First-ever cartel case: SC allows PPA’s appeal, reduces penalty to Rs25m

ISLAMABAD: While deciding the first-ever cartel case, the Supreme Court of Pakistan has decided the civil appeal filed on behalf of Pakistan Poultry Association (PPA) against the judgement of the Competition Appellate Tribunal that upheld the Order of CCP with respect to price fixing in contravention of Section 4 of the Competition Act, 2010.

CCP had imposed a fine of Rs100 million on the Pakistan Poultry Association (PPA) for price fixing of poultry products, in violation of Section 4 of the Competition Act, 2010. The Supreme Court, to this extent, has allowed PPA’s appeal and reduced the penalty from PKR 100 million imposed by CCP in its Order to PKR 25 million, taking into account that the said advertisements by PPA were discontinued after a few days, i.e., “after two days for eggs and five days for poultry”. The Supreme Court has directed PPA to pay the penalty amount of PKR 25 million within a period of 15 days from the date of the Order.

Moreover, the Supreme Court has directed CCP to “frame and notify relevant rules inter alia relating to imposition of penalties.” Currently, there exists guidelines on imposition of financial penalties. Under Section 57 of the Act, the Commission, with the approval of the Federal Government, has the power to make rules.

The Supreme Court proceedings pertained to CCP’s Order wherein CCP found that PPA had inter alia discussed and approved the advertisement of prices of certain poultry products (concerning broiler chicken and chicken eggs) in the national press, which was prohibited under the Competition Act. Against CCP’s Order, the first appeal was filed by PPA before the Competition Tribunal and its decision was authored by the Member, Technical, Ahmed Owais Pirzada.

The Competition Tribunal held that: “…By advertising prices of the poultry products in the national press the appellant has clearly prevented, restricted and reduced competition within the relevant market, which is a clear violation of section 4 of the Act.” It was further observed that the findings recorded by CCP were “based on proper appraisal of relevant provisions of Competition Law as well as other material brought on record. The same are, therefore, maintained.” PPA had filed an appeal against the said Competition Tribunal order before the Supreme Court.

CCP has time and again highlighted collusive/anti-competitive practices in the poultry sector.

First in 2010 where CCP issued show cause notices against 25 poultry association members and imposed a fine of PKR 50 million on PPA for contravention of Section 4 of the Competition Act. In 2021, the show cause proceedings against the said poultry association members also resumed after the Islamabad High Court had set aside the stay order(s) granted after a period of over 10 years.

CCP also concluded two enquiries in 2021 concerning possible collusive and anti-competitive practices in various market categories in the poultry sector including the market for broiler meat, eggs, day old broiler chicks and various poultry feed segments. The first enquiry report revealed that inter alia the poultry feed mills collectively fixed the price of poultry feed and, in the other enquiry, it was concluded that inter alia the hatcheries/poultry companies collectively discussed and decided on prices of day-old broiler chicks, which are in prima facie violation of Section 4 of the Competition Act.

Copyright Business Recorder, 2022