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 crushing of sugarcane and fixing the purchase price of cane at Rs 400 per maund.
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 allegedly agreed to start crushing on November 28 and fix a uniform cane price of Rs 400 per 40 kg. The meeting was chaired by Fatima Sugar Mills Resident Director 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 personally attended the meeting. 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. Earlier, the Punjab Sugarcane Commissioner had directed mills to start crushing from November 15.
The Commission also noted a power imbalance 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 proceedings should not be initiated for allegedly entering into prohibited agreements, manipulating the sugarcane market and securing unfair commercial advantage by delaying crushing.
The PCC warned that delays in the procurement of cane early in the season could disrupt supplies and contribute to an increase in retail sugar prices.
The CCP noted that forming 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 previously 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 mill should determine cane prices in consultation with local farmer representatives, taking into account supply and demand. Instead, the factories allegedly colluded to unilaterally set the price at Rs 400 per 40 kilograms.
The PCC has directed the mills to submit a written response within 14 days explaining why legal action should not be taken against them for engaging in prohibited deals, manipulating the sugarcane market and gaining unfair commercial advantages by delaying crushing.
Delays in cane crushing early in the season could affect the supply of sugar in the market, potentially creating artificial shortages and increasing retail sugar prices.
