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September 15, 2020

Anti-competitive practices: CCP raids PSMA offices in Islamabad, Lahore

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September 15, 2020

ISLAMABAD: The Competition Commission of Pakistan (CCP) on Monday raided the offices of Pakistan Sugar Mills Association (PSMA) located at Islamabad and Lahore in order to collect evidence for plunging into anti-competitive practices for fleecing consumers.

According to CCP’s announcement, as part of an ongoing inquiry into the possible anti-competitive activities in the sugar industry, the CCP carried out a search and inspection of the Pakistan Sugar Mills Association (PSMA)’s Lahore and

Islamabad offices. The CCP authorised its officers to ‘enter and search’ the PSMA premises under Section 34 of the Competition Act, 2010 following indications of PSMA’s anti-competitive activities including, but not limited to, the collective stoppage of crushing in season 2019-20, collective rise in prices of sugar, and collective refusal to supply sugar to Utility Store Corporation (USC) as recently reported.

Two different teams, authorised by the Commission, simultaneously carried out the search in PSMA’s Islamabad and Lahore premises and impounded the relevant records. Through its various enforcement orders, the CCP warned industry associations from indulging in activities, which may violate the Competition Act. The rule of thumb is that the associations are not allowed to discuss, deliberate or share sensitive commercial information that may allow its members, who are competitors, to coordinate business policy or discussion on economic aspects.

The CCP, as part of its statutory mandate under the Competition Act, strives to eradicate anti-competitive practices in all sector of economy. The pattern of events, i.e. closure of mills and subsequent re-commencement of crushing operations, indicate the possibility of a collective strategy on part of sugar mills to delay crushing season.

On increase in price of sugar across Pakistan, the PSMA in a statement to the media on 11th July 2020 claimed, “There is not at all sugar crisis in our country. Sugar stocks are available in Pakistan.” It said the millers are unable to sale (sic) sugar at the rate of Rs65. “The total cost on one kg sugar is Rs72. Then how it is possible to sell it at the rate of Rs63.”

The PSMA’s stance has been that the increase in prices was due to rising cost of production however, by PSMA’s own admission purported cost of production is Rs72. In the same statement, the PSMA also claimed that there were enough stocks of sugar in the country.

The retail prices of refined sugar have witnessed an exponential increase especially between July and August 2020 across all cities of Pakistan with the media also reporting that in some cities, such as Peshawar, sugar was selling for as high as Rs110 per kg.

These reports also suggest that this hike was at the sugar millers’ end who had increased the price to wholesalers which was then passed on to consumers.