Pakistan has been facing an adverse economic and financial situation and is struggling to increase exports and production. But uncompetitive business practices by top organizations are one of the obstacles in economic growth and development.
Recently, the Competition Commission of Pakistan (CCP) has found ‘hardcore evidence’ of cartelization in the cement sector. It stated that the All Pakistan Cement Manufacturers Association (APCMA) was acting as a cartel to fix cement prices through unlawful means which led to a manifold increase in profits while the burden fell on consumers who were compelled to pay higher prices.
The inquiry revealed that top cement companies colluded to increase prices as much as Rs50 per bag which forced consumers to pay an additional Rs40 billion this year alone. This is despite the lockdown restrictions during which the construction sector was closed down but yet the manufacturers did not pass on the impact of the reduction in federal excise duty to consumers.
This is the second time the CCP has busted a cartel in the cement sector but no action was taken. In 2012, an enquiry was initiated but the companies managed to get a stay order from the courts. It is also the second cartel that has been exposed after we witnessed manipulation in the sugar sector by top industry barons but the case has been pushed aside by deep-rooted vested interests.
In recent months, it has been observed that the prices of cars have increased exponentially and not a single car being sold for less than one million rupees. The auto sector has also been operating as a cartel by anti-competitive behaviour but has not been exposed. The automobile firms are able to even control policy and were the biggest hindrance in the introduction of electric vehicles in Pakistan.
Businesses that make agreements with their competitors to fix prices, rig bids, share markets or restrict outputs are breaking laws and stealing from consumers by inflating prices, reducing choices and damaging the economy. These business practices that limit or prevent competition are against the law and must be discouraged by companies and governments.
It is imperative that businesses understand their rights and obligations at all times particularly when dealing with suppliers and other businesses. The rights of consumers must be protected from any anti-competitive behaviour. The government should empower the CCP so that it only exposes these cartels and monopolistic behaviour but also takes strict action against them.
