Fined for 'cartelisation': Sugar sector tops list of penalties imposed by CCP

The Competition Commission of Pakistan (CCP) has imposed a total penalty of Rs68 billion on different sectors in the last 15 years, data shows, with sugar industry being fined the most for alleged cartelisation.

The CCP, a quasi-judicial body, has the role of overseeing different sectors of the economy with an aim to prevent abuse of a dominant position in the market, certain types of anti-competitive agreements, and deceptive market practices. It also reviews mergers of undertakings that could result in a significant lessening of competition.

In its data, which covers the time period between 2007 and April 2022, it was revealed that it fined the sugar sector the most, followed by telecom and cement. The combined fines on all three sectors cover more than 90% of the total penalties imposed during the over 15-year period.

The sugar sector was slapped with Rs43.6 billion in fines, followed by telecom that faced Rs11.57 billion, and cement with Rs6.4 billion.

In a recent visit to the Karachi Chamber of Commerce and Industry (KCCI), CCP chairperson Rahat Kaunain Hassan said that the watchdog may have imposed the penalties, but recovery of the amount remains paltry as most have challenged the orders in higher courts where the due process of judicial review is under way.

The development raises questions on Pakistan's economy that faces inflationary pressures due to several factors, one of which Hassan says is the cartelisation of different industries in the country.

She said that as per the Organisation for Economic Co-operation and Development (OECD), prices can go down 25-30% "if cartels are busted".

She said that the real effectiveness of the CCP’s orders will be felt once the judicial review process is complete, particularly in cases that call for prioritisation for the harm it incurs to the economy.

The chairperson further said that as an institution, the CCP is accountable for its mandate but in pending cases the review process has to take its course.

Hassan said that CCP is not a price regulator but its job is to make sure that markets are functioning in compliance with the competition rules and regulations.

She further said that the CCP is not against businesses; rather the Competition Law is pro-business and pro-growth, however, without strict enforcement of the law, a competition culture cannot prevail.