Cement cartels

Not for the first time has the Competition Commission of Pakistan, in an investigation that began in May this year, found major cartelization by cement companies. The companies appear to have colluded in order to raise the prices of cement in the market at a time when logically the price should have fallen, and the benefit of a decrease in government duties passed on to consumers. Instead, the prices of cement were raised by between Rs45 and Rs50 per bag in April this year, despite the fact that this coincided with a global fall in the prices of coal, the item usually used in cement manufacturing units. In addition, the prices continued to be increased as interest rates fell and the price of fuel and transport came down. In some cases, companies increased profits by up to 800 percent, while the largest companies, which were permitted – under the deal reached by the cement cartel – to charge a higher rate for their product benefited in a big way.

This is not the first time that the cement industry has been found guilty of cartelization. There were similar findings in 2012 and incidents after this that showed that the cement manufacturers were engaged in collectively working to raise the prices of cement artificially and thereby rob consumers of billions of rupees that they could hardly afford. The problem was found to be particularly marked in the north of the country, since the Sindh High Court had barred the Competition Commission from utilising data taken from cement companies for any purpose till the end of its ongoing hearing. The Competition Commission also discovered a WhatsApp group bringing together cement companies; the group had been formed in 2018 and was used to discuss issues such as the supply and demand of cement, the setting of prices, the methods which could be used to push up prices etc. The group proved beyond doubt that the cement companies were acting as a cartel with the largest companies perhaps gaining the biggest benefits.

Cement is obviously a vital commodity for consumers, particularly at a time when the government is trying to boost the construction industry and thereby push up the economy by creating employment and encouraging manufacturing. The actions by the cement cartel go against this act and thereby harm the country. There is also evidence with the Competition Commission that even if the price rises by the companies were in some way necessary, they should not have occurred prior to the announcement of the current budget. This did indeed happen. And there is every reason to believe that cement companies are involved in cartelization just like sugar companies and other big manufacturing units.