Merger

2026 CLD 113 COMPETITION COMMISSION OF PAKISTAN Judicial Precedent

S. 11MergerDominant purchaserEffect

When merging companies have to deal with a dominant purchaser, their own market power may be constrained by that of their customer

Wherever a purchaser who accounts for a significant proportion of a supplier's business can readily switch to another source and can thereby effectively deploy buyer power, the market power created by a merger becomes constrained to some degree

For assessment of parties, the Commission takes into account the size, bargaining strength and strategic significance of merging companies' customers.

2026 CLD 113 COMPETITION COMMISSION OF PAKISTAN Judicial Precedent

Ss. 11, 12 & 13Competition (Merger Control) Regulations, 2016, Regln. 12MergerCommon MarketEntry of new parties

Pakistan Telecommunication Company Limited intended to acquire 100% ownership of Telenor Pakistan (Pvt.) Ltd., Telenor LDI Communications (Pvt.) Ltd. and Orion Towers (Pvt.) Ltd. (Targets)

Validity

Entry of new Mobile Network Operators (MNO) is unlikely due to high capital expenditure, whereas Mobile Virtual Network Operators' (MVNOs) entry was comparatively feasible provided there was an effective regulatory framework

Reduced number of MNOs in post-merger could hinder MVNOs entry and proportionate remedies were required to ensure MVNOs' access to the market on competitive terms

Proposed merger was likely to create a dominant position in Retail Mobile Telecommunication (RMT) market carrying a risk of reducing competition

By consolidating subscriber basis and network resources, the Merged Companies (MergeCo) would hold a substantial market share, altering competitive dynamics and potentially reducing intensity of rivalry among other players

Dominance in itself does not constitute a contravention of Competition Act, 2010, it increases risk of future market abuse and collusion / cooperation in terms of control over pricing or restricted access to infrastructure

Proposed merger might not produce immediate anti-competitive effects

Sustained regulatory oversight of MergeCo and other industry players was essential to safeguarding consumer choice, maintaining competitive pricing and encouraging innovation

In such contest Pakistan Telecommunication Authority (PTA) would play a vital ex-ante role with statutory and regulatory tools to deter monopolistic behavior, particularly by MergeCo and other market leaders

Pakistan Telecommunication Authority under Pakistan Telecommunication Rules, 2000 would designate SMP operators and require such licenses to obtain prior approval of their RIOs

If effective, such process could enhance transparency, non-discriminatory access and fair pricing

Consumer Protection Regulations, 2009 and SIM Card Terms and Conditions approved by PTA could protect consumers against unauthorized use of SIM Cards and also ensure quality use of mobile telecommunication services

In a highly concentrated IP Bandwidth market, regulatory oversight was imperative to prevent anti-competitive practice that could distort market dynamics and restrict consumer choice

Such concerns were amplified in the context of PTCL's proposed acquisition of merging company

Resultant merger of the two companies could substantially strengthen ability of PTCL and incentive to exert control over influence pricing and service access and would confer preferential treatment upon its subsidiary in provision of IP Bandwidth services

Such consolidation could pose a material risk of reducing competition, disadvantaging rival ISPs and telecom operators and narrowing the range of options available to end-users

Proposed transaction and amalgamation could generate significant efficiencies; these were neither assured nor independently verifiable in their current form

In assessing proposed merger, the Competition Commission had applied established principles which required that the claimed efficiencies should be merger-specific, verifiable and demonstrably capable of delivering tangible consumer benefits, including lower prices, improved service quality, expanded coverage and gains from investment, innovation and product differentiation

Although projected efficiencies aligned with global telecommunications trends and had appeared promising, yet the Commission remained vigilant to ensure that such efficiencies were fully realized and passed on to consumers in the form of improved services and competitive pricing

Incremental cost reductions, service enhancements and network improvements, including open and fair access to infrastructures and associated services by applicant company must translate into actual benefits for telecommunication users rather than accruing solely to PTCL and MergeCo

Substantial evidence was required to demonstrate that the claimed efficiencies would be realized, were exclusive to the proposed merger and would be passed on the end user

Competition Commission approved the merger of parties and imposed behavioral conditions that would render PTCL's commitments enforceable and subject to effective monitoring

Competition Commission directed that claimed efficiencies would be subject to a periodic review by an independent third party reviewer, whose appointment and functions were outlined by the Commission separately

Application was allowed accordingly.

2026 CLD 113 COMPETITION COMMISSION OF PAKISTAN Judicial Precedent

Ss. 11, 12 & 13Competition (Merger Control) Regulations, 2016, Regln. 12MergerScopeEntry of new parties

Pakistan Telecommunication Company Limited intended to acquire 100% ownership of Telenor Pakistan (Pvt.) Ltd., Telenor LDI Communications (Pvt.) Ltd. and Orion Towers (Pvt.) Ltd. (Targets)

Validity

Independent auditor to be appointed would be a Chartered Accountant Firm, in category 'A' of the panel of auditors as maintained by State Bank of Pakistan

Audit report by audit firm to Competition Commission for reporting period should include a separate para expressively and exclusively specifying whether they obtained reasonable information to form an opinion that the sperate accounts prepared had reflected true and fair view in due compliance to reporting framework provided by the Commission

Commission directed audit firm to also state in its report that related party transaction by PTCL and MergeCo during reporting period had been at arm's length transactions or not and whether substantial difference, if any, had been observed in such context for the cost of goods and /or services rendered and charged by associated undertakings for those transactions during the reporting period

Commission further directed the parties to ensure that necessary investments were timely made in view of the business plan it had submitted to the Commission so that required capacity was available to enable non-discriminatory and fair access to its infrastructure to ensure compliance with the conditions imposed upon the parties

Merger was allowed, in circumstances.

