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Business Recorder
6 days ago
- Business
- Business Recorder
CCP imposes Rs375m fines on six major fertilizer makers, FMPAC
ISLAMABAD: In a landmark decision against cartelisation, the Competition Commission of Pakistan (CCP) has imposed fines totaling Rs 375 million on six major fertilizer manufacturers and their trade association, the Fertilizer Manufacturers of Pakistan Advisory Council (FMPAC), for colluding to fix the retail price of urea across the country. The penalties follow a suo motu inquiry launched by the Commission, which concluded that the manufacturers — in coordination with FMPAC — had jointly issued a public advertisement setting the maximum retail price at Rs 1,768 per 50 kg bag. The CCP found that this was not a routine awareness campaign but a coordinated act of cartelization, violating Section 4 of the Competition Act, 2010. The order was issued by a CCP bench comprising Chairman Dr Kabir Ahmed Sidhu and Member Salman Amin. The six companies fined Rs 50 million each include Engro Fertilizers Limited, Fauji Fertilizer Company Limited, Fauji Fertilizer Bin Qasim Limited, Fatima Fertilizer Company Limited, Fatima Fertilizer Limited, and Agritech Limited. Their association, the FMPAC, was fined Rs 75 million, bringing the total penalty to Rs 375 million. The Commission's investigation noted that despite significant differences in gas pricing, economies of scale, and input costs, all companies charged the exact same price — a clear indicator of collusion rather than coincidence. The manufacturers attempted to defend their conduct by invoking the 'state action doctrine,' arguing that they acted under a federal government directive to educate farmers about urea prices. However, the CCP bench found no formal instructions compelling the companies to set a uniform price. Instead, the companies misused the government's communication to justify a cartelised price-fixing strategy. The bench observed that actions taken under the pretext of public interest effectively undermined the forces of supply and demand and distorted competitive pricing mechanisms. The Commission expressed concern that despite repeated warnings issued in 2010, 2012, and 2014 — including findings that two companies had engaged in joint advertising to influence market prices — no long-term corrective measures were taken by the companies or FMPAC. The recurrence of such behavior signaled the ineffectiveness of prior warnings and reinforced the need for stronger enforcement and deeper structural reform. While announcing the order, the CCP reiterated that business associations like FMPAC have no legal authority to set or recommend prices. Their involvement in coordinated pricing decisions undermines market competition and consumer welfare. The Commission warned that any such action — particularly from entities that have long benefited from government subsidies — will not be tolerated. The CCP's order also touched upon broader policy concerns. Pakistan's fertilizer sector, once heavily subsidized to promote local production, continues to operate under the outdated Fertilizer Policy of 2001. That policy had extended 20-year gas supply contracts at concessionary rates to fertilizer plants commissioned after 2001. Although these subsidies expired in July 2021, pricing across companies has remained inexplicably aligned. According to a study by the Pakistan Institute of Development Economics (PIDE), the government has been spending approximately Rs 200 billion annually on fertilizer subsidies — yet the intended benefit has largely failed to reach farmers, who continue to face high prices and supply shortages. The Commission stressed that this uniformity in pricing, even after deregulation and subsidy withdrawal under IMF conditions, raises serious concerns about the lack of true market competition. Despite differences in technology, plant age, and gas costs, the six companies maintained identical prices, suggesting that collusion — not competition — drives pricing in the fertilizer sector. Separately, the Islamabad High Court (IHC) has reserved its verdict in a related case concerning the CCP's direction for fertilizer companies to submit cost audit reports. As part of its investigation, the Commission had required these reports to assess pricing behavior. However, the companies challenged the directive in court, claiming that cost audit data was confidential and could not be disclosed. In response, CCP's legal representative argued that all companies are already required to submit cost audits to the Securities and Exchange Commission of Pakistan (SECP), and questioned why the same data could not be provided to another statutory regulator. The court has now reserved judgment after hearing both sides. It is also worth noting that in a separate case involving Dalda Foods, the Supreme Court of Pakistan upheld the CCP's jurisdiction to seek information, monitor market conduct, and conduct investigations—further reinforcing the Commission's legal mandate. Under the Competition Act, any agreement or practice that fixes prices, limits output, or divides markets is prohibited. Violations may lead to fines of up to 10% of annual turnover or Rs 75 million, whichever is higher. Repeat violations can result in criminal prosecution under Section38 of the Act. The CCP has urged the federal government to comprehensively review the Fertilizer Policy 2001, disengage from price coordination through trade bodies, and let market dynamics—not collusive agreements — govern the industry. The Commission reaffirmed its commitment to promoting open markets, safeguarding consumer interests, and holding violators accountable. To report cartel behavior or anti-competitive practices, members of the public can contact the CCP's Market Intelligence Unit at 0304-0875255 or email [email protected]. Copyright Business Recorder, 2025
Business Recorder
15-05-2025
- Business
- Business Recorder
Deceptive marketing practices: CAT upholds CCP's decision to penalise paint manufacturer
