ISLAMABAD: The Competition Commission of Pakistan (CCP) recently conducted a ‘search and inspection operation’ of the office of the All Pakistan Cement Manufacturer Association (APCMA). Apparently, cement manufacturers in Pakistan have engaged in anti-competitive behavior through an overt collusive arrangement. The objective was to restrict the supply of cement, raise its price and hence earn higher profits.
The price of cement rose by approximately 28 per cent during 2010 while capacity utilisation declined from a high of 81.53 per cent in 2007-08 to 69.67 per cent by the second quarter of 2011-12. This is clear evidence of cement manufacturers functioning as a cartel, reducing supply (shown in the reduced capacity utilisation figure) and raising the price of cement.
As a consequence, the cost of construction has risen significantly. In 2009, the members were again found to be engaged in anti-competitive behaviour as well and were fined. They went to court and obtained a stay order and the matter has rested there since.
The CCP claims to have issued fines of over seven billion rupees to various firms that it has said were found violating the country’s anti-competitive laws. However, a single rupee is yet to be received from such companies because all of them seem to have obtained stay orders!
Surely, this is a matter that should be sorted out by our judiciary as well?
Asad Syed
Published in The Express Tribune, January 30th, 2012.
