ISLAMABAD: The Competition Commission of Pakistan (CCP) announced on Tuesday that it is closely monitoring the ongoing sugar crisis and warned of potential enforcement and policy interventions if any anti-competitive behavior is detected.
The CCP has been actively addressing cartelization in the sugar industry, striving to ensure fair competition and protect consumers. In 2020, the Commission initiated an inquiry into the sugar sector, uncovering evidence that sugar mills were likely involved in price-fixing and controlling supply through coordinated efforts led by the Pakistan Sugar Mills Association (PSMA). As part of the investigation, the CCP conducted raids on PSMA offices.
In August 2021, the CCP imposed a landmark fine of Rs. 44 billion on the sugar mills and PSMA—the largest penalty in its history. However, the decision was challenged in the courts, resulting in stay orders from the Sindh and Lahore High Courts, as well as the Competition Appellate Tribunal (CAT). This has delayed the collection of the penalties.
Over the years, the CCP has remained committed to increasing transparency and competitiveness in the sugar sector. Its first inquiry into the industry, conducted in 2009, found initial evidence of PSMA’s involvement in price-fixing and manipulation of production and supply quotas. As a result, the CCP issued show-cause notices to specific sugar mills and PSMA in 2010, though these proceedings were later stayed by the Sindh High Court.
The CCP has issued several policy recommendations over the years (in 2009, 2012, and 2021) urging both federal and provincial governments to address market distortions. These recommendations included deregulating the sugar industry, allowing market forces to determine prices, and lifting restrictions on the establishment or expansion of sugar mills to promote competition.
In its most recent policy note, the CCP advised the government to discontinue the practice of setting support prices for sugarcane and instead adopt a market-driven pricing system. This transition would ensure fair compensation for farmers while promoting greater efficiency and competition in the sector.
Currently, there are 127 ongoing cases related to sugar cartelization, pending across various courts. This includes 24 cases in the Supreme Court, 25 in the Lahore High Court, 6 in the Sindh High Court, and 72 in CAT. To expedite the resolution of these cases, the government has recently appointed a new Chairman and Members to the Competition Appellate Tribunal.
