Anticompetitive behaviour: CCP decision neither majority nor unanimous, says PSMA

LAHORE: The Pakistan Sugar Mills Association (PSMA) Friday said the Competition Commission of Pakistan (CCP) decision, announced on Friday, was neither majority nor unanimous on the main allegations of anticompetitive behaviour of sugar mills and the imposition of fines.

The PSMA, in response to the CCP decision, said “two members of the CCP gave findings in favour of the PSMA and its member sugar mills. The decision could not be clearly established against any party. Even on one issue, they stressed that the matter be remanded for further inquiry,” the Association claimed.

Further, the PSMA said, two members of the CCP did not issue any order on imposition of fine on the PSMA, or its member sugar mills.

The decision of the bench, hearing the sugar mills matter, is actually a “tied” or “hung” decision, as two members decided against the PSMA and the sugar mills and other two decided in favour of the sugar mills, the PSMA claimed.

The PSMA said: “In view of the split/hung 2-2 decision, the chairperson of the CCP exercised a casting vote by relying on Section 24 and 28 of the Competition Act (which provides that decisions at a “meeting” of the CPP will be decided by majority of votes of members present in the meeting and that in the event of equality of votes, the CCP chairman may exercise a casting vote).

However, the decision to exercise a casting vote in such manner is legally questionable, unprecedented and unsound as “the provisions of the Act relied upon by the chairperson only relate to decisions taken in ‘meetings’ of the CCP and, in essence, is applicable and intended for administrative matters, taken up in a ‘meeting’ and not to legal proceedings, initiated under Section 30 of the Competition Act.

Secondly, the chairperson does not have a casting vote in relation to proceedings before a ‘bench’ of the CCP, and the provisions relied upon by the chairperson do not cover proceedings before a ‘bench’ of the CPP. Such ‘proceedings’ are clearly not ‘meetings’ of the CPP, added the PSMA.

Thirdly, the Section 24 does not apply to ‘proceedings’, but only to ‘meetings’ of the CCP is also clear from the provisions of that section as it requires a quorum of three members for any ‘meeting’. However, it is a fact that previously (in other matters) ‘proceedings’ of the CCP have been conducted by benches of only two members also. If Section 24 had applied then all proceedings by two-member benches would be illegal.

Fourthly, the provisions of Section 24 have been relied upon in a self-serving manner by the chairperson. It is interesting that the order of the CCP itself states that the chairperson has been ‘guided by the spirit’ of Section 24 - as opposed to its actual text and language – which shows that even the chairperson was uncertain about the availability of a casting vote in relation to ‘proceedings’ before a ‘bench’ but exercised it illegally nevertheless.

An official of the CCP, commenting on the PSMA response, said there was no split on major decision including on imposition of penalty. He said there were some differences on some matters, but overall, no differences on cartelization of the PSMA. A difference of opinion and observation is also witnessed even in Supreme Court benches. So there is no issue with difference of opinion, the official added.

However, according to the dissent notes of the order, the members recommended de novo inquiry (re-inquiry) on the following key factors which were missing grounds in the order. These included, “A detailed analysis of the price discovery mechanism in sugar industry, keeping in view the regulatory framework and cyclic nature of production; Inclusion of the role of market intermediaries and detailed analysis of their possible role in market manipulation through 'Forward contract & satta'; Inclusion of Sindh and KPK mills for investigation into the possibility of existence of collusive behaviour with respect to sharing of sensitive commercial information; The verification/ corroboration of the information and evidence provided in the enquiry report (ER) to confirm its credibility. “With respect to Issues II & III, we set aside the show-cause notice and enquiry report to the extent of these issues.”