ISLAMABAD: The anti-trust watchdog, the Competition Commission of Pakistan (CCP) on Monday raided the Islamabad and Lahore office of Pakistan Sugar Mills Association (PSMA) and impounded their record for any possible proof of cartelisation in the sugar industry.
The CCP has initiated inquiry into the possible anti-competitive activities in the sugar industry, while the raid was conducted to gather the proofs of price fixing, cartelisation and other suspected anti-competitive activities by PSMA.
The inquiry team of the CCP is already engaged in the inquiry of sugar mills and now the team would analyze the recovered record and submit its final inquiry report to the Commission for further necessary action.
Sources told Business Recorder that the CCP's ongoing inquiry suspect that the pattern of events, i.e. closure of mills and subsequent re-commencement of crushing operations, indicate the possibility of a collective strategy on part of sugar mills to delay crushing season. Moreover, the CCP is also closely looking at the possibility of PSMA's involvement in raising the sugar prices in the country through collusive arrangements.
The data from Pakistan Bureau of Statistics shows that between July and August 2020 prices of sugar increased by Rs.11 per kg and the overall average increase in price of sugar between January to August 2020, across various cities, is 26 percent.
As per the documents being analysed by the CCP, PSMA's stance has been that the increase in prices was due to rising cost of production however, by PSMA's own admission purported cost of production is Rs 72. In the same statement PSMA also claimed that there were enough stocks of sugar in the country.
The documents revealed that the retail prices of refined sugar have witnessed an exponential increase especially between July and August 2020 across all cities of Pakistan with the media also reporting that in some cities, such as Peshawar, sugar was selling for as high as Rs 110 per kg. These reports also suggested that this hike was at the sugar millers' end who had increased the price to wholesalers which was then passed on to consumers.
In a press release issued on Monday, the CCP said: "As part of an ongoing inquiry into the possible anti-competitive activities in the sugar industry, the Competition Commission of Pakistan (CCP) carried out a search and inspection of the Pakistan Sugar Mills Association (PSMA)'s Lahore and Islamabad offices today."
The CCP authorized its officers to the "Enter and Search" PSMA premises under Section 34 of the Competition Act, 2010 following indications of PSMA's anti-competitive activities including, but not limited to, the collective stoppage of crushing in season 2019-20, collective rise in prices of sugar, and collective refusal to supply sugar to Utility Store Corporation (USC) as recently reported. Two different teams, authorized by the Commission, simultaneously carried out the search in PSMA's Islamabad and Lahore premises and impounded the relevant record.
Through its various enforcement orders, the CCP warned industry associations from indulging in activities, which may violate the Competition Act.
Copyright Business Recorder, 2020
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