ISLAMABAD, Aug 22: The Monopoly Control Authority (MCA) has initiated an investigation into the recent moves of cement manufacturers to set up a cartel for the second time in about four years, according to an official source.

In 1999 too they had established a cartel, forcing the Authority to direct them to reduce their prices to the level existing before a 100-rupee increase in price. The government, however, did not implement the decision taken by the MCA under the Monopolies and Restrictive Trade Practices Ordinance, 1969. Instead, it allowed the industry to reduce the price by only about Rs40 to Rs200 per bag.

The tangible sign of the plot was the sudden raise in the price of cement by Rs25 per bag without any explanation or justification, the source observed.

This action of the cement industry is likely to deliver a rude shock to the construction industry and rob tens of thousands of people of their jobs and business.

The hike followed closely the three-day total closure of production by most of the factories and drastic cut (60 per cent in some cases) in output by others for three days around Independence Day.

The artificial shortage thus laid the ground for drastic increase of price, the source noted.

The closure and reduction in output was not warranted by the market situation where the demand for the important building material was normal. Should one assume that the demand was sluggish which ‘forced’ the industry to curtail its production? The industrialists, however, deprived themselves of this justification by making their product costlier.

When his attention was drawn to the situation, MCA chairman Saleem Asghar Mian said he had already ordered a probe into the matter with a view to determining whether the industry had resorted to establishment of cartel. For this purpose, the analysis of data had been undertaken by the MCA staff.

In yet another twist to the sordid scenario, he said, the Authority had received a complaint from a cement producer of Sindh who had alleged that the cement industrialists of Punjab and NWFP had hatched a conspiracy to destroy the cement industry of the southern province. Their objective was to thus eliminate competition in that part of the world.

In this connection, it was further alleged, the cement industrialists of the North had started sending their product in Sindh at the prices much lower than those prevailing in the South.

Responding to another question, the MCA chairman said that the Authority was also engaged in investigations into what looked like the formation of cartels by the flour mills and vegetable ghee factories.

There were indications that some of the mill owners were using their respective associations to restrict the supply of their products and exploit the resultant artificial shortage to peg up their prices, he said.

The MCA’s interest in the matter had been triggered by the recent hike in prices of wheat flour and edible oil, which is not warranted by economic factors, he said.