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CCP Issues Show Cause Notices to Fertilizer Manufacturers for Alleged Price Fixing

The Competition Commission of Pakistan (CCP) has taken a significant step towards ensuring fair competition in the fertilizer industry by issuing Show Cause Notices to the Fertilizer Manufacturers of Pakistan Advisory Council (FMPAC) and six prominent fertilizer companies. This action comes in response to allegations of price fixing, a violation that could have far-reaching consequences for both farmers and consumers.

CCP Issues Show Cause Notices to Fertilizer Manufacturers for Alleged Price Fixing

Urea prices, a pivotal factor in determining the cost of essential food commodities, have been the focal point of this inquiry. The CCP’s investigation revealed a prima facie violation of Section 4 of the Competition Act, of 2010, indicating potential collusion among fertilizer companies to manipulate urea prices.

Among the companies under scrutiny are industry giants such as Engro Fertilizers Limited, Fauji Fertilizer Company Limited, and Fatima Fertilizer Company Limited. The inquiry was prompted by an advertisement released by FMPAC in November 2021, where they announced a ‘Maximum Retail Price of Urea at Rs, 1,768 per 50kg bag’ amidst rising prices and reported shortages.

Despite the deregulation of urea prices under the Fertilizer Policy of 2001, the advertisement’s contents were perceived as a violation of the Competition Act. Furthermore, the inquiry revealed a troubling pattern of uniform pricing and price parallelism among urea companies, raising suspicions of collusive activity.

Of particular concern is the apparent uniformity in pricing despite variations in the subsidized feedstock gas received from the Government of Pakistan. This raises questions about the cost structures and subsidies enjoyed by these companies.

The CCP has consistently emphasized the importance of fair competition and has directed business associations to refrain from engaging in price fixing or other collusive practices. The potential consequences of urea price hikes on food prices and the broader economy cannot be understated, particularly in a country grappling with persistent double-digit food inflation.

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This latest development underscores the CCP’s commitment to ensuring a level playing field in Pakistan’s fertilizer industry and its determination to curb anti-competitive practices that harm both farmers and consumers. As the investigation progresses, stakeholders will be keenly observing the outcome, hoping for a fair and just resolution that promotes healthy competition and benefits the nation as a whole.

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