Healthy competition for cooking oil?

The Competition Commi-ssion of Pakistan (CCP) recently conducted a study on the state of the cooking oil and ghee sector in Pakistan, inviting comments and feedback on their report.
One of the main points highlighted by the CCP was the lack of reflection of international palm oil prices trends in the local cooking oil prices. The CCP pointed out that in 2007-08, international prices of palm oil fell considerably but local prices rose, and in 2008-09, local prices fell when international prices rose.
The commissions concerns are based on the possibility of a lack of competitive environment in the industry since local players were expected to reduce prices in 2007-08 in order to take advantage of the falling international palm oil prices.
Even though imported palm oil is a significant constituent of local edible oil prices, there are other influences on the local price of edible oil as well and pegging it to international prices alone may not be a holistic analogy. In fact, correlation between local cooking oil prices and international palm oil prices since 2006 until March 2010 is close to 63 percent, which is quite weak.
Yet, if local and international prices are to be compared, an indexation of the two since 2006 reveals that even when international prices rose considerably between 2006 and 2008, the relative rate of increase of local prices was much less than that of international prices. Similarly, when the international prices plunged drastically in 2008, local prices fell by a lower percentage.
Such a pricing strategy by local players makes sense when looked at from a business perspective. Because international palm oil prices fluctuate considerably due to a variety of reasons, including speculative actions, the consumers will not be very welcoming of similar fluctuations in local cooking oil prices.
Where it has been remarked in the report that cooking oil advertisements do not focus greatly on price differences, it can be argued that such a strategy may not have been chosen from a marketing standpoint. Price differentiation can be one of the marketing strategies, but there is a possibility that companies employ a more product-based brand positioning.
As far as the case of the closure of a few units due to competitive pressures is concerned, representatives of the Pakistan Vanaspati Manufacturers refute this argument, saying that manufacturing units have closed down in the past.
Underutilisation of capacity has also been noted as posing a possible barrier to entry for new players, but the report itself mentions that a possible reason could be the presence of unregistered players, which meet up a portion of demand. This aspect can be explored more deeply in context of the fluctuations in local demand and capacity utilisation of edible oil companies.
Keeping in mind the above observations, it seems wise of the CCP to be inviting comments before drafting a formal report on the level of competitiveness in the industry. The points mentioned can be explored further to help prepare a more well-rounded analysis of the sector.