CCP issues show-cause notices to FMPAC, six fertiliser firms

ISLAMABAD  -  The Competition Commission of Pakistan (CCP) has issued show-cause notices to the Fertilizer Manufacturers of Pakistan Advisory Council (FMPAC) and six lead­ing fertilizer companies for allegedly fix­ing urea prices, a prima facie violation of Section 4 of the Competition Act, 2010.

Urea prices play a crucial role in deter­mining the prices of essential food com­modities. Any arbitrary increase in urea prices by fertilizer companies can lead to higher costs for farmers, ultimately result­ing in more expensive food prices for con­sumers. CCP’s inquiry found FMPAC and its six member firms, including Engro Fer­tilizers Limited, Fauji Fertilizer Company Limited, Fatima Fertilizer Company Limit­ed, Fauji Fertilizer Bin Qasim Limited, Ag­ritech Limited, and Fatimafert Limited, of prima facie violating the Competition Law.

The inquiry was prompted by an FM­PAC’s advertisement in November 2021, where they announced a ‘Maximum Re­tail Price of Urea at Rs 1768 per 50kg bag’, during a time of rising prices and reported shortages. The inquiry pro­ceedings revealed that urea prices were deregulated under the Fertilizer Policy of 2001. The advertisement contents were seen as a decision by an associa­tion on the sale rate of urea, a violation of Section 4(2)(a) of the Act.

The inquiry also noted a pattern of uni­form pricing and price parallelism among urea companies, suggesting potential col­lusive activity. Despite receiving subsi­dized feedstock gas from the Government of Pakistan, which varies in rate for each plant, these companies’ prices showed uniformity in some instances. This raises questions about their cost structures and subsidies received. From a competition law perspective, the announcement of prices by an association, even if relaying government-set prices, is considered a commercial decision beyond permissible activities. CCP has repeatedly directed business associations to refrain from en­gaging in price fixing or other collusive practices. The persistent double-digit food inflation in Pakistan over the past few years underscores the ripple effect of urea price hikes on the broader economy.

ePaper - Nawaiwaqt