The Competition Commission of Pakistan has taken a significant step against major fertilizer companies and their representative organization, imposing a total fine of Rs 375 million for violating competition laws. Six major fertilizer companies, including M/s Fatima Fertilizer Limited, M/s Fatima Fertilizer Company, M/s Fauji Fertilizer Company Limited, M/s Fauji Fertilizer Bin Qasim Limited, M/s Engro Fertilizer Company Limited, and M/s Agri Tech Limited, along with their advisory council, ‘Fertilizer Manufacturers of Pakistan Advisory Council,’ have been penalized for forming a nexus to fix fertilizer prices.
Each company has been fined Rs 55 million, while the advisory council has been fined Rs 75 million. The decision was made by a two-member bench of the commission, consisting of Chairman Dr. Kabir Ahmed Sidhu and Member Salman Amin, after a suo motu inquiry and hearing of the case. The commission found that the fertilizer companies and their trade association issued advertisements in the name of an “awareness campaign,” where they fixed the same price of Rs 1,768 for a 50 kg bag of urea throughout the country.
This joint price-fixing caused harm to farmers and artificially increased the prices of fertilizers, especially during the crucial Rabi and Kharif seasons. The companies defended their behavior by stating that the prices were announced under the direction of the government. However, the commission rejected this position, stating that there was no formal order or official compulsion that would justify this nexus.
The commission observed that the federal government had only directed the companies to launch an awareness campaign, but the companies took advantage of it and fixed the prices in consultation with each other, which is against the competition laws and the principles of business in the market. The bench noted that despite the production costs, gas prices, and market share of the fertilizer companies being different from each other, all the companies fixed the same price for a 50 kg bag of urea.
The commission held that this was a clear case of cartelization and nexus in prices. The investigation also found that the companies were repeatedly given instructions by the government’s Fertilizer Review Committee to resolve the issue of imbalance in fertilizer supply, which were ignored. The commission’s decision highlights the need for transparency and fair competition in the market.
The chairman of the Competition Commission, Dr. Kabir Ahmed Sidhu, has warned all trade associations and organizations in Pakistan to refrain from actions such as exchanging information related to prices or fixing prices. He has reiterated his commitment to establishing transparency in the markets in the country and protecting the interests of consumers. Dr. Sidhu has appealed to the public to immediately inform the Competition Commission through WhatsApp or email if they witness any collusion or anti-competitive behavior.
This decision serves as a reminder to businesses to comply with competition laws and regulations. The commission’s strict stance against cartelization and price-fixing will likely have a positive impact on the market, promoting fair competition and protecting the interests of consumers. The fine imposed on the fertilizer companies and their advisory council is a significant step towards ensuring compliance with competition laws and promoting a level playing field in the industry.
