Competition Commission issues show-cause notices to Punjab sugar mills for price-fixing and crushing delays

The Competition Commission of Pakistan (CCP) has issued show-cause notices to ten Punjab-based sugar mills for allegedly forming a cartel to delay the start of sugarcane crushing and fix the cane purchase price at Rs400 per maund.

CCP Chairperson Dr Kabir Ahmed Sidhu said no commercial organisation or trade association should be used as a platform for collusive decision-making. He warned that strict action would be taken against any entity involved in anti-competitive practices.

According to the CCP, representatives of the ten mills met at Fatima Sugar Mills on November 10, where they allegedly agreed to begin crushing on November 28 and set a uniform cane price of Rs400 per 40kg. The meeting was chaired by Fatima Sugar Mills’ Resident Director Rana Jamil Ahmed Shahid.

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Representatives from Sheikho Sugar Mills, Thal Industries Corporation, Tandlianwala Sugar Mills (Rehman Hajra Unit), JK One Sugar Mills, Ashraf Sugar Mills and Kashmir Sugar Mills attended the meeting in person. Delegates from Siraj Sugar Mills, Two Star Sugar Mills and Haq Bahoo Sugar Mills joined online.

The CCP said any agreement to fix prices or coordinate other business decisions violates Section 4 of the Competition Act, 2010. The Punjab Sugarcane Commissioner had earlier directed mills to begin crushing from November 15.

The Commission also noted an imbalance of power between mills and farmers in price negotiations. It said that individual mills should set cane prices in consultation with local grower representatives, based on supply and demand, rather than collectively determining a uniform rate.

The mills have been asked to submit a written explanation within 14 days to justify why proceedings should not be initiated for allegedly entering into prohibited agreements, manipulating the sugarcane market and securing an unfair commercial advantage by delaying crushing.

The CCP cautioned that early-season delays in cane procurement could disrupt supplies and contribute to higher retail sugar prices.

The CCP noted that forming agreements to fix prices or make other business decisions in any market violates Section 4 of the Competition Act 2010. The Punjab Sugarcane Commissioner had previously directed sugar mills to start crushing from November 15.

The Commission highlighted a clear imbalance of power between mill owners and farmers in price negotiations. Ideally, each mill should determine cane prices in consultation with local farmer representatives, taking supply and demand into account. Instead, the mills allegedly colluded to unilaterally fix the price at Rs 400 per 40 kilograms.

The CCP has directed the mills to submit a written response within 14 days explaining why legal action should not be taken against them for engaging in prohibited agreements, manipulating the sugarcane market, and gaining unfair commercial advantage through delayed crushing.

Delays in cane crushing early in the season could impact sugar supply in the market, potentially creating artificial shortages and increasing retail sugar prices.