559 major cases of CCP pending in courts: Stay orders may be driving up prices of commodities?

ISLAMABAD: There are 559 major cases of the Competition Commission of Pakistan (CCP) pending in various courts, raising concerns that the stay orders may inadvertently be driving up prices of essential commodities.

Sources told Business Recorder that the vested interests are exploiting the court process in cases of economic importance, resulting in a huge pendency of 559 cases of the CCP in different courts.

About the actions of the SIFC on commodity prices, they said that the Special Investment Facilitation Council (SIFC) has taken decisive actions to clamp down on speculative forex trading and combat the smuggling of petroleum products and sugar have yielded positive outcomes. These actions have effectively driven down commodity prices and led to the appreciation of the Pakistani Rupee.

Fighting cartelism: CCP brings enforcement, policy actions under focus

Under the Constitution, the Competition Commission of Pakistan (CCP) has the mandate of curbing cartels and mafias. CCP has taken decisive actions in sectors such as sugar, wheat, cement, poultry, automobile, cooking oil and ghee, agriculture, oil and gas, ports and shipping, power, insurance, steel, and aviation.

The CCP actions and penalties do not result in immediate drop in prices in various sectors of high public importance. It’s because the parties obtain the stay orders in cartel cases for a long period of time.

They said that the delays in making decision in cartel cases indicate that matters of economic importance are not high on Court’s Agenda. It ultimately resulted in high prices of essential commodities.

Data revealed that the CCP has imposed Rs6.3 billion in the cement sector, over Rs11 billion in telecom sector, over Rs1 billion in electronic goods sector, Rs140 million in automobile sector, Rs300 million in insurance sector, Rs75 million to flour mills associations, and Rs44 billion in the sugar sector. Total penalties imposed by CCP amount to approximately Rs68 billion.

Presently, there is a total of 559 cases pending in various courts. Among these, 170 cases are pending in the Supreme Court, where the constitutionality of the Competition Act, 2010 has been challenged. Additionally, 210 cases await resolution in the Competition Appellate Tribunal, which is dysfunctional due to lack of appointment of Chairman Appellate Tribunal.

As per sources, the lack of appointment of Chairman Competition Appellate Tribunal has also resulted in CCP being bombarded with writ petitions in High Courts. Government needs to appoint Chairman Competition Appellate Tribunal as a matter or priority so that these cartel cases can be urgently decided.

The stay or restraining orders against CCP for a long period are also directly connected with higher prices. The vested interest abuses the court process at the expense of the public at large.

For instance, in the sugar sector, CCP initiated an investigation in 2020 and discovered that members of the Pakistan Sugar Mills Association (PSMA) collectively took commercially sensitive decisions. Such decisions included reducing domestic sugar stocks, which led to the increase or stabilization of desired sugar price levels. In its 2021 Order, CCP imposed a penalty of Rs44 billion on PSMA and its members. Presently, this case remains pending in the Supreme Court, the High Courts of Lahore and Sindh, and the Competition Appellate Tribunal.

Moreover, in 2019, CCP found the Pakistan Flour Mills Association (PFMA) of violating the law and imposed a fine of Rs75 million. PFMA had been found guilty of fixing wheat flour prices, facilitating the exchange of commercially sensitive information, and manipulating the quantities of wheat flour production. The case is pending in the Competition Appellate Tribunal.

In 2022, CCP imposed a fine of Rs1.1 billion on two home appliances firms for engaging in Resale Price Maintenance (RPM) agreements with their dealers. Through these arrangements, they restricted their dealers from offering discounts to consumers. The case is currently pending in the Competition Appellate Tribunal.

Similarly, in 2015, CCP imposed a fine of Rs140 million on the Pakistan Automobile Manufacturers Authorised Dealers Association (PAMADA). This penalty was levied after CCP discovered that the association had been overcharging consumers by artificially fixing prices for their products and services. The case is pending in the Lahore High Court.

In 2013, CCP successfully dismantled a cartel that had been manipulating the prices of incoming international calls. In its ruling, CCP nullified the International Clearing House (ICH) Agreement among 14 LDI (long distance and international) operators. Subsequently, CCP imposed substantial penalties, such as 7.5% of the annual turnover on each LDI, Rs8.30 billion on PTCL, Rs534 million on Worldcall, and Rs189 million on Telecard. The case is pending in both the Competition Appellate Tribunal and Sindh High Court.

Whilst these cases are pending in the Court for decision, the vested interest and dominant players are unchecked in their conduct in the markets. The current inflation is partly attributed to collusion and cartel functions in key areas of the economy, they added.

Copyright Business Recorder, 2023