ISLAMABAD
The Competition Commission of Pakistan (CCP) has given a week’s time to Fauji Fertiliser Company (FFC) and Agritech to provide complete details on the proposed acquisition of the later by Agritech.
CCP held a hearing on the proposed acquisition of 79 percent shares of Agritech by FFC here on Wednesday. The hearing was held by the CCP bench comprising of CCP Chairperson Rahat Kaunain Hassan and Members Dr Joseph Wilson and Vadiyya S Khalil.
CCP granted an opportunity of hearing to the parties that involved potentially significant market concentration in the fertiliser sector.
FFC has a market share of 48 percent while Agritech has a share of six percent.
The proposed acquisition involves acquisition by FFC of 79 percent of Agritech shares, owned by Azgard, which also owns Hazara Phosphates.
Agritech was asked to demonstrate on what basis it was adopting a failing firm defense. FFC’s counsel said that they were interested in a consolidated acquisition of Agritech, which would include Hazara Phosphates.
They said that the merger would result in significant synergies and efficiencies for FFC. The bench asked whether such efficiencies would result in a cheaper product for the consumer, but FFC did not make any such commitment.
CCP pointed out that Agritech product was already cheaper than FFC product, so how would their argument on greater economies of scale be justified.
FFC counsel said that the quality of product would improve.
Agritech maintained that because its parent company was a failing firm, any restriction on such merger would result in the loss of 12,000 direct jobs and place a significant burden on the banking sector because of its immense liabilities.
