KARACHI: Cement manufacturers have begun receiving notices from the Competition Appellate Tribunal (CAT) regarding their penalty case dating back to 2009, sources told Dawn.

Fines of about Rs6-7 billion were imposed on 22 cement companies for alleged cartelisation and price fixing.

A high-ranking source from a major cement company said the notices for the resumption of the penalty case started arriving on Oct 18.

After the imposition of heavy fines in 2009, many companies moved the court to obtain a stay order against the decision by the Competition Commission of Pakistan (CCP). Some companies also approached the Supreme Court directly.

However, the apex court ordered in June that the case should first be sent to the CAT. Under the law, the CAT must decide the case within six months. Afterwards, any aggrieved party can appeal to the Supreme Court.

Some market analysts believe an order can be issued in one or two months.

Syeda Humaira Akhtar of BMA Research said the resumption of the case adds to the uncertainty prevailing in the cement sector. In the case of a negative tribunal decision, provisioning for the penalty will need to be recorded on company books even if an appeal is filed, she said. “Any tangible payment in the near-to-medium term seems unlikely,” she said.

The development may reduce the chances of any price hike in the near term by cement manufacturers, particularly in the north region where prices have already been slashed by 10-13 per cent from their high point in June, because the move may invite further scrutiny by the CCP, she said.

An analyst at a brokerage house said the stock market was already abuzz with rumours about CAT notices. Cement stocks led the rally last week, but a string of poor financial results is putting them under pressure.

“Currently, no cement cartel exists as prices in the north region have crashed in the last two months,” he said while requesting anonymity.

“No action was taken against cement makers in 2009-10 when the cement cartel was actually active. What will happen now in the absence of any cartel?” he asked, rhetorically.

According to the commission’s detailed judgment, the penalties were imposed after examining the seven-month record of cement manufacturers recovered from the premises of their association in March 2009.

According to the decision, Lucky Cement received a penalty of Rs1.27bn, D.G. Khan Rs933 million, Maple Leaf Rs586m, Bestway Rs562m, Pakistan Cement Rs405m, Attock Rs374m, Pioneer Rs366m, Dewan (the merged entity of Dewan and Dewan-Hattar) Rs345m, Fauji Rs266m, Cherat Rs266m, Askari (Wah) Rs233m, Askari (Nizampur) Rs187m, Fecto Rs174m, Kohat Rs103m, Al Abbas Rs87m, Mustehkam Rs74m, Dandot Rs42m, Gharibwal Rs39m, Dadabhoy Rs28m and Flying Rs12m.

Published in Dawn, October 25th, 2017