ISLAMABAD: The Competition Commission of Pakistan (CCP) is likely to conclude the hearing against the Pakistan Sugar Mills Association (PSMA) and its 84 members during the current month, sources said.
Day-to-day hearings on show cause notices (SCN) issued to the PSMA office and its 84 member for alleged prima facie cartelisation started in January 2021.
A full bench of CCP comprising Chairperson Rahat Kaunain Hassan and members Shaista Bano, Bushra Naz Malik, and Mujtaba Lodhi is holding the hearing.
The PSMA and its members are being provided with an opportunity of hearing to plead their cases with reference to the prima facie violations indicated in their respective SCN issued in November 2020.
As per enquiry report of the CCP, the PSMA, and 84 sugar mills were found to be in prima facie violation of the CCP Act, 2010, by controlling domestic stocks/supplies through the determination of export quantities, creating zonal divisions in Punjab to coordinate on sales, stock positions, and production quota to monitor and control quantity to be sold.
The regulator found that the PSMA’s platform in Punjab Zone was used to share sensitive commercial stock information having a direct bearing on current and future prices of white refined sugar.
Certain mills were alleged to have used the PSMA’s platform to take a collective decision to divide among themselves the quantity of sugar to be supplied for two Utility Stores Corporation (USC) tenders.
Another allegation is that 15 mills in the Punjab Zone collectively decided to cease crushing activity from 30th December 2019 to January 11, 2020.
The bench of CCP will pass an order after hearing the respondents’ pleadings in the matter.
An enquiry in the cement sector has also been concluded but show cause notices could not be issued to cement manufacturers due to the stay granted by the Sindh High Court (SHC).
The CCP is also looking at the cooking oil and ghee, and automobile sectors for any anti-competitive activities.
During the last few months, the CCP has raided various companies and associations in the cement, sugar, and poultry sectors, and impounded the proofs of cartelisation.
Enquiry in the poultry sector is going on where the CCP, on 4th February, raided two major poultry feed mills based in Rawalpindi and Lahore to impound the proofs of their suspected involvement in collusive activities and collective fixing of poultry feed rates.
The data gathered from market sources showed that there was indeed a simultaneous increase in price by poultry feed mills and the average quantum of increase in prices also appeared to be similar, which raised suspicion of collusive decision making and a violation of Section 4 of the Competition Act.
It was observed that the prices of chicken farm broiler increased by more than 100 percent (from Rs103/kg to Rs225/kg – according to the Pakistan Bureau of Statistics) during the same period, which can be linked with the increase in prices of broiler feed.
The reason provided by the poultry feed mills that the increase in prices was due to a rise in the cost of production, i.e. input cost, currency devaluation, and general inflation, etc; could not be substantiated.
Information was also received from multiple sources that some of the top poultry feed mills were involved in collectively fixing poultry feed rates through their meetings at various locations.
Through its various enforcement orders, the CCP has warned companies and industry associations against indulging in anti-competitive and collusive activities.
The rule of thumb is that the associations are not allowed to discuss, deliberate, or share sensitive commercial information and take collective business decisions that may allow its members, who are competitors, to co-ordinate business policy or discussion on economic aspects.
Copyright Business Recorder, 2021
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