CCP fines fertiliser sector Rs375m for price-fixing

KARACHI: The Competition Commission of Pakistan (CCP) has imposed fines totalling Rs375 million on six major fertiliser producers and an industry association after finding evidence of collusive pricing that artificially raised urea prices across the country, undermining market competition and harming farmers.

In a ruling announced on Monday, the competition regulator said its investigation concluded that the companies, in coordination with a trade body, engaged in anti-competitive conduct by jointly fixing the retail price of urea. Each firm was fined Rs50 million, while the association was fined Rs75 million.

The case stems from a suo motu inquiry launched by the commission, which found that under the guise of a public awareness campaign, the manufacturers had “effectively fixed the price of urea across the country”. The commission said the move went beyond legal coordination and entered the realm of unlawful collusion in violation of Section 4 of the Competition Act, 2010.

Despite maintaining that they acted independently, the companies were unable to justify their nearly identical pricing structures. The commission’s findings highlighted that such coordinated conduct distorted the market, curtailed consumer choice, and placed undue financial strain on farmers, particularly during key agricultural seasons.

The firms’ defence, that they were acting in line with government instructions, was dismissed by the CCP. The bench held that no formal state directive existed to compel such coordinated pricing. Instead, a government call for greater price transparency was “misused as a platform to align prices in a manner that eroded competitive discipline”.

Of particular concern was the uniformity of pricing -- Rs1,768 per urea bag -- despite marked differences in production costs, energy inputs and market share across the firms. The commission said this could not be attributed to coincidence or healthy competition, but rather to deliberate, concerted action. Previous warnings issued by the CCP in 2010, 2012 and 2014 had failed to change behaviour.

The CCP’s ruling also criticised the role of trade associations in facilitating price coordination, reiterating that such bodies should not serve as forums for sharing sensitive pricing information. It warned other industries against similar practices, noting that collusion undermines consumer welfare and damages the integrity of markets.