CCP seizes proof against edible oil cartels

ISLAMABAD – The Competition Commission of Pakistan (CCP) on Friday conducted search and inspection operation at offices of Pakistan Vanaspati Manufacturers Association (PVMA) and Pakistan Edible Oil Refiners Association (PEORA) in Islamabad and Karachi to impound documentary evidences of the associations’ alleged involvement in anti-competitive practices.
The CCP took notice of continuously increasing ghee and cooking oil prices as reported in various sections of press. Ghee and cooking oil are very important commodities and concerns have been raised that historic increase in prices may have been the result of possible anti-competitive practices by the manufacturers. Similarly, the findings of a “Competition Assessment Study of Cooking Oil and Ghee Sector in Pakistan”, recently conducted by CCP had highlighted that despite a thin diffusion of market share across about 100 firms, there are certain instances inviting concern from a competition perspective.
It had also argued that the industry is able to thrive even while maintaining capacity utilisation of less than 50 percent, which points to absence of competitive pressure particularly in the middle market segment. It has also been observed that price increase in different categories and brands of ghee/cooking oil has always taken place in parallel manner. Upon further examination of media reports it has also been noticed that the price increase is often referred to a collective decision of all manufacturers or their association, resulting in simultaneous increase in price.
It is a norm of competitive markets that decisions are taken and implemented independently by competitors. However, simultaneous increase in the prices of ghee and cooking oil by equal amounts at various occasions prima facie raises suspicion of collusive behavior and collective decision in the ghee and cooking oil industry. Such collusive behavior is prohibited under Section 4 of the Competition Act, 2010.
During the search and inspection, conducted under Section 34 the Competition Act, important data has been confiscated from the associations’ offices that will be analysed by the Commission’s enquiry officers.