Big flour mills: CCP may scrutinize production costs, profit margins

The Competition Commission of Pakistan (CCP) may scrutinize the production costs, profit margins, and sales records of the country's big flour mills, as part of an extensive investigation in the wheat flour sector, to punish those who abused their dominant position or engaged in collusive practices for making unreasonable profits.

The CCP officers also raided the office of Pakistan Flour Mills Association this week and confiscated its record, to determine the association's role in any possible anti-competitive activities.

Sources informed that the CCP inspection team did not face any resistance during the raid on PFMA and successfully confiscated around 2000 papers and computer data relating to the association's activities.

Sources told Business Recorder that CCP is looking at the wheat sector from different angles and is determined to unearth the culprits. This investigation is different from the one completed in December 2019 that resulted in the imposition of Rs. 75 Million penalty on PFMA for collusive practices.

The CCP Chairperson had informed the federal cabinet last month about the CCP's enforcement work, including some of the ongoing investigations. The Prime Minister who chaired the meeting had directed CCP to play its role effectively so that cartelists cannot hard consumers and the economy.

Chairperson Vadiyya Khalil informed the cabinet that out of total 2399 enforcement actions in 12 years, 1051 were taken during the last five years. This includes 376 exemptions granted, 395 mergers and acquisitions clearances, 223 show cause notices, and 57 orders.

As a result of the CCP's work in enforcement and advocacy, and steps taken towards agency effectiveness, the CCP's was awarded 3-star rating by the Global Competition Review in 2016.

The cabinet was also briefed on the current status of Competition Appellate Tribunal. The Tribunal, constituted under Section 43 of the Competition Act, 2010, consists of a Chairperson, who has been a judge of the Supreme Court or a retired judge of the High Court, and two technical Members. The Chairperson and Members holds office for a period of three years, extendable for another three years term. The federal government appoints the Chairperson and Members.

Appeal against the CCP's orders can be filed with the Tribunal within sixty days of passing of the order. The Tribunal shall decide an appeal against the orders passed by CCP within six months of its presentation to the Tribunal. Appeal against the Tribunal's decision can be filed with the Supreme Court of Pakistan within sixty days of the Tribunal's Order.

The federal government had appointed Justice (Rtd) Miftahuddin on 21 January 2016, Mr. Owais Pirzada, Member Technical on 18 May 2018, and former Justice Fasih-ul-Mulk, Chairperson on 30 May 2018. Justice Miftahuddin's term ended on 21 January 2019, leaving the Tribunal dysfunctional for more than a year now. In the absence of even a one Member, the Tribunal cannot function as it lacks the required quorum. PFMA has appealed against the CCP's order in the Tribunal, but it cannot hear the appeal due to being dysfunctional.

Moreover, currently various appeals against CCP's orders involving over 15 billion rupees penalties imposed on undertakings for violations of the Competition Act are pending with the Tribunal. A timely appointment of Tribunal Members will make it functional and enable it to dispose of the cases without further delay.