THE findings of the Competition Commission of Pakistan (CCP) have confirmed cartelization in the cement manufacturing sector and involvement of All Pakistan Cement Manufacturers Association (APCMA) in anti-competitive activities. An announcement by the CCP on Tuesday said that big players were also involved in cartelization to harm the interests of the consumers and that the decision to fix cement prices through unlawful process led to 100% to 800% increase in their gross profits.
Credit for busting of the cartel in the cement sector mainly goes to the media, which highlighted the issue and the CCP initiated prompt proceedings that have led to the confirmation of reports by the media. The inquiry began after publication of reports in the media between April and May 2020 regarding an increase in the price of cement, particularly the 50kg bag, by cement manufacturers. The media reports alleged that an increase in the price of cement by Rs45-55 per 50kg bag was due to cartelization by the manufacturers who held a meeting subsequent to which the price increase was announced. According to CCP, the prices were increased at a time when the cost of production had gone down significantly and the manufacturers also did not pass on the impact of 25% reduction in federal excise duty to consumers. This amounts to undermining the plan of the government to stimulate the economy by offering liberal incentives to the construction sector as the benefit was mainly pocketed by the cement mafia and together with some other factors the cost of construction increased significantly whereas it should have come down. The cement cartel hiked prices when prices of petrol and diesel reduced in the international and domestic market significantly, global coal prices also dropped due to excess supply and lower demand due to Covid-19 and interest rates were also reduced by the State Bank of Pakistan. Sugar, wheat, edible oil and other cartels also behaved in the same manner and as a result there was no relief for the consumers. The CCP and Inquiry Commissions assigned the task of probing into different scams have done a commendable job but their efforts do not bear fruits due to lack of implementation mechanism. Mere slapping of fines or import of the commodities is no answer if prices unjustifiably increased are not reversed. We would urge the Government to help vacate the stay of the Sindh High Court in the case of cement issue and take firm action against those blamed for involvement in malpractices.