CCP fines urea makers, trade body for price fixing

June 03, 2025 (MLN): The Competition Commission of Pakistan (CCP) has taken decisive action against anti-competitive conduct in the fertilizer sector, imposing a penalty of Rs50 million on each of the six major urea manufacturers and Rs75m on a leading industry association, FMPAC.

Following a detailed inquiry initiated suo motu, the Commission’s Bench, comprising Dr. Kabir Ahmed Sidhu and Mr. Salam Amin, reached a conclusion regarding anti-competitive practices in the fertilizer sector.

They found that six urea manufacturing companies Fatima Fertilizer Limited, Fauji Fertilizer Company Limited, Fauji Fertilizer Bin Qasim Limited, Fatima Fertilizer Company Limited, Engro Fertilizer Company Limited, and Agritech Limited in coordination with their trade association, FMPAC, had “under the guise of conducting an awareness campaign/advertisement, effectively fixed the price of urea across the country.”

This conduct was deemed a violation of Section 4 of the Competition Act, 2010.

Despite claiming price independence, the manufacturers failed to justify their synchronized pricing strategy.

The Commission's investigation revealed that this conduct not only distorted competition but also harmed farmers across Pakistan, particularly during the critical Rabi and Kharif seasons, by artificially influencing fertilizer prices and limiting market choice.

The Respondents’ attempt to claim protection under the 'state action doctrine' was rejected. The Bench held that no formal government directive or compulsion existed to justify their collusive behavior.

Instead, the Respondents took advantage of a Federal Government direction regarding initiating an awareness campaign encouraging farmers about urea prices and used it as a tool to fix the price in coordination among themselves.

They jointly announced the uniform price for urea buyers/consumers, as per the press release issued.

The Bench further stated that such “actions, under the pretext of complying with government instructions, effectively undermined market forces and distorted competitive pricing mechanisms.”

It was also noted with great concern that despite significant variations in input costs, economies of scale, market sizes, and gas prices, all Respondents were charging an identical price for a urea bag (i.e., Rs1768/- per bag).

The Bench observed, “In a market where each undertaking’s production capacity and market share are matters of common knowledge, such a coordinated disclosure cannot be viewed as incidental or competitively benign.

Rather, the joint announcement constitutes an overt manifestation of concerted conduct.”

Moreover, the Fertilizer Review Committee (FRC) had repeatedly directed the Respondents to address their failure to manage supply imbalances.

Previous warnings issued by the Commission to the Fertilizer Manufacturers and FMPAC in the years 2010, 2012, and 2014 had failed to bring about any lasting change.

The Chairman reiterated the Commission's message that associations across the country should not provide platforms for sharing price-sensitive information or exchanging views on prices.

The Commission reaffirmed its commitment to ensuring competitive markets, promoting consumer welfare, and holding undertakings accountable for practices that violate the law.

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