading
conditions;
 Price discrimination by charging different prices for the same goods or services from
different customers in the absence of objective justifications that may justify
different prices;
  Tie-ins, where the sale of goods or service is made conditional on the purchase of
other goods or services;
 Making conclusion of contracts subject to acceptance by the other parties of
supplementary obligations which by their nature or according to commercial usage,
have no connection with the subject of the contracts;
 Applying dissimilar conditions to equivalent transactions on other parties, placing
them at a competitive disadvantage;
 Predatory pricing driving competitors out of a market, prevent new entry, and
monopolize the market;
 Refusing to deal."

If CCP established that Crowley abuses the dominant position in the market, it can pass
order to bring the balance of competition in the market by actions that may deem fit to the
commission.

Taking the issue to the Court:

Dean and Sam should also approach the court and file a petition for dissolution of sole
proprietorship barring Crowley from conducting its business on the basis of creating a
dominant market position in shoe industry fraudulently through acquiring shares in number
of companies with the intention of exploitation of consumers and public at large. Strong
evidence connecting the claim shall be presented before the court with the petition for a
strong case.

Using both the above mentioned options, Crowley would either be dissolved or its dominant
market position would be cut to size by the authorities and if not, it would still remain under
immense scrutiny and monitoring by CCP to ensure it does not abuse its dominant market
position which would eventually serve Dean and Sams purpose.

As for the second part where they believe the companies where Crowley has acquired
shares should be shut down, Dean and Sam may approach the SECP or Registrar of
Companies to file a petition for winding up of these companies through court after
investigating into the affairs of the company which may reveal that it was formed for any
fraudulent or unlawful purpose or that it is carrying on a business not authorised by its
memorandum or that its business is being conducted in a manner oppressive to any of its
management has been guilty of fraud, misfeasance or other misconduct towards the
company or towards any of its members or on the basis of operating against public interest
at large. However, this would be a very weak case at best.