CAT upholds Rs50m fine on ghee association for price collusion

KARACHI: The Competition Appellate Tribunal has upheld a Rs50 million ($180,000) fine against the Pakistan Vanaspati Manufacturers Association (PVMA) for anti-competitive practices, reinforcing the country’s regulatory stance against collusion and market abuse.

The ruling affirms a 2011 decision by the Competition Commission of Pakistan (CCP), which found PVMA -- representing around 100 edible oil and ghee manufacturers -- guilty of orchestrating coordinated price increases and entering into price-fixing agreements that distorted competition.

According to the CCP, PVMA used its platform to negotiate pricing with government authorities and then advised members to adopt uniform pricing strategies. Though PVMA claimed its guidance was non-binding, the commission determined the directives were enforced in practice, suppressing price competition.

The CCP also established that PVMA engaged in collusive agreements with oil tanker associations and the National Logistics Cell (NLC) to fix transportation rates, limiting fair access for other market players.

In a separate finding, the CCP ruled that PVMA abused its dominant position by charging discriminatory fees for import invoice verification -- Rs4 per metric tonne for its members versus Rs10 for commercial importers. PVMA’s argued that its membership fees and the fact that commercial importers sold to its members justified its actions.

It also claimed it lacked authority to set prices and only acted due to government pressure to stabilise palm oil prices. The tribunal rejected these arguments, stating that such practices lacked “objective justification.” While upholding the penalty, the Tribunal gave PVMA a 15-day deadline to eliminate the discriminatory pricing. Failure to comply would reactivate a daily penalty of Rs1 million initially imposed by the CCP.

The tribunal added that even advisory decisions by industry associations may breach competition law if they result in reduced market competition, setting a broader precedent for regulatory enforcement across Pakistan’s trade associations.