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November 20, 2020

CCP raids APCMA Karachi offices over cartelisation probe

Top Story

November 20, 2020

ISLAMABAD: The Competition Commission of Pakistan (CCP) on Thursday raided premises of office bearers of All Pakistan Cement Manufacturers Association (APCMA) in Karachi for collecting evidence of alleged cartelisation through price fixing and quota allocations among members of APCMA.

Exercising its powers under Section 34 of the Competition Act 2010, the CCP, as part of an inquiry launched in May 2020 to investigate the possible anti-competitive activities by the cement manufacturers, carried out a search and inspection of the offices of chairman and vice chairman of APCMA located in Karachi on Thursday. Two different teams entered and searched the offices of the chairman and vice chairman and impounded the relevant record. Azam Farooq is the Chairman of APCMA. Syed Noman Hassan, Vice President of APCMA, and both these offices were raided by the CCP teams simultaneously to collect evidence of alleged cartelisation.

According to the CCP announcement, the inquiry in cement sector was started based on the information gathered through various media reports, and concerns and complaints expressed regarding a concurrent increase in cement prices, particularly during the month of April 2020. The reports indicated that an increase ranging between Rs45-Rs55 per cement bag was apparently collectively decided in a meeting of the cement manufacturers held under the umbrella of APCMA.

On September 24, 2020, the CCP conducted search and inspection of the APCMA main office and the office of senior vice chairman of the APCMA executive committee, a senior employee of a major cement company in Lahore.

Moreover, the impounded record, including WhatsApp messages and emails, warranted conducting search and inspection in the south zone as well for obtaining evidence relating to anti-competitive practices. The evidence suggests possibility of a cartel/collusive arrangement between the cement manufacturers.

It is pertinent to mention that various factors among others, lower demand of cement in the first two quarters of 2020, and almost parallel increase in cement prices and data collected from Pakistan Bureau Statistics and the cement companies became the basis of CCP’s enquiry and the earlier search.

Sudden rise in price by the cement manufacturers at a time when there is low demand compared to the installed capacity of the manufactures and considering that input fuel cost (coal and oil), transportation and interest rate have declined raises suspicion of a collective rise in price by cement companies.

Earlier, in 2012, the Commission had initiated inquiry against cement companies. However, the same could not proceed and was concluded due to stay order granted to cement companies by the Lahore High Court (LHC). The current inquiry was initiated in 2020.