The landmark order of huge penalty on cement manufacturers should be a lesson for other cartels and groups involved in collusive behaviour to immediately take benefit of the leniency scheme of the Competition Commission of Pakistan (CCP) to avoid heavy penalties and other punishments, sources said on Tuesday. They told Business Recorder that the penalisation of cement factories owned by influential groups should be a clear message for others to stop such activities.
The higher judicial fora have stared giving judgements in favour of CCP in view of legal position of the law and ample prove of cartelisation in different sectors. It is the right time for cartels to enjoy the leniency provisions of the CCP to avoid heavy penalties. Such cartels can benefit from the provisions of the leniency scheme under the relevant rules and regulations. It is in the interest of the companies and undertaking to avail the leniency scheme.
Under the Competition (Leniency) Regulations, 2007, the CCP may grant an undertaking the benefit of total immunity from financial penalties on fulfilment of certain conditions. Even an undertaking may benefit from a reduction in the financial penalty of up to 100 percent.
Secondly, people should also benefit from the 'Reward Payment to Informants' scheme to avail huge rewards on providing information about cartels. The objective of the scheme of reward payment is uncovering and taking action against cartel activity. The reward shall be paid subject to the condition that the information provided by the informant is accurate, verifiable and useful in the Commission's anti-cartel enforcement work.
Sources said that the CCP is not silent on the issue of sugar, and is carefully watching the activities of this sector. So far, the CCP has no evidence to prove cartelisation against the sugar sector. Any person having inside information about sugar cartelisation can enjoy extraordinary amount of reward on providing evidence of cartelisation. A policy note on sugar has already been sent to the Ministry of Industries. However, they admitted that if there is globally increase in sugar prices, it would also affect the price of the commodity in the local market.
Giving details of the cement cartel, sources said that the government should appreciate CCP's effort for taking action against such a powerful lobby of cement cartel. The government should give political and financial support to the CCP for protection of the consumer rights.
Lahore High Court (LHC) has further allowed the CCP to publish its order imposing heavy penalties on cement cartel in accordance with law. Under the Competition Ordinance, 2007 the law requires posting of its decision/order on website and publication of the orders in the official Gazette. CCP, however, has only been restrained till the next date of hearing from taking any adverse action pursuant to its order against the cement undertakings.
Earlier LHC under its order August 10, 2009 had allowed the Commission to conduct and conclude its proceedings in the matter' but restrained it from passing any adverse order against the petitioners until the next date of hearing. Subsequently, on the next date of hearing, LHC under its order dated 24-08-2009 observed inter alia that "the submissions made by the learned counsel for the commission prima facie show that Parliament has competence to legislate the regulation of commerce and trade. Such regulation should include the matters of fairness of competition and openness of the market in relation to commerce." According1y, the Commission was allowed to issue the final order with the restriction on its publication or issuance to the press, which in terms of the order passed on 31-8-2009 stands removed.
It is interesting to point out that the cement companies had first invoked the jurisdiction of Islamabad High Court which earlier allowed the proceedings initiated by the CCP but restrained it from passing any adverse order. The erstwhile Islamabad High Court after several hearings was pleased to dismiss the writ petitions filed by the cement companies in terms of its order dated July 30. 2009.
Upon passing of the said order the cement companies instead of filing an appeal against the order of the erstwhile Islamabad High Court again filed a writ petition on substantially the same grounds before the LHC. The restrained placed on passing the final order has twice been lifted. The order passed by the High Court has enabled the Commission to dispose of the long pending proceedings initiated vide Show-Cause Notice dated October 28, 2008 and pass the final order. The detailed 75 pages order can be accessed on CCP's website, sources added.
If the cement manufacturers file appeal before the Supreme Court of Pakistan, the CCP would not proceed for recovery of penalty. Otherwise, the CCP is legally empowered to invoke recovery provisions against the cement manufacturers.
Under section 40 of the CCP Ordinance, if the amount is not paid within the prescribed time, the CCP may proceed to recover the said amount from the person or undertaking in default. It includes attachment of immovable or sale of any movable property, including bank account of the person or undertaking; appointment of a receiver for the management of the movable or immovable property of the person or undertaking or recovery of the amount as arrears of land revenue through the District Revenue Officer, etc.
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