Zubair Qureshi
Islamabad
The Competition Commission of Pakistan (CCP) has concluded its enquiry in the matter of prima facie violation of the Section 4 (Prohibited Agreements) Competition Act, 2010 by all Pakistan Cement Manufacturers Association and its member undertakings
In this regard, the enquiry committee has recommended that the commission, in light of hard core evidence of collusive behaviour and cartelization of cement industry, many consider initiating proceedings under Section 30 of the Act against the APCMA and its members’ undertakings in terms of the findings of the enquiry report.
The enquiry was initiated based on the information gathered through various media reports, concerns and complaints expressed regarding increase in cement prices, in North region, particularly during the month of April, May & June 2020. The reports indicated that an increase of Rs. 45 – Rs55 per cement bag, was apparently decided by the cement manufacturers under the umbrella of APCMA. From the information gathered, it was revealed that during the months of June-July 2019, a sharp increase in cement prices was recorded in Islamabad (Rs. 63/50 kg bag), Lahore (Rs. 101/50 kg bag) and Karachi (Rs. 32/50 kg bag) translating into a hike of 11.4%, 18.6% and 5.0% respectively.
Various factors among others lower demand of cement in the first two quarters of 2020, and almost parallel increase in cement prices and data collected from Pakistan Bureau Statistics and the cement companies, became the basis of CCP’s enquiry. Sudden rise in price by the cement manufacturers at a time when there was low demand compared to the installed capacity of the manufactures and considering the fact that the input cost (fuel cost (coal and oil), and interest rate had declined, raised suspicion of a collective rise in prices by cement companies.
On 24th September 2020, the CCP conducted search and inspection of the APCMA main office and the office of Senior Vice Chairman of the APCMA’s Executive Committee; a senior employee of a major cement company in Lahore. The evidence suggested possibility of a cartel/collusive arrangement between the cement manufacturers.
