Souring the Deal? CCP Claims Existence of a Sugar Cartel

Fresh from the traumatic ups and down suffered at the hands of the government as mentioned in a previous post, and smack in the middle of a perennial sugar crisis, the Competition Commission of Pakistan (CCP) appears to be back in full swing, claiming in a report submitted to the Supreme Court of Pakistan, that the preliminary results of its investigations into the sugar crisis pointed to 'collusive behaviour and prima facie cartelisation'. Snippets of the report can be read in this news story in the daily Dawn.

Interestingly, the CCP website also carries a Policy Note on the alleged Price Fixing Agreement between the government and the Pakistan Sugar Mills Association (PSMA), allowing the fixing of prices at certain rates. In this Note, the CCP advises the government to scrap the Agreement since it amounts to 'legitimization of practices prohibited under law' and urges it to 'not provide any patronage to anticompetitive practices and measures that in effect promote and encourage collusive behaviour'.

All this brings three questions to the fore:

1. How responsibly are the Boards of the sugar companies, almost all of whom are listed companies on the country's bourses, acting?

2. What role has the Securities & Exchange Commission of Pakistan (SECP) played so far in reviewing corporate practices that another regulator is tagging so publicly as inappropriate and illegal?

3. With all and sundry apparently wanting to sweeten the deal for the sugar barons, will anyone in government pay heed to the CCP's advice?