CCP clarification

The Competition Commission of Pakistan and Business Recorder enjoy long standing relationship based on a shared agenda of promoting the rule of law in Pakistan. Business Recorder has always been supportive of the Commission's efforts to enforce the competition law in Pakistan.
The editorial team of Business Recorder is also cognisant of this relationship as evident by the level of coverage given to highlight the Commission's work. However, the CCP like to bring to newspaper's notice an article published in the BR Research section of Business Recorder on 15 July 2011 under the headline, "PVMA not slick enough for CC P" about the order passed by the Competition Commission of Pakistan (CCP) against Pakistan Vanaspati Manufacturers Association (PVMA) for fixing the price of ghee and cooking oil. The analysis as to findings of the CCP Bench in the above-mentioned case have been made without giving a cursory reading to the Order and, therefore, create a misconception as to the viewpoint taken by the CCP on the issues addressed in the Order.
We observe that following misstatements have been made by BR Research:
1. Quoting CCP officials without actually taking the official version of CCP;
2. PVMA's philanthropist practice has landed it in trouble in the form of a fine of Rs 50 million;
3. CCP Bench used evidence only against PVMA and not against government for fixing the price;
4. CCP Bench has brushed aside PVMA's arguments that transport rates were fixed under the pressure of government; and;
5. CCP imposed penalty of Rs 50 million for fixing rates of transportation. We would like to put across the real facts which gave rise to violation of provisions of the Competition Act, 2010 and restate/clarify the viewpoint that has been taken by CCP through its order passed against PVMA
1. Quoting CCP Official
CCP offered BR Research team opportunity to seek clarification/verification on the findings given in the Order, however, the analysis was published in haste without taking official version in this respect. We take strong objection that an official statement was made by CCP regarding the Order as has been quoted in this article. Such mis-statements tarnish the image of CCP while creating a contradiction between the principles of law laid down in its order and opinion of its officials.
2. PVMA's role as an association
Article endorsing point of view that PVMA is acting as a philanthropist to assist the government and to convince manufacturers to lower their price in reality negates the front role played by PVMA for price fixing on behalf of its member mills. It has been reiterated by CCP in its number of orders passed by its different benches that it is not the mandate of an association to deliberate on commercial sensitive information and engage into such activities of costing and taking decisions on pricing of commodities manufactured by its members.
What PVMA did was not mere passing on information or request from government to its members to reduce the price of their products, rather PVMA played a significant role in actually fixing the price. It needs to be appreciated that there is a difference between the so-called philanthropic practice to communicate concerns of government on price to its members and deliberately acting to fix the price of ghee and cooking oil manufactured by its members.
CCP Bench while disposing of the issue of price fixing by PVMA analysed the evidence available including minutes of meeting of PVMA, letters and circular issued to its members, which proved beyond any doubt that prices were regularly discussed in the meetings of PVMA. Costing was also prepared by PVMA and then active negotiations were made by PVMA with government to fix the price around its own costing. Once price was fixed, it was communicated to all of its members to follow the decision of PVMA.
3. Evidence used against PVMA only and not against government for fixing the price
We would also like to address this misconception that the evidence in minutes of meeting between PVMA and government to lower the price has been used only against PVMA for colluding to fix price. It would be pertinent to mention here that PVMA did not take the plea of the Stale Action Defence and nothing was brought on record in this regard. The Bench has held that demand on behalf of government for reduction in price, in wake of decline in prices of edible oil used as raw material in manufacturing of ghee/cooking oil was legitimate. The Bench in its order has also emphasised that government did not fix the price rather urged the manufacturers to reduce the prices. In the case where price was suggested by the government, it was based on the costing prepared by PVMA itself. However, the Bench has observed the demand from government was legitimate but the modality ie negotiating, in particular, any price with the association was not as per competitive norms.
4. CCP Bench has brushed aside PVMA's arguments that transport rates were fixed under the pressure of government Then article goes on to mis-state that CCP has brushed aside PVMA's arguments that mainly stated that transport rates were negotiated after the recommendations of, and under the patronage of previous government, to ensure smooth supply of edible oil and ghee to consumers, we have found nothing available on record including the written submissions and the arguments made during the hearing which infers as has been stated in this article.
On the other hand, what PVMA and its legal representative argued was based on extraordinary circumstances which forced PVMA to enter into horizontal mutual agreements with transporters. PVMA argued that it had not choice but to succumb to their demands and become a victim of cartelisation.
5. CCP imposed penalty of PKR 50 million for fixing rates of transportation We would also like to clarify here that fine of PKE 50 million was imposed on PVMA for fixing the price of ghee and cooking oil and not for fixing the rate of transportation. In respect of fixing the rate of transportation the Bench held that "no determination with respect to this issue can be made unless all parties concerned are probed on this account. Subject to such enquiry, if any adverse finding is given in terms of, prima facie, violation under the Act, the Commission may then proceed in accordance with law against parties concerned."-PR