ISLAMABAD: The initial inquiry report by the Competition Commission of Pakistan (CCP) has found two leading tractor manufacturers of the country — Millat Tractors Ltd (MTL) and Al-Ghazi Tractors Ltd (AGTL) — involved in abuse of their dominant position in Pakistan by establishing a cartel.

The CCP had initiated the inquiry after receiving complaints via the Pakistan Citizen Portal (PCP) for drastic increase in the prices of tractors by manufacturing companies at different points in time despite various incentives given by the government and a great extent of localisation in the tractor industry. The complainants also highlighted the alleged substandard build quality of the tractors resulting in frequent breakdowns.

The CCP report highlighted that during the course of inquiry, information relating to production and price data from MTL and AGTL for the period three years was obtained. The data from January 2018 to May 2021 shows that both the tractor manufacturers increased their prices in a sequential manner during a smaller time frame and the quantum of percentage increase was approximately similar.

The CCP report said that authorised teams of the commission searched the premises of MTL Lahore and AGTL Karachi on September 2. The impounded data comprised the relevant record, documents, meeting minutes and computer-stored information.

The nature of evidence impounded during the enter and search revealed that there were WhatsApp conversations between senior officials of these companies regarding price fixing and other anti-competitive practices.

The CCP report added that the two companies were also involved in coordinated and collusive decision making with respect to prices of tractors for various models, and shared real-time pricing decision and thereafter enabling the other competitor to announce its own increase to take effect at a future date tantamount to collusive activities in the tractor industry.

The report added that MTL entered into agreement with its dealers across Pakistan for the imposition of restrictive trading condition amounting to Resale Price Maintenance (RPM). The company monitored the same by circulating instructions to all dealers as well as warning them against punitive measures.

Sources in the CCP said that based on the inquiry report the commission has decided to initiate proceeding against tractor manufacturers under the Competition Act, 2010 for alleged violations.

Published in Dawn, September 14th, 2021