KARACHI – A six-year trail of allegedly coordinated tanker rates, business allocation and threats against discount operators ended with Rs60 million fine against the All Pakistan Edible Oil Tanker Owners Association.
Competition Commission of Pakistan (CCP) ordered an immediate end to the system it found to be restricting competition in the transportation of ghee and edible oil. CCP found the association guilty of collectively fixing transportation charges and dividing business through a “parchi” (slip) and “bari” (turn) system, effectively replacing free competition with an organised allocation mechanism.
The Commission imposed Rs30 million for collective rate fixing and another Rs30 million for the business-allocation mechanism.
One of the key striking findings concerns the formula used to adjust tanker rates according to diesel prices. Under the arrangement, a Rs1 increase in diesel prices triggered a 0.75% increase in transportation charges, while a Rs1 decrease resulted in only a 0.5% reduction.
In other words, the rate of increase was 50% higher than the rate of decrease, despite the same one-rupee movement in fuel prices.
CCP found that transportation rates were collectively revised 89 times over six years — with 52 increases and 37 decreases.
Commission also found evidence of pressure against tanker owners and mills seeking lower rates. Tanker owners who transported goods at discounted prices were allegedly threatened with blacklisting, while mills demanding discounted transportation charges were threatened with the suspension of edible oil supplies.
The association’s system, according to the CCP, meant tankers were allocated business through the “parchi” and “bari” mechanism rather than competing independently for contracts. The system also prescribed a Rs500,000 penalty for the tanker and another Rs500,000 for its owner for violations of specified conditions.
The scale of the association’s operations emerged as another key factor in the CCP’s decision. The association had approximately 2,362 tankers and 1,700 owners registered, while between 250 and 300 association tankers arrived at ports every day.
Against this, the National Logistics Corporation (NLC) had only 50 to 60 tankers. Based on these figures, the CCP said the Oil Tanker Owners Association accounted for approximately 83% of the market between the two major players.
The investigation also uncovered a rate circular issued by the association covering 81 destinations outside Karachi for ghee transportation.
Separate rates were also fixed for transporting tallow to 53 destinations outside Karachi and 18 destinations within Karachi.
CCP said these arrangements demonstrated that transportation rates were being determined collectively rather than through independent competition.
The case also involves the Pakistan Vanaspati Manufacturers Association (PVMA). According to the CCP’s decision, an agreement existed between the All Pakistan Edible Oil Tanker Owners Association and PVMA for determining transportation rates.
Representatives of the tanker association acknowledged that the rates were fixed under a mutual agreement. The agreement was originally signed in 2011 and subsequently updated in 2022. During a search operation, the CCP seized six years of rate circulars, the agreement and computer-stored records, which formed part of the evidence examined by the Commission.
The latest action follows an earlier CCP decision in which agreements between PVMA and oil tanker associations concerning transportation rates had also surfaced. In that case, the Pakistan Vanaspati Manufacturers Association was fined Rs50 million for violating Section 4 of the Competition Act in relation to price fixing.
CCP said that in August 2026, the association issued a fresh circular prescribing new transportation rates for 81 locations. The development became a key part of the Commission’s findings against the association.
