ISLAMABAD – The Competition Commission of Pakistan (CCP) has imposed a penalty of Rs50 million on each of the six major Urea Manufacturers, and also a penalty of Rs75 million on a leading industry association, totalling Rs375 million in fines.
The CCP’s bench comprising Dr. Kabir Ahmed Sidhu and Salam Amin concluded that six urea manufacturing companies, i.e. M/s Fatima Fertilizer Limited, M/s Fauji Fertilizer Company Limited, M/s Fauji Fertilizer Bin Qasim Limited, M/s Fatima Fertilizer Company Limited, M/s Engro Fertilizer Company Limited and M/s Agritech Limited in coordination with their trade association, FMPAC, “under the guise of conducting an awareness campaign/advertisement, have effectively fixed the price of urea across the country.
Such conduct goes beyond the bounds of lawful information dissemination and enters into the realm of anti-competitive behaviour” in violation of Section 4 of the Competition Act, 2010.
Despite claiming price independence, the manufacturers failed to justify their synchronised pricing strategy. The Commission’s investigation uncovered that the conduct not only distorted competition but also harmed farmers across Pakistan, especially during the critical Rabi and Kharif seasons, by artificially influencing fertilizer prices and limiting market choice.
The companies’ attempt to claim protection under the ‘state action doctrine’ was also rejected. The bench held that no formal government directive or compulsion existed to justify their collusive behaviour. It was also noted that despite significant variations in input costs, different economies of scale, size of the market, different prices of gas, etc., all companies were charging an identical price for the size of the urea bag (i.e. Rs. 1768/- per bag).
The bench also noted that “in a market where each undertaking’s production capacity and market share are matters of common knowledge, such a coordinated disclosure cannot be viewed as incidental or competitively benign. Rather, the joint announcement constitutes an overt manifestation of concerted conduct.” Moreover, repeated directions from the Fertilizer Review Committee (FRC) were given to the Respondents to address their failure to manage supply imbalances.
Previously, as well, warnings were issued by the Commission to the Fertilizer Manufacturers and FMPAC in the years 2010, 2012 and 2014, which failed to produce any lasting change.
