The Competition Commission of Pakistan (CCP) has issued show cause notices to ten Punjab-based sugar mills for allegedly forming a cartel to delay the start of sugarcane crushing and fixing the purchase price of the cane at Rs 400 per mah.
PCC President Dr Kabir Ahmed Sidhu said no trade organization or trade association should be used as a platform for collusive decision-making. He warned that strict action would be taken against any entity involved in anti-competitive practices.
According to the PCC, representatives of the ten mills met at Fatima Sugar Mills on November 10, where they reportedly agreed to start crushing on November 28 and fix a uniform price of cane at Rs 400 per 40 kg. The meeting was chaired by Resident Director of Fatima Sugar Mills, Rana Jamil Ahmed Shahid.
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Representatives of Sheikho Sugar Mills, Thal Industries Corporation, Tandlianwala Sugar Mills (Rehman Hajra Unit), JK One Sugar Mills, Ashraf Sugar Mills and Kashmir Sugar Mills attended the meeting in person. Delegates from Siraj Sugar Mills, Two Star Sugar Mills and Haq Bahoo Sugar Mills joined online.
The PCC said any agreement to fix prices or coordinate other business decisions violates Section 4 of the Competition Act, 2010. The Punjab Sugarcane Commissioner had earlier ordered mills to start crushing from November 15.
The Commission also noted an imbalance of power between factories and farmers in price negotiations. He said individual mills should set cane prices in consultation with local grower representatives, based on supply and demand, rather than collectively determining a uniform rate.
The mills have been asked to submit a written explanation within 14 days to justify why action should not be taken for allegedly entering into prohibited deals, manipulating the sugarcane market and gaining unfair commercial advantage by delaying crushing.
The PCC has warned that cane supply delays at the start of the season could disrupt supplies and contribute to a rise in retail sugar prices.
The PCC noted that entering into agreements to fix prices or make other business decisions in any market violates Section 4 of the Competition Act, 2010. The Punjab Sugarcane Commissioner had earlier ordered sugar mills to start crushing from November 15.
The Commission highlighted a clear power imbalance between factory owners and farmers in price negotiations. Ideally, each factory should determine cane prices in consultation with local farmer representatives, taking into account supply and demand. Instead, the factories reportedly agreed to unilaterally set the price at Rs 400 per 40 kilograms.
The CCP ordered the mills to submit a written response within 14 days explaining why legal action should not be taken against them for entering into prohibited deals, manipulating the sugarcane market and gaining unfair commercial advantage through delayed crushing.
Delays in early season cane crushing could impact the supply of sugar to the market, potentially creating artificial shortages and an increase in retail sugar prices.
