|
By Dr Farrukh Saleem
Last year, the Competition Commission of Pakistan (CCP) searched and inspected the head office of the Pakistan Sugar Mills Association (PSMA) located at 24 Mezzanine Floor, Rashid Plaza, Blue Area, Islamabad (PSMA's offices in Lahore and Karachi were also searched). During these searches various documents were impounded. The CCP concluded that the documents "persuasively indicated that the decisions by the PSMA in this regard and the collective/collusive behavioural pattern of the sugar mills may entail violation of provisions of sections 3 and 4 of the Competition Ordinance."
An enquiry report by the CCP, dated October 21, 2009, states: "The perusal of the documents, prima facie, indicated extensive institutionalisation of collusive behaviour in the refined sugar industry. The collusive behaviour appears so extensive that the forum of the collusion i.e., the PSMA can no longer be called just a representative of the sugar mills but it seems to be functioning as a business decision-making body for the latter. The association, by the approval of its member, has, prima facie, exceeded mandate that an association normally enjoys and it has almost morphed into an equivalent of the business 'trusts' of the US back in the 19th century (in the 19th and early 20th centuries these 'trusts' created cartels that fixed prices. President McKinley launched a serious campaign to break these cartels and then President Roosevelt actually based his presidency on busting these cartels)."
The CCP's Enquiry Report further states: "It appears, that sugar mills under the flag of the PSMA are, prima facie, engaged in setting sugarcane price, territorial division for sugarcane procurement, bid rigging in TCP tenders, establishing entry barriers by advocating restrictions on the opening of new mills, setting sugar prices by making estimates and indulging in collective targeted/desired price negotiation."
If the CCP is to be believed, there is "ample documentation that shows the existence of a buyers' cartel" as well (in addition to a sellers' cartel). That amounts to a serious violation of Section 4(1) of the Competition Ordinance.
On April 24, 2008, the CCP searched the office of the All Pakistan Cement Manufactures Association (APCMA) located at House No 27-283-4, FCC, Gulberg IV, Lahore. The CCP found a written so-called 'Marketing Agreement', signed by member-entities of the APCMA. The 'Marketing Agreement' explicitly set production quotas of cement in order to maintain a targeted price level so that member-entities can maximise their profits (or minimise their losses) at the cost of the consumer.
The so-called 'Marketing Agreement', prima facie, constituted a 'prohibited agreement' in terms of Section 4(1) of the Competition Ordinance. The CCP took suo moto action and 21 members of the APCMA were required to show cause in writing by November 13, 2008. Subsequently, the CCP held five hearings. On August 27, 2009, the CCP finally imposed a penalty of Rs6.3 billion, an amount equivalent to 7.5 per cent of the accumulated turnover of member-companies.
On September 4, 2009, CCP Chairman Khalid Mirza was unceremoniously sacked by Prime Minister Gilani (Additional Secretary Planning Javed Akhtar was appointed as the new chairman after being promoted to Grade 22).
Question: what really is Prime Minister Gilani's job? To protect cartels or to protect people who voted for him?
PS. Final revenge of cartels: unless re-promulgated, the Competition Ordinance will lapse on March 27 -- and the Competition Commission will be no more. |