PFMA fined Rs75m for fixing flour prices
The Competition Commission of Pakistan (CCP) has imposed a fine of Rs75 million on Pakistan Flour Mills Association (PFMA) for fixing the price of wheat flour, fixing the quantities of production of wheat flour among its members and providing a platform to share commercially sensitive information.
The commission took notice of various news items suggesting an unusual price hike in the prices of wheat flour (atta) across the country and carried out a raid at PFMA premises.
As the initial inquiry concluded that PFMA was providing a platform to its members for settling of prices of wheat flour to avoid any form of competition, and it was ruled that such an act was violation of Section 4 of the Competition Act.
The CCP bench comprising of chairperson Vadiyya Khalil and members Dr Muhammad Saleem, Dr Shahzad Ansar passed the order after hearing the parties.
In its order, the CCP bench observed that under Article 38 of the Constitution - the State is responsible to ensure the provisions of food and basic necessities at fair prices along with other social and economic benefits to its citizens.
The Provincial Food Departments set a maximum cap of the wheat flour price under the Foodstuffs (Control) Act 1958 as wheat is Pakistan's dietary staple and used by consumers belonging to all socioeconomic groups, it contributes to around 72 per cent of the country's daily caloric intake with per capita consumption of around 124 kg per year, one of the highest in the world.
The CCP order noted that PFMA deliberately fixed the rates of wheat flour by conducting meetings and discussing the prices as well as the quantities to be produced and supplied by flour mills.
It further observed that fixing of prices by competitors; is one of the most egregious and serious violations of Competition Law; in fact it disturbs the central nervous system of the economy, hence cannot be tolerated at all. However, the CCP noted that it is not the role of association to ensure that each and every member of the association, who should be competitors, has a profitable business.
The CCP also observed that discussion, deliberation and decisions regarding purely business concerns like current and future pricing, production and marketing are anti-competitive and should be avoided at all costs by the associations.
"Associations have a responsibility to ensure that their forum is not used as a platform for collusive activities," it concluded.