CCP imposes Rs44bn penalty on 55 sugar mills

The Competition Commission of Pakistan (CCP) on Friday imposed the highest-ever penalty of Rs44 billion on the sugar industry for cartelisation, price fixing and market manipulation, and ordered them to stop the violations besides deposit the penalty within 60 days. In a media briefing on Friday, CCP chairman informed of passing an order against Pakistan Sugar Mills Association (PSMA) and 81 member mills on the calculation of turnover for the financial year 2019, with a maximum penalty of Rs300 million having been imposed on the PSMA. A penalty of Rs75m was imposed for each of four violations committed by the association, summing up to Rs300m. The CCP order states that the sugar mills were found to be collectively deciding the quantum of exports, eventually controlling the domestic supply of sugar in the relevant market during the period 2012 to 2020. The commission initiated an inquiry in order to analyse possible anticompetitive activities in the sugar industry. To gather evidence, search and inspections were carried out under Section 34 of the Act at two premises of PSMA and of one of the sugar mills. Documents stated that a full four Member Bench of the Commission was constituted in the instant matter, consisting chairperson Rahat Kaunain Hassan and three members including Shaista Bano, Bushra Naz Malik and Mujtaba Ahmad Lodhi. All four members of the commission are unanimous in their view and have arrived at an unqualified consensus on background facts, formulation of issues, determination of preliminary and technical objections, the determination of the relevant market, and the spillover effect. However, two members, Shaista Bano and Bushra Naz Malik have recorded a different opinion dated August 12, 2021 on other issues, thus, the commission was faced with a deadlock situation. This is also the first time the commission has passed a split decision. Earlier, the CCP had approved a provisional order against the sugar sector in 2010, but the proceedings were stopped as the matter was still lying in the Sindh High Court (SHC).