PVMA not slick enough for CCP

Just like last Ramazan, the government of Punjab has planned to negotiate with manufacturers of essential food items to keep food prices in check during the month of fasting.
However, this time around prices of edible oil and ghee will likely remain unaddressed through these negotiations, as the Pakistan Vanaspati and Ghee Manufacturers Association (PVMA) has expressed its inability to represent the industry in these talks.
Speaking to BR Research, general secretary PVMA Umer Islam Khan said that "we have been assisting the government to convince manufacturers to lower their margins during the holy month to facilitate the public for many years, but now the same philanthropic practice has landed the association in trouble".
The "trouble" that he speaks of came in the form of a fine of Rs50 million imposed on PVMA by the Competition Commission of Pakistan (CCP). The association has been found guilty of colluding among its members to fix prices; negotiating transport rates on behalf of manufacturers with transporters as well as charging different rates for providing services to members of PVMA and commercial importers of palm oil.
The regulator brushed aside the associations arguments that mainly stated that transport rates were negotiated after the recommendation of, and under the patronage of the previous as well as present government, to ensure smooth supply of edible oil and ghee to consumers.
Similarly meetings between the association and the government to lower prices at various points in time have been held as evidence against the association for colluding to fix prices.
"The regulator realizes that there was pressure on the association from government to enter negotiations with transporters so a relatively lower fine of Rs50 million was imposed on PVMA" a CCP official told BR Research.
But Umer Islam begs to differ. "This amount is more than what the association could make in revenues over five years, we have little choice but to appeal this verdict because even if we sold every last asset of PVMA, we would not have the required amount to pay the fine" he asserted.
He also said that the association had hoped that the CCP would also take notice of "non-competitive practices of the transporters". He contended that "the real cartel is in the transport sector and everyone from the flour mills to the refineries and oil marketing companies are forced to work on their terms".
So what is the rationale behind PVMAs unwillingness to cooperate with the government of Punjab for their Ramazan package? Observers suggest it may be aimed at getting the provincial government to obtain a stay order on the judgment against PVMA.
However CCP officials insist that there are more effective ways to address the issue. "PVMA has the right to appeal for leniency" a CCP official told BR Research.
He also alluded that PVMA may approach the watchdog with evidence against other cartels if it wishes to see action taken against them. However the association appears less impressed with CCPs ability to go after the "big fish".