ISLAMABAD: The Competition Appellate Tribunal (CAT) has upheld the Competition Commission of Pakistan's (CCP) decision to penalize a paint manufacture for deceptive marketing practices, which is a violation of Section 10 of the Competition Act, 2010. The original penalty of Rs5 million was halved to Rs2.5 million, in light of the company's compliance-oriented approach. The tribunal's decision follows Diamond Paints' admission of guilt and a plea for leniency. Appreciating the company's willingness to comply with legal obligations, the CAT reduced the fine and disposed of the appeal. The CCP's original order was issued by a bench comprising Chairman Dr Kabir Ahmed Sidhu and Member Salman Amin. It stemmed from a complaint filed by Nippon Paint Pakistan (Pvt) Ltd, alleging that Diamond Paints failed to disclose key details in its Television Commercials (TVCs), specifically the presence and value of redeemable tokens in its paint buckets. CCP's investigation found that while the company included disclaimers on packaging and shade cards, it's TVCs — the first point of contact for many consumers — omitted this material information. The Commission concluded that such selective disclosure misleads consumers and violates their right to make informed choices. The order clarified that offering redeemable tokens without clearly stating their value in advertisements lacks a reasonable basis under Section 10(2)(b) of the Act. The CCP stressed that transparency in advertising is essential, particularly when promotional schemes like coupons or tokens can significantly influence purchasing decisions. Copyright Business Recorder, 2025
Business Recorder
14-05-2025
- Business
- Business Recorder
Rs40mn CCP penalty: Al-Ghazi Tractors says ‘will take appropriate legal steps'
The Al-Ghazi Tractors Limited (AGTL) on Wednesday said it was reviewing the details of Rs40 million penalty by the Competition Commission of Pakistan (CCP) and 'will take appropriate legal steps as needed'. The company said this in a notice to the Pakistan Stock Exchange (PSX). 'With reference to recent news circulating in media regarding the imposition of penalty on Al-Ghazi Tractors Limited ('the company') by Competition Commission of Pakistan, the company is reviewing the details and will take appropriate legal steps as needed,' the notice read. The CCP has imposed a penalty of Rs40 million on AGTL for 'violating competition law and misguiding consumers', according to a CCP statement on Tuesday. In January 2022, AGTL ran a front-page ad in an Urdu newspaper, claiming its new Holland tractor models offered 'up to 30% extra diesel savings compared to any competitor's tractors.' The ad cited a report by the Agricultural Mechanisation Research Institute (AMRI), Multan as basis of its claim. 'Farmers across Pakistan, especially small landholders often make purchasing decisions based on savings and efficiency. For them, a claim like 'up to 30% extra diesel savings' can mean the difference between affordability and hardship. 'But this claim, made by Al-Ghazi Tractors Limited in a newspaper ad, has now been declared false and misleading by the Competition Commission of Pakistan. The bench comprising Dr Kabir Ahmed, the Chairman CCP and Mr Salman Amin (Member) has imposed a penalty of PKR 40 million on AGTL for violating competition law and misguiding consumers,' the CCP statement read.
Business Recorder
14-05-2025
- Business
- Business Recorder
Deceptive claims: CCP imposes Rs40m fine on Al-Ghazi Tractors
ISLAMABAD: The Competition Commission of Pakistan (CCP) Tuesday imposed a penalty of Rs 40 million on a tractor manufacturing company for making deceptive claims about fuel efficiency having serious financial consequences for small farmers. In a detailed final order passed by a two-member bench comprising Dr Kabir Ahmed Sidhu (Chairman) and Salman Amin (Member), the Commission found that Al-Ghazi Tractors Limited (AGTL) advertisement published on January 24, 2022, falsely claimed that its new Holland tractor models offered 'up to 30 percent extra diesel savings compared to any competitor's tractors.' The misleading claim was widely circulated in media and referenced a report by the Agriculture Mechanization Research Institute (AMRI), Multan, giving it an air of official credibility. However, the Commission's investigation revealed that AMRI never endorsed the claim, nor did its report support the fuel-saving comparison being advertised. In rural Pakistan—where over 60% of the population relies on agriculture—tractors are long-term investments, and such exaggerated claims can have serious financial consequences for small farmers. These communities are particularly vulnerable to misleading advertisements due to limited access to technical verification or alternative sources of information. A 30 percent fuel-saving claim could mean thousands of rupees of projected savings to a farmer—yet no such advantage existed. After receiving complaints from stakeholders and conducting a thorough investigation, the CCP determined that the AMRI report only compared AGTL tractors to those of one other manufacturer (Millat Tractors) in limited settings. Copyright Business Recorder, 2025
Business Recorder
13-05-2025
- Business
- Business Recorder
‘False fuel saving claim': CCP imposes Rs40mn penalty on Al-Ghazi Tractors
The Competition Commission of Pakistan (CCP) has imposed a penalty of Rs40 million on Al-Ghazi Tractors Limited (AGTL) for 'violating competition law and misguiding consumers', a statement from the CCP said on Tuesday. In January 2022, AGTL ran a front-page ad in an Urdu newspaper, claiming its new Holland tractor models offered 'up to 30% extra diesel savings compared to any competitor's tractors.' The ad cited a report by the Agricultural Mechanisation Research Institute (AMRI), Multan as basis of its claim. CCP says recovered Rs10mn penalty from PIA for 'abusing dominant position' 'Farmers across Pakistan, especially small landholders often make purchasing decisions based on savings and efficiency. For them, a claim like 'up to 30% extra diesel savings' can mean the difference between affordability and hardship. 'But this claim, made by Al-Ghazi Tractors Limited in a newspaper ad, has now been declared false and misleading by the Competition Commission of Pakistan. The bench comprising Dr Kabir Ahmed, the Chairman CCP and Mr Salman Amin (Member) has imposed a penalty of PKR 40 million on AGTL for violating competition law and misguiding consumers,' the CCP statement read. According to the CCP, it found that AMRI had not issued any report supporting the claim. 'In fact, AMRI had warned AGTL to stop using its name for false claim and to retract the advertisement.' The AMRI report, which AGTL selectively quoted, only tested tractors from two manufacturers—AGTL and one competitor, the CCP said. 'It did not provide market-wide fuel efficiency comparisons. AMRI also emphasised that its report contained general energy-saving tips, not certification of any tractor model's performance.'
