Karachi: The Pakistan Competition Committee (CCP) has inflicted fines totaling 375 million rupees out of six major fertilizer producers and an association of industry after finding proof of collusive pricing which has artificially increased the prices of urea across the country, compressed market competition and harming farmers.
In a decision announced on Monday, the competition regulator said that its investigation concluded that companies, in coordination with a commercial body, engaged in anti -competitive driving by jointly fixing the retail price of the urea. Each company was sentenced to a fine of 50 million rupees, while the association was sentenced to a fine of 75 million rupees.
The case stems from a Suo Motu investigation launched by the Commission, which found that under the guise of an public awareness campaign, the manufacturers had “effectively set the price of urea across the country”. The Commission said that this decision was going beyond legal coordination and entered into the field of illegal collusion in violation of article 4 of the 2010 competition law.
Despite the maintenance that they acted independently, companies were unable to justify their almost identical price structures. The commission’s conclusions stressed that such coordinated conduct has distorted the market, reduces the choice of consumers and has exerted excessive financial pressure to farmers, especially during key agricultural seasons.
The defense of companies, which it acted in accordance with the government’s instructions, was rejected by the CCP. The bench argued that no official state directive existed to oblige such coordinated pricing. Instead, a government call for greater prices has been “misused as a platform to align prices in a way that eroded competitive discipline”.
Price uniformity – RS1 768 per bag of urea – despite marked differences in production costs, energy inputs and market shares in businesses. The Commission said that this could not be attributed to a coincidence or a healthy competition, but rather to a deliberate and concerted action. The previous warnings issued by the PCC in 2010, 2012 and 2014 had not changed behavior.
The PCC decision has also criticized the role of professional associations in the facilitation of price coordination, reiterating that these organizations should not serve for forums to share information on sensitive prices. He warned other industries against similar practices, noting that collusion undermines the well-being of consumers and damages the integrity of the markets.
