PFMA fined Rs75m for fixing flour prices

Published December 17, 2019
The Competition Commission of Pakistan order noted that PFMA deliberately fixed the rates of wheat flour by conducting meetings and discussing the prices as well as the quantities to be produced and supplied by flour mills. — APP/File
The Competition Commission of Pakistan order noted that PFMA deliberately fixed the rates of wheat flour by conducting meetings and discussing the prices as well as the quantities to be produced and supplied by flour mills. — APP/File

ISLAMABAD: The Competition Comm­ission of Pakistan (CCP) has imposed a fine of Rs75 million on Pakistan Flour Mills Association (PFMA) for fixing the price of wheat flour, fixing the quantities of production of wheat flour among its members and providing a platform to share commercially sensitive information.

The commission took notice of various news items suggesting an unusual price hike in the prices of wheat flour (atta) across the country and carried out a raid at PFMA premises.

As the initial inquiry concluded that PFMA was providing a platform to its members for settling of prices of wheat flour to avoid any form of competition, and it was ruled that such an act was violation of Section 4 of the Competition Act.

The CCP bench comprising of chairperson Vadiyya Khalil and members Dr Muhammad Saleem, Dr Shahzad Ansar passed the order after hearing the parties.

In its order, the CCP bench observed that under Article 38 of the Constitution - the State is responsible to ensure the provisions of food and basic necessities at fair prices along with other social and economic benefits to its citizens.

The Provincial Food Departments set a maximum cap of the wheat flour price under the Foodstuffs (Control) Act 1958 as wheat is Pakistan’s dietary staple and used by consumers belonging to all socio-economic groups, it contributes to around 72 per cent of the country’s daily caloric intake with per capita consumption of around 124 kg per year, one of the highest in the world.

The CCP order noted that PFMA deliberately fixed the rates of wheat flour by conducting meetings and discussing the prices as well as the quantities to be produced and supplied by flour mills.

It further observed that fixing of prices by competitors; is one of the most egregious and serious violations of Competition Law; in fact it disturbs the central nervous system of the economy, hence cannot be tolerated at all. However, the CCP noted that it is not the role of association to ensure that each and every member of the association, who should be competitors, has a profitable business.

The CCP also observed that discussion, deliberation and decisions regarding purely business concerns like current and future pricing, production and marketing are anti-competitive and should be avoided at all costs by the associations.

“Associations have a responsibility to ensure that their forum is not used as a platform for collusive activities,” it concluded.

Published in Dawn, December 17th, 2019

Follow Dawn Business on Twitter, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Editorial

Kurram atrocity
Updated 22 Nov, 2024

Kurram atrocity

It would be a monumental mistake for the state to continue ignoring the violence in Kurram.
Persistent grip
22 Nov, 2024

Persistent grip

PAKISTAN has now registered 50 polio cases this year. We all saw it coming and yet there was nothing we could do to...
Green transport
22 Nov, 2024

Green transport

THE government has taken a commendable step by announcing a New Energy Vehicle policy aiming to ensure that by 2030,...
Military option
Updated 21 Nov, 2024

Military option

While restoring peace is essential, addressing Balochistan’s socioeconomic deprivation is equally important.
HIV/AIDS disaster
21 Nov, 2024

HIV/AIDS disaster

A TORTUROUS sense of déjà vu is attached to the latest health fiasco at Multan’s Nishtar Hospital. The largest...
Dubious pardon
21 Nov, 2024

Dubious pardon

IT is disturbing how a crime as grave as custodial death has culminated in an out-of-court ‘settlement’. The...