Competition Commission of Pakistan (CCP) Monday informed Prime Minister Imran Khan that the CCP in December 2019 imposed a maximum penalty of Rs 75 million on Pakistan Flour Mills Association (PFMA) for committing cartelization and violating Section 4 of the Competition Act, 2010 by fixing the price of wheat flour.

It is learnt that the Chairperson CCP shared this action against the flour mills association during a meeting with the PM here on Monday.

According to sources, Chairperson CCP Vadiyya Khalil also briefed the Prime Minister Imran Khan on the situation in wheat sector as well as on the Commission's performance. the CCP has acted under its mandate to punish the wheat flour cartel and directed the Commission to get more active in other sectors as well.

The Chairperson informed PM that CCP took notice of various news items suggesting an unusual price hike in the prices of 'wheat flour' or 'wheat atta' across Pakistan and carried out dawn raid of PFMA premises. The enquiry in the matter concluded that PFMA is providing a platform to its members for settling of prices of wheat flour to avoid any form of competition which is in violation of Section 4 of the Act.

Sources told Business Recorder that the Prime Minister expressed his concern over the non-recovery of CCP penalties and directed the Ministry of Finance to work with the Law Ministry to expedite the vacation of stay orders against the CCP penalties.

Amid the ongoing wheat crisis in the country, the Competition Commission of Pakistan's order in December 2019 holding the Pakistan Flour Mills Association guilty of cartelization, collusion, and price fixing has turned attention towards manipulative practices by the industrial tycoons, causing shortage of commodities and raising of prices of essential food items.

The CCP's December order imposed a penalty of Rs 75 Million (maximum penalty) on PFMA for violating Section 4 of the Competition Act, 2010 by fixing the price of wheat flour, providing a platform to share commercially sensitive information and fixing the quantities of production of wheat flour.

Sources told Business Recorder on Monday that CCP is also keeping a check on the activities of other trade associations, particularly the Pakistan Sugar Mills Association, for any possible collusive practices. The recent hike in sugar prices has raised concerns regarding manipulative market practices by sugar millers, alarming the regulator to keep guard against any possibility of collusion in sugar prices and supply. The CCP's 2009 enquiry has held PSMA guilty of cartelization. Moreover, a CCP's opinion in 2018 called for more competition in the sugar industry, review of the legislative framework, opening up the sector for more competition, and bringing efficiency on part of the millers.

In its Order, CCP observed that under Article 38 of the Constitution the State is responsible to ensure the provisions of food and basic necessities at fair prices along with other social and economic benefits to its citizens. Accordingly, Provincial Food Departments set a maximum cap of the Wheat Flour Price under the Foodstuffs (Control) Act, 1958; as wheat is Pakistan's dietary staple and used by consumers belonging to all socio-economic groups.

Wheat flour currently contributes 72 percent of Pakistan's daily caloric intake with per capita wheat consumption of around 124 kg per year, one of the highest in the world. CCP observed that having a maximum cap in the essential food item benefits the consumer to bargain for a lower price and prevents retailers from overcharging consumers.