ISLAMABAD: The Competition Commission of Pakistan (CCP) has issued show-cause notices to the Fertiliser Manufacturers of Pakistan Advisory Council (FMPAC) and six leading fertililiser companies for allegedly fixing urea prices, a prima facie violation of Section 4 of the Competition Act 2010.
Urea prices play a crucial role in determining the prices of essential food commodities. Any arbitrary increase in urea prices by fertiliser companies can lead to higher costs for farmers, ultimately resulting in more expensive food prices for consumers.
CCP’s inquiry found that FMPAC and its six-member firms, including Engro Fertilisers Ltd, Fauji Fertiliser Company Ltd, Fatima Fertiliser Company Ltd, Fauji Fertiliser Bin Qasim Ltd, Agritech Ltd and Fatima Fertiliser Ltd of prima facie violating the competition law.
The inquiry was prompted by an FMPAC’s advertisement in November 2021, where they announced a ‘Maximum Retail Price of urea at Rs1,768 per 50kg bag’ during a time of rising prices and reported shortages.
The inquiry proceedings revealed urea prices were deregulated under the Fertiliser Policy 2001. The advertisement contents were seen as a decision by an association on the sale rate of urea, a violation of section 4(2)(a) of the act.
The inquiry also noted a pattern of uniform pricing and price parallelism among urea companies, suggesting potential collusive activity.
`Despite receiving subsidised feedstock gas from the government, which varies in rate for each plant, these companies’ prices showed uniformity in some instances. This raises questions about their cost structures and subsidies received.
Published in Dawn, April 3rd, 2024
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