The Competition Commission of Pakistan (CCP) will give presentation to the Economic Coordination Committee (ECC) of the Cabinet on Tuesday (today) in the wake of reported cartelisation by sugar, cars, cement and milk industries. Sources told Business Recorder on Monday that the CCP presentation was deferred in the last few meetings of the ECC, but now, the commission has finally been given a chance for detailed presentation on the alleged cartelisation by these sectors.
The ECC of the Cabinet had requested the CCP to examine the extent of cartelisation by cement, sugar, milk and cars producers. This presentation sets out CCP tentative views on the existing situation of these sectors from a competition perspective and recommends further necessary action in each case.
Recently, the CCP had imposed huge fine on the cement manufacturers. As per CCP, the circumstances clearly call for no leniency and imposition of the highest penalty, the commission also feels that the necessary deterrence effect would be achieved and the interest of justice served even if a somewhat lesser penalty is imposed.
Therefore, instead of 15 percent of the turnover (the highest level) we are imposing a penalty of 7.5 percent of the turnover in the case of each member's undertaking based on last annual accounting statements. In case of sugar, the CCP had conducted raids at the Pakistan Sugar Mills Association (PSMA) offices at Islamabad and Lahore and recovered valuable information including files, minutes of meetings and computerised data of sugar industry. The CCP would analyse the sugar data to check collusive behaviour in sugar sector.
The CCP feels that the sugar mills represent a powerful political lobby in the country and proceedings against any alleged wrongdoing would require full support of the government. How competition and competition policy will impact this sector significantly depend on how the government policy shapes up in future, especially with regard to the procurement price of sugarcane. The CCP recommendation is that the government should support and assist the CCP in carrying out a detailed competition assessment of the sugar sector so that abuses, if any, can be identified and addressed.