Clearing the air: CCP responds to 'factually incorrect' statements of PEW

KARACHI: The Competition Commission of Pakistan (CCP) has noted with concern the “factually incorrect” statements made by Pakistan Economy Watch President Murtaza Mughal, carried by Daily Times on January 11, with regard to alleged inaction of CCP in tackling collusion in the cement sector.

Mughal had alleged in his statement that CCP “prefers to remain a silent spectator” as the cement cartel operates in the market. He further alleged that CCP fined the cement cartel some years ago but reversed the decision after “interference by the then finance minister”.

“We would like to put the record straight,” said a statement issued by CCP on Friday. “The PEW president apparently concludes that a cartel exists in the sector solely on basis of rising prices of cement bags. First, rising prices alone are not en ough to conclude that a cartel operates in the market. Rising prices can be due to rising input costs or simply due to a rise in demand of a product. Under the Competition Act, 2010, CCP can only take action if there is evidence that prices in the market are due to cartelisation between competitors or a result of an excessive increase in prices by businesses with market power. In this regard, CCP is constantly monitoring the cement sector, and whenever it finds evidence of anti-competitive behaviour, enforcement action will be taken against those violating the law.”

The statement further clarified that CCP fined the All Pakistan Cement Manufacturers Association (APCMA) and its members, undertakings a total of Rs 6 billion in fines for cartelisation in 2009. “The penalty has not been reversed or taken back in any way. No government functionary has ever influenced CCP’s enforcement work. It is pertinent to mention that under the act, CCP is operationally and administratively independent of the federal government. The fact is that the cement cartel filed writ petitions in the matter before the Lahore High Court, which stayed the recovery of the fines till the final order of the court. As and when the stay order is vacated or the matter is finalised, CCP will begin recovery proceedings as per the law.”

Apart from the action in 2009, CCP initiated an inquiry into a possible collusive activity in the cement sector in 2012, which was stayed by the Lahore High Court after APCMA filed a writ petition and the matter is currently sub-judice.

CCP initiated another inquiry in 2014 that could not find any evidence of anti-competitive behaviour in the sector. “CCP always encourages people and businesses to come forward with evidence of anti-competitive behaviour in all sectors of the economy. To facilitate complainants, it operates a complaint cell, which can be reached by telephone (051-9100260-263) and email (complaints@cc.gov.pk). Whenever actionable information about anti-competitive behaviour is received, CCP will take appropriate enforcement action to protect the consumers and businesses from the effects of anti-competitive behaviour,” the statement concluded.

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