CCP fines dairy associations for collusive practices

KARACHI: The Competition Commission of Pakistan (CCP) has penalised three dairy associations in Karachi for engaging in collusive practices that manipulated fresh milk prices, violating Section 4(1) and 4(2)(a) of the Competition Act, 2010.

The investigation was launched after media reports highlighted a steep surge in milk prices in Karachi. The enquiry revealed that the three associations, operating at different stages of the fresh milk supply chain, played a direct role in the price hike across Karachi and its adjoining areas.

The CCP’s findings revealed that these associations influenced key pricing mechanisms, including ‘bandhi’ rates’, ‘mandi’ rates, wholesale prices, and retail rates. The associations used coercive tactics, such as threatening milk supply suspensions, to enforce compliance with their pricing directives among wholesalers and retailers.

The evidence, including video recordings, demonstrated that price increases announced by the associations were effectively implemented across the supply chain. The order highlighted that the groups created artificial milk shortages by hoarding supplies in ice factories and later selling them at inflated rates in Sindh’s rural parts. These practices not only disrupted the supply chain but also imposed a significant financial burden on consumers.

The commission has imposed a Rs1 million fine on the Dairy and Cattle Farmers Association (DCFA) and Rs500,000 each on Dairy Farmer Association Karachi (DFAK) and Karachi Dairy Farmers Association (KDFA).

During the proceedings, the associations argued that the price caps set by the commissioner of Karachi under the Sindh Essential Commodities Price Control and Prevention of Profiteering and Hoarding Act, 2005, had not been revised for three years despite inflationary pressures. However, the CCP concluded that the associations’ practices went beyond addressing economic challenges, amounting instead to anti-competitive behaviour aimed at manipulating the market.