ISLAMABAD: The Competition Commission of Pakistan (CCP) is all set to issue show-cause notices to the Pakistan Sugar Mills Association (PSMA) and over 80 sugar mill members over purported cartelization in the sugar industry.

Sources told Business Recorder that after hearing the parties, the CCP will decide the case and pass an appropriate order. The CCP had conducted an enquiry in 2009 and found PSMA ‘guilty’ of cartelization. The Sindh High Court had restrained it from passing its order. In September 2020, the CCP conducted dawn raids on the office of PSMA and the head office of JDW Group, owned by senior PTI leader Jehangir Khan Tareen, on suspicion of one of its senior officials’ involvement in anti-competitive activities. The CCP impounded ‘solid evidence’ that sugar mills are using the PSMA platform to collude and use exports as a means of sustaining or controlling prices.

Based on the ‘evidence’ gathered during the raids, the CCP concluded its enquiry and determined that the hike in sugar price appeared to be the direct result of misreporting in sugar stock positions (of which PSMA was aware that led to a decision to delay sugar imports). The enquiry report observed that the decision not to import in a timely manner caused a rise in sugar price between July to September 2020 by Rs. 11.6 per kg.

The CCP has ‘evidence’ that indicates that in 2019 the domestic price of sugar rose by Rs. 18/kg due to the commodity’s export while the sugar mill owners made an additional gain of Rs 40 billion in addition to Rs 5 billion subsidy they received.

The CCP will also issue show-cause notices to cement sector players. An enquiry was launched in May 2020 to investigate the possible anti-competitive activities by the cement manufacturers, CCP carried out a search and inspection of the All Pakistan Cement Manufacturers Association (APCMA) in Lahore in September 2020.

Two different teams entered and searched the APCMA’s main office and a member of APCMA. The enquiry launch was based on information gathered from various media reports, and concerns and complaints regarding an increase in cement prices, particularly during April 2020. The reports indicated that an increase of Rs45 – Rs55 per cement bag was purportedly decided in a meeting of the cement manufacturers held under the umbrella of APCMA. Some of the media reports also quoted cement dealers as saying that the leading cement companies in the north region had collectively decided to increase the cement prices by Rs. 55 per bag.

The cement sector has a history of collusive activities; it has been penalized up to Rs 6.3 billion on account of involvement in collusive activities.

The CCP is also looking at the wheat sector to find out whether there are any anti-competitive practices in the sector. In August 2020, the CCP held a consultative meeting with key stakeholders to discuss competition distortions and consumer protection issues in the wheat sector of Pakistan.

The purpose of the meeting was to engage stakeholders on the relevant issues and consult with them on the possible policy interventions to address competition distortions and collusive practices in the wheat sector.

The PTI government decided to reform the CCP and had tasked Dr Ishrat Hussain, PM’s Advisor on Institutional Reforms and Austerity, to prepare a report with recommendations to make CCP a vibrant competition agency. Dr Hussain submitted his report to the cabinet with recommendations which are under review.

To “improve” the performance of CCP, the government terminated the contract of the CCP chairperson Ms Vadiyya Khalil in April 2020 and appointed Rahat Kaunain Hassan as new chairperson in July 2020. She already served as chairperson from 2010 to 2013 during the last Pakistan People’s Party government.

No new enquiry has been initiated in the two years of Pakistan Tahreek Insaaf (PTI). Currently, inquiries against sugar, wheat and cement ‘mafias’ are in progress which were also held during the tenures of Pakistan Muslim League (N) and PPP governments. On January 20, 2020, the Prime Minister expressed his outrage at the poor performance of the CCP during the past five years and asked for a detailed report on CCP’s decisions, investigations and their outcomes from the Finance Division while chairing a high-level meeting.

Sources said that the Finance Division has yet to submit a detailed report to Prime Minister’s Secretariat.

Copyright Business Recorder, 2020