The Pakistan Competition Commission (CCP) imposed fines of RS375 million to fertilizer companies for “anti -competitive behavior”.
“The Pakistan Competition Commission has taken decisive measures against anti -competitive behavior in the fertilizer sector, imposing a penalty of RS50 million in each of the six main urea manufacturers,” said a PCCH press release.
He added that he also penalized a leading association of the RS75M industry, totaling RS375m in fines.
The PCCH said that after a detailed motu-initiated Swing Augritilizer Limited, and Fertilizer Limited, and Fertilizer Limited, and Autritilizer Limited, and Augritilizer. Coordination with their commercial association, fertilizer manufacturers of the Pakistan Advisory Council (FMPAC), participated in anti -competitive behavior.
“Under the appearance of making an awareness/announcement of awareness, [they] They have effectively set the price of urea throughout the country. This conduct goes beyond the limits of the dissemination of legal information and enters the scope of anti -competitive behavior in violation of section 4 of the 2010 Competition Law, ”said the press release.
Despite claiming the independence of prices, manufacturers did not justify their synchronized price setting strategy. The “commission’s investigation discovered that the conduct not only distorted the competition, but also damaged farmers in Pakistan, especially during the critical seasons of Rabi and Kharif, by artificially influencing fertilizer prices and limiting the choice of the market.”
“The attempt of respondents to claim protection under the” state doctrine “was also rejected. The bank said there was no formal government directive or compulsion to justify their collusive behavior,” said the statement.
The PCCH Osberbed that the respondents took advantage of a federal government direction with respect to initiating an awareness campaign encouraging farmers with respect to the price of urea and used it as a tool to set the price in due coordination between them and jointly announced the uniform price for urea consumers.
The bank also said that such “actions, under the pretext of complying with government instructions, effectively undermining market forces and distorted competitive price mechanisms.”
It was also observed with great concern that all respondents were charging an identical price for the size of an urea bag: RS1,768, despite the significant variations in the input costs, different economies of scale, market size, different gas prices, etc.
The bank also observed that “in a market where the production capacity and market share of each company are issues of common knowledge, such a coordinated dissemination cannot be considered incidental or competitively benign. Rather, the joint announcement constitutes a general manifestation of concerted conduct,” according to the press release.
In addition, repeated instructions from the fertilizer review committee were granted for respondents to address their inability to administer the imbalances of the offer.
Previously, the Commission issued warnings to fertilizer and FMPAC manufacturers in 2010, 2012 and 2014; However, they could not produce any lasting change, according to the PCCH.
The president reiterated the message of the commission that associations throughout the country should not provide a platform to share information sensitive to prices or exchange of prices.
Last month, in a significant movement to stop deceiving marketing practices, the PCCH had imposed a considerable fine on a housing society for false and deceitful ads.
Through a warning notice, the PCCH had also warned financial sanctions companies of up to RS75 million or 10 percent of the annual turnover if they participate in prohibited agreements without seeking a previous exemption.
