The two companies have parted company to pursue their own strategies to take advantage of the fast growing Middle East market.
Both firms are affiliated to the WPP network, but while Burson Marsteller is fully owned, as part of WPP's Young & Rubicam Group; Bates PanGulf is part of a joint venture.
Avi Bhojani, group chief executive of Bates PanGulf Group, said his PR business needed 'entrepreneurial independence' from its partner.
Revenues at the PR division grew by 47% in 2005.
"Our stated mission is to build significant competitive advantages for our clients through disruptive and integrated marketing programmes. This necessitates entrepreneurial independence coupled with our ability to choose and pick our partners out of the WPP portfolio that would work best for our clients locally and regionally," he said.
Bill Rylance, president and CEO of Burson Marsteller Asia-Pacific and Middle East, admitted that conflicts of interest were inevitable if the agreement continued.
"We require a flexibility which is not available to us if we remain part of an integrated service group in the Middle East," he said. "We have had a tremendous working relationship with BPG PR - and will continue to service some key clients together - but, unfortunately, conflicts would become increasingly difficult to accommodate within BPG's integrated offering."
Rylance said the decision will not affect clients that are served jointly by Bates PanGulf and Burson Marsteller, who will continue to be served by both agencies.