ISLAMABAD, March 18: The Competition Commission of Pakistan (CCP) on Tuesday stated that it is closely monitoring the ongoing sugar crisis and warned that strict enforcement and policy actions will be taken if any anti-competitive activities are found.
The CCP has been actively working to curb cartelization in the sugar industry, promoting fair competition and protecting consumers. In 2020, the CCP launched an inquiry into the sector, which revealed that sugar mills were prima facie engaged in price-fixing and controlling supply through coordinated actions facilitated by the Pakistan Sugar Mills Association (PSMA). As part of the investigation, the CCP also conducted raids at PSMA offices.
As a result, in August 2021, the CCP imposed a record PKR 44 billion in penalties on sugar mills and the PSMA—one of the highest fines in its history. However, the decision was challenged in courts, and stay orders issued by the Sindh and Lahore High Courts, as well as the Competition Appellate Tribunal (CAT). This has delayed the recovery of penalties.
The CCP has consistently intervened to enhance transparency and competitiveness in the sugar sector. Its first inquiry in 2009 found prima facie evidence of PSMA’s involvement in price-fixing and the manipulation of production and supply quotas. Consequently, the CCP issued show-cause notices to certain sugar mills and the PSMA on July 16, 2010, though these proceedings were subsequently stayed by the Sindh High Court.
Over the years, the CCP has issued multiple policy notes (2009, 2012, and 2021) recommending the federal and provincial governments to reduce market distortions. Key recommendations included deregulating the sugar sector, allowing market forces to determine prices, and lifting restrictions on the establishment or expansion of sugar mills to encourage competition.
In its latest policy note, the CCP advised the government to discontinue the practice of announcing support prices for sugarcane and instead adopt a market-based pricing mechanism. This shift will ensure fair compensation for farmers while fostering efficiency and competition within the sector.
Currently, 127 cases related to sugar cartelization are pending in various courts, including 24 in the Supreme Court, 25 in the Lahore High Court, six 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 of CAT.
