The Competition Commission of Pakistan (CCP) levied the highest-ever penalty of Rs44 billion on the sugar sector on Friday for cartelization, price-fixing, and market manipulation.
The penalty was imposed on the computation of turnover of 55 sugar mills for the fiscal year 2019, with the Pakistan Sugar Mills Association facing a potential penalty of Rs300 million (PSMA). The association was fined Rs75 million for each of four breaches, totaling Rs300 million.
The CCP has ordered the PSMA and sugar mills to halt the infractions listed in the order and pay the fine within 60 days.
Meanwhile, a PSMA news statement stated that the CCP decision was not final since two members did not agree with the chairwoman and voted in favor of the sugar mills and the PSMA.
“According to the Competition Act, the chairwoman of the CCP does not have the authority to cast a second vote in the proceedings,” the news statement said.
Meanwhile, according to the CCP order, sugar mills were discovered to be collectively choosing the number of exports, finally controlling the domestic supply of sugar in the relevant market from 2012 to 2020.
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Due to capacity restrictions, the CCP claims that the government lacks the ability to cross-check this information.
According to the directive, there was a lack of an impartial, timely, and accurate information-gathering system to offer quantitative assistance in the government’s price controls mechanisms for critical commodities.
“As a result, policymaking is dependent on dubious sources of information,” according to the CCP. “Instead, policy choices that impact the lives of all people are made primarily on the basis of dubious information obtained directly from relevant industry associations or groups of suppliers, wholesalers, or retailers with a vested interest,” the ruling said.
A fixed penalty of Rs50 million has been levied on each of the 22 sugar mills for conspiring to participate in the Utility Stores Corporation (USC) contract in 2010. The divided ruling was issued by the full four-member CCP bench, which included chairwoman Rahat Kaunain Hassan and members Mujtaba Ahmad Lodhi and Mujtaba Ahmad Lodhi, Bushra Naz Malik, and Shaista Bano.
Ms. Bano and Ms. Malik, on the other hand, filed a dissenting note against the ruling, and following a stalemate, Ms. Kaunain opted to approve it. This is also the first time the panel has made a divided judgment.
Previously, the CCP approved a temporary ruling against the sugar industry in 2010, but the proceedings were halted since the case was still pending before the Sindh High Court.