November 19, 2020: Exercising its powers under Section 34 of the Competition Act 2010, the Competition Commission of Pakistan (CCP), as part of an enquiry launched in May 2020 to investigate the possible anti-competitive activities by the cement manufacturers, carried out a search and inspection of the offices of Chairman and Vice-Chairman of All Pakistan Cement Manufacturers Association (APCMA) located in Karachi today.
Two different teams entered and searched the offices of the Chairman and Vice-Chairman of APCMA located in Karachi and impounded the relevant record.
The enquiry in the cement sector was started based on the information gathered through various media reports, and concerns and complaints expressed regarding a concurrent increase in cement prices, particularly during the month of April 2020. The reports indicated that an increase ranging between Rs. 45 – Rs55 per cement bag was apparently collectively decided in a meeting of the cement manufacturers held under the umbrella of APCMA.
On 24th September 2020, the CCP had conducted a search and inspection of the APCMA main office and the office of Senior Vice Chairman of the APCMA’s Executive Committee; a senior employee of a major cement company in Lahore.
Moreover, the impounded record, including Whatsapp messages and emails, warranted conducting search and inspection in the South Zone as well for obtaining evidence relating to anticompetitive practices. The evidence suggests possibility of a cartel/collusive arrangement between the cement manufacturers.
It is pertinent to mention that various factors among others lower demand of cement in the first two quarters of 2020, and an almost parallel increase in cement prices and data collected from Pakistan Bureau Statistics and the cement companies, became the basis of CCP’s enquiry and the earlier search.
Sudden rise in price by the cement manufacturers at a time when there is low demand compared to the installed capacity of the manufactures and considering that input fuel cost (coal and oil), transportation and interest rate have declined raises suspicion of a collective rise in price by cement companies.
It is pertinent to mention here that the cement sector has a history of collusive activities and they have been penalized in the past to an amount of collectively more than Rs. 6.3 billion on account of forming a cartel and involvement in the prohibited agreements in violation of Section 04 of the Act. In 2012 the Commission again initiated enquiry against cement companies, however the same could not be proceeded and concluded due to a stay order granted to cement companies by the Lahore High Court. The current enquiry was initiated in 2020.