The Lahore High Court (LHC) on Wednesday stayed Competition Commission of Pakistan's (CCP) proceedings against LPG Association of Pakistan (LPGAP), and also suspended the operation of CCP's show-cause notice. The next date of hearing has been fixed for June 25, 2009.
CCP had served identical show-cause notices on March 20, 2009, on LPGAP, an informal organisation of all LPG marketing companies licensed by the Oil and Gas Regulatory Authority (Ogra), and Jamshoro Joint Venture Limited (JJVL), Pakistan's largest LPG producer.
The LPGAP had filed a writ petition under Article 199 of the Constitution against the CCP through Aitzaz Ahsan and Shahid Saeed with the Federation of Pakistan, Ogra, CCP and four of its officers, and Progas Pakistan Limited as respondents. In its notices, CCP viewed government-directed, industry-wide efforts to ensure fair pricing as evidence of collusion and as being detrimental to the interests of the consumer.
CCP went public with the show-cause notices prior to either organisation even having received them, thus engaging in a media trial. LPGAP responded by issuing a strongly-worded public notice in April referring to the show-cause notice as "one-sided", as having eroded the CCP's "moral authority", and being "built on falsehoods propagated by malafide sources".
LPGAP had further stated that it would take legal action against "dissembling quarters" attempting to besmirch its reputation. The CCP action was initiated on the basis of a letter dated July 29, 2008, from Progas in which the LPG marketing company alluded to the existence of a certain cartel with undisclosed members. Progas's case for higher prices was dismissed by Sindh High Court on February 15, 2008, and by Ogra on March 7, 2008. Interestingly, in its representations to Ogra, Progas had specifically stated that no cartel existed in the LPG sector.
"After it had failed to obtain any relief from Ogra, Progas manoeuvred proceedings before the CCP by alleging that Ogra and the federal government, too, were part of the conspiracy hatched against it," states the LPGAP writ petition. During the eight months of the inquiry, CCP relied exclusively on information provided by Progas and a purported LPG distributor without involving LPGAP, Ogra, or the Ministry of Petroleum & Natural Resources.
LPGAP has stated in court documents that the inquiry was conducted in a "clandestine" manner with "ulterior motives" and that the CCP "acted virtually exclusively on the dictates of Progas and the information provided by it." LPGAP has also submitted to the court that "bias and malice in this case is also established by the fact that the Commission as deliberately proceeded on the basis of conjectures and incorrect assumptions.
"LPGAP court documents further state: "It is clear, from its failure to follow the dictates of due process that the Commission has a pre-determined and prejudiced mind and, irrespective of the final determination, has decided to persecute JJVL and LPGAP at the behest of Progas".
LPGAP has also argued that the Competition Ordinance, 2007, is ultra vires the Constitution and in any event is no longer in force. It has also argued that jurisdiction in the matter of LPG pricing and competition in the LPG market legally vests in Ogra alone, and that the CCP has no jurisdiction over Ogra or the federal government, especially where they have acted in exercise of their statutory powers.
LPGAP has also stated that the LPG Producer Pricing Policy, 2007, remains in force even today. The CCP has alleged that JJVL and LPGAP, which are independent of each other, have colluded to keep prices low so as to exclude LPG importers. LPG is being imported by a wide range of LPG marketing companies under the existing policy. To date, Pakistan has imported over 30,000 metric tons of LPG--the highest figure yet for the first five months of any calendar year.
"It is thus evident that the LPGAP and others are only being persecuted for supplying the domestic product at a lower price," state court documents submitted by LPGAP. "They should have been given credit for this, as it is eminently in the national and public interest. Instead they are being penalised and prosecuted for a policy in the interest of the Pakistani consumer." LPGAP also submitted that the federal government has been appreciative of efforts to keep LPG prices low and the publication of the prices in newspapers, which is a mandatory requirement.