Sugar crisis: CCP warns against anti-competitive activities

ISLAMABAD: The Competition Commission of Pakistan (CCP) Tuesday said the ongoing sugar crisis is being monitored and warned policy actions will be taken if any anti-competitive activities are found.

According to a statement issued by the watchdog, CCP has been actively working to curb cartelisation in sugar industry, promoting fair competition and protecting consumers.

In 2020, CCP launched an inquiry into the sector, which revealed sugar mills were prima facie engaged in price-fixing and controlling supply through coordinated actions, facilitated by the Pakistan Sugar Mills Association (PSMA). As part of the investigation, the CCP also conducted raids at the PSMA offices. The CCP reminded, currently, 127 cases related to sugar cartelisation are pending in various courts, including 24 in the Supreme Court, 25 in Lahore High Court, six in Sindh High Court and 72 in Competition Appellate Tribunal (CAT). To expedite resolution of these cases, the government has recently appointed a new chairman and members of CAT. As a result, in August 2021, CCP imposed a record Rs44 billion in penalties on sugar mills and the PSMA — one of the highest fines in its history.

However, the decision was challenged in the courts and stay orders issued by Sindh and Lahore high courts, as well as the Competition Appellate Tribunal (CAT). This has delayed recovery of penalties.

The CCP has consistently intervened to enhance transparency and competitiveness in the sugar sector. Its first inquiry in 2009 found prima facie evidence of PSMA’s involvement in price-fixing and manipulation of production and supply quotas.

Consequently, CCP issued show-cause notices to certain sugar mills and PSMA on July 16, 2010, though these proceedings were subsequently stayed by the Sindh High Court.

Over the years, CCP has issued multiple policy notes (2009, 2012, and 2021), recommending federal and provincial governments to reduce market distortions. Key recommendations included deregulating sugar sector, allowing market forces to determine prices and lifting restrictions on establishment or expansion of sugar mills to encourage competition.

In its latest policy note, CCP advised government to discontinue practice of announcing support prices for sugarcane and instead adopt a market-based pricing mechanism. This shift will ensure fair compensation for farmers, while fostering efficiency and competition within the sector.