CCP cracks down on sugar cartel practices

March 18, 2025 (MLN): The Competition Commission of Pakistan (CCP) has reaffirmed its commitment to monitoring the ongoing sugar crisis, warning that strict enforcement and policy measures will be implemented if any anti-competitive practices are detected.

The CCP has been actively working to curb cartelization in the sugar industry, ensuring fair competition and consumer protection.

In 2020, the CCP launched an inquiry into the sector, which revealed that sugar mills were allegedly engaged in price-fixing and supply manipulation through coordinated actions facilitated by the Pakistan Sugar Mills Association (PSMA).

To further investigate, the CCP conducted raids on PSMA offices, as per the press release issued today.

Following its findings, the CCP imposed a record-breaking Rs44 billion in penalties on sugar mills and the PSMA in August 2021, marking one of the highest fines in its history.

However, legal challenges arose, as the Sindh and Lahore High Courts, along with the Competition Appellate Tribunal (CAT), issued stay orders that have delayed the recovery of these penalties.

The CCP has a long history of interventions aimed at promoting transparency and competitiveness in the sugar sector.

In 2009, its first inquiry found preliminary evidence of PSMA’s involvement in price-fixing and production manipulation.

Consequently, show-cause notices were issued to certain sugar mills and the PSMA on July 16, 2010.

However, these proceedings were also stayed by the Sindh High Court.

Over the years, the CCP has issued multiple policy notes (2009, 2012, and 2021) to federal and provincial governments, advocating for market-driven reforms to reduce distortions.

Key recommendations have included deregulating the sugar sector, allowing market forces to determine prices, and lifting restrictions on the establishment or expansion of sugar mills to foster competition.

In its latest policy note, the CCP advised the government to discontinue the practice of announcing support prices for sugarcane and instead adopt a market-based pricing mechanism.

This shift is expected to ensure fair compensation for farmers while fostering efficiency and competition within the sector.

At present, 127 cases related to sugar cartelization remain pending in various courts, including 24 in the Supreme Court, 25 in the Lahore High Court, six in the Sindh High Court, and 72 in CAT.

In a move to expedite resolutions, the government has recently appointed a new Chairman and Members of CAT, signaling a renewed focus on addressing legal bottlenecks in the sugar sector.

As the CCP continues to monitor market conditions, the industry awaits further developments that could reshape the sugar sector’s competitive landscape.

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