2026 CLD 113 COMPETITION COMMISSION OF PAKISTAN Judicial Precedent

S. 11MergerNew dominance, absence ofScopeWhen no "new" dominance is created, Competition Commission is not precluded from scrutinizing such merger

Commission can assess a merger which substantially lessens competition by strengthening a dominant position in the relevant market.

2024 CLD 1570 LAHORE-HIGH-COURT-LAHORE Judicial Precedent

MergerConnotation

Merger is analogous and akin to amalgamation and absorption.

2023 PLD 19 PESHAWAR-HIGH-COURT Judicial Precedent

ApplicabilityDoctrine of merger is based on principles of propriety in the hierarchy of justice delivery system

Doctrine of merger does not make a distinction between an order of reversal, modification or an order of confirmation passed by appellate and revisional Courts

Doctrine of merger postulates that there cannot be more than one operative decrees governing the same subject matter at a given point of time.

2010 PTD 2486 INLAND REVENUE APPELLATE TRIBUNAL OF PAKISTAN Judicial Precedent

S. 205Default surchargeMergerDetermination of due date for payment of additional taxPrincipleOrder passed by the Taxation Officer merges into order passed by the Appellate forumDemand crystallized in final order will be considered as demand against the tax payer from the day one

Foundation of the additional tax was the existing demand that too existing at the time when order under S.205 of the Income Tax Ordinance, 2001 was passed

If the assessment order raising some demand had been set aside in appeal either by First Appellate Authority or Appellate Tribunal or other higher forum, the period in which no demand was in existence will be deducted even if stay was granted by Appellate Tribunal or any other forum, that would amount to suspension of demand

Taxpayer could reap the benefit of period of suspension also.

2009 PTD 1609 INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN Judicial Precedent

S.66-APowers of Inspecting Additional Commissioner to revise Deputy Commissioner's orderMergerAmendment of assessment order

Assessee contended that at the time of original assessment specific queries had been raised regarding issue of claim of mark-up through notices which were properly replied and no action was taken but later at belated stage when all the issues had been thrashed out up to the Appellate Tribunal, Inspecting Additional Commissioner had amended the original assessment order

Inspecting Additional Commissioner had not considered that theory of merger will come into play and the original assessment order had already merged in the higher tier order

Where the original order had gone through the test of appeals before the higher forums, the jurisdiction under S.66-A of the Income Tax Ordinance, 1979 was ousted

Department contended that issue of admissibility of financial expenses confronted to assessee had never been adjudicated upon as was evident from the assessment order

No findings whatsoever had been given by the Assessing Officer on the issue of admissibility of financial expenses or otherwise when the loan was not utilized for his own business rather it was advanced to its sister concern

Since the matter under consideration was not adjudicated upon, the question of its decision by the appellate authorities did not arise at all. and theory of merger of original order of Assessing Officer in the subsequent orders of the appellate authorities was not applicable on this specific issue/point

No objection was raised in respect of the facts of the case before the Assessing Officer which shows that financial expenses allowed by the Assessing Officer were in fact not admissible under the law

Loan was not wholly utilized for own business rather it was advanced to its sister concern

Assessee was not entitled to claim the financial expenses to minimize its profit and tax liability thereon

Assessing Officer should have disallowed the financial expenses proportionately as the interest paid in respect of capital borrowed for the purpose of business or profession was allowable deductions or allowance to the' extent of amount of loan utilized by the assessee-company

Validity

Assessee in his returns had declared bank overdrafts and loans, out of which certain amounts had been advanced: to the associated . undertakings by the assessee

Assessee against the bank's profits and loans had paid mark-up but all the mark-up had been charged against income as financial expenses

Since loan was not utilized for the assessee's business and was advanced to sister concern, the mark-up paid on loss was to be disallowed proportionately

However, at the time of assessment, Assessing Officer failed to take the cognizance of this facts and financial expenses were allowed in full instead of disallowing these proportionately as the interests paid in respect of capital borrowed for the purpose of the business or profession was allowable deduction or allowance to the extent of amount of loan

Inspecting Additional Commissioner had rightly cancelled the assessment order being erroneous in so far as prejudicial to the interest of revenue as the interest was wrongly claimed by the assessee-company and was erroneously allowed by the Assessing Officer needless to say that this resulted into loss of revenue

Assessment order had been merged on the point/issue only which was the subject matter of appeal

Since no addition on account of mark-up was made by Assessing Officer, this issue did not merge with the appellate order

No interference was warranted by the Appellate Tribunal in the order of Inspecting Additional Commissioner passed under S.66-A of the Income Tax Ordinance, 1979

However, Assessing Officer in compliance of the order of Inspecting Additional Commissioner had not taken the correct figures of total outstanding, total mark-up due to associated companies, 'average mark-up rate and other figures of amount, the order passed by the Taxation Officer was set aside for de novo consideration with the directions to Assessing Officer to pass afresh order after giving proper opportunity of being heard to assessee

Assessee was directed to place the details which had been furnished before the Bench to submit the same before the Assessing Officer who will pass order in accordance with law after considering these details

Appeals of assessee were dismissed by the Appellate Tribunal.

2005 PTD 678 INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN Judicial Precedent

ConceptThing of lesser importance merges into a thing of a greater importanceOrder of higher authority absorbs or swallows up the order of a subordinate authority

On appeal the original order merges in the appellate order.