Tribunal overturns ruling in sugar case

Appellate forum orders fresh hearing, sets aside Rs44b penalty

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ISLAMABAD:

The Competition Appellate Tribunal, while deciding the appeals filed by the Pakistan Sugar Mills Association (PSMA) and its member mills, has sent back the case involving a penalty of Rs44 billion to the Competition Commission of Pakistan (CCP) for a fresh hearing.

In its short order, the tribunal directed that the matter be reheard by either the chairperson or any other member of the commission who was not a signatory to the earlier conflicting opinions and a final decision should be made preferably within 90 days.

The CCP's original 2021 order was issued by a four-member bench that was evenly split. Two members, including the then chairperson Rahat Kaunain Hassan and member Mujatba Lodhi, supported the imposition of the penalty while the remaining two including Bushra Naz Malik and Shaista Bano wrote a dissenting note.

To break the deadlock, the then chairperson exercised the "casting vote" under sub-section 5 of Section 24 of the Competition Act 2010 through a note dated August 13, 2021, effectively converting the stalemate into a majority ruling that upheld the penalty.

The legality of the casting vote became the central issue in the appeals filed by millers. The tribunal has ruled that the chairperson has no authority to exercise a casting vote in quasi-judicial proceedings under the Competition Act. As a result, the chairperson's opinion based on the casting vote has been set aside.

After fresh hearing, the decision of the chairperson or the assigned member will settle the matter and determine the violation of competition law by the PSMA and its member mills.

The appellate tribunal has recently become fully functional following the federal government's appointment of a new chairman, allowing the tribunal to resume hearing on several long-pending appeals.

In the sugar cartel case, the CCP had imposed penalties of Rs44 billion on the millers' association and 81 of its members. PSMA and its members had allegedly formed a cartel to manipulate prices and had collectively decided to export the sweetener. The CCP passed the order for violating Section 4 of the Competition Act.