Cement industry: CCP remains vigilant in fighting cartel activities

The Competition Commission of Pakistan (CCP) remains dedicated to fighting against the alleged cartelization by cement manufacturers with the full support of the judiciary. With the cement sector’s troubling history of price-fixing, market manipulation, and unfair profiteering, stronger enforcement measures and policy adjustments are crucial. The current soaring cement prices in Pakistan, reaching up to Rs1,500 per bag, are a stark reminder of the damaging effects of unchecked corporate collusion and the urgent necessity for decisive action to combat cartelization.

The prices of cement have witnessed a staggering increase from Rs272 per bag in 2009 to the current Rs1,500. The CCP has repeatedly uncovered evidence of price-fixing and collusion among cement manufacturers, only to face legal hurdles in the form of stay orders. This unchecked manipulation not only burdens individual consumers but also hinders national infrastructure projects, leading to increased costs across the board.

Pakistan’s cement industry has long faced accusations of cartelization, utilizing market forces for unjust profits while disregarding consumer welfare. Despite the CCP’s interventions, manufacturers persist in engaging in anti-competitive practices, raising prices through collusion and utilizing legal protection from court-issued stay orders.

The CCP has conducted three significant inquiries into the cement industry, revealing direct proof of price-fixing, market division, and coordinated production controls in 2009, 2012, and 2020. However, legal interventions have continuously impeded the CCP’s actions, allowing cartelization to prevail.

During the 2009 inquiry, the CCP discovered price-fixing agreements orchestrated by the All Pakistan Cement Manufacturers Association (APCMA). Although penalties were imposed, cement companies obtained stay orders from the higher courts, delaying the resolution. A similar situation arose in the 2012 inquiry and, more recently, in the 2020 investigation, where evidence of cartel behavior leading to significant price increases was uncovered.

Despite the lowering of costs, cement manufacturers failed to pass on benefits to consumers, resulting in significant financial burdens. The CCP’s analysis revealed deliberate supply restrictions and price manipulation enabled by the industry players, despite favorable global circumstances like reduced coal and oil prices.

In response to these findings, the CCP issued a Policy Note in March 2024, recommending improved transparency through mandatory disclosure of manufacturing and expiry dates on cement bags. While the CCP possesses the authority to issue fines of up to Rs75 million or 10% of a company’s turnover, legal barriers have allowed the cement cartel to continue its anti-competitive practices.

In conclusion, the continuous efforts of the CCP to combat cartelization within the cement industry remain essential to safeguarding consumer interests, promoting fair competition, and ensuring transparency in the market. Stronger enforcement mechanisms and policy reforms are imperative to address the damaging impacts of unchecked corporate collusion and protect the overall welfare of consumers and national development initiatives.