The Competition Commission of Pakistan (CCP) is set to face a seriously challenging case. The rehearing of a popular and politically charged case is about to take place about a decision by the Commission against the sugar mills.

The CCP had imposed its highest-ever penalty of Rs44 billion against the sugar mills and the Pakistan Sugar Mills Association (PSMA) in 2021 for alleged cartelisation and anti-competitive conduct. However, the sugar mills maintain that the decision was only made to popularise the performance of the CCP and abide by the political decision-makers of that time.

The 2021 sugar mill case has also highlighted the alleged excessive use of powers by the chairperson of the Commission at that time, who voted twice to approve the inquiry against the sugar mills. The decision is available on the CCP’s website, informing the public about the three members and the chairperson of the CCP who conducted the inquiry.

With a 2-2 deadlock, the chairperson, as the chair of the Commission, cast the decisive vote, and the order imposing the highest penalty ever by the CCP was approved. The order, however, was challenged in the Competition Appellate Tribunal (CAT), which questioned the legality of the additional ‘casting vote’ exercised by the chairperson to break the deadlock in the original four-member bench.

The sugar mill 2021 case re-emerges along with questions surrounding cartelisation and pricing decisions

In May, the CAT ruled that ‘no casting vote’ could be exercised in quasi-judicial proceedings under the Competition Act, 2010, and set aside the CCP 2021 order against the sugar mills. The CAT directed the CCP to rehear the matter with the condition that the chairperson or a member of the Commission who was not part of the earlier decision would be present.

The CCP has issued notices to the PSMA and its member sugar mills to appear for a hearing in the matter on August 4th, 5th, 6th and 7th.

The 186-page decision of the CCP against the PSMA in 2021 presents two differing views on cartelisation by sugar mills and the PSMA.

Those who supported imposing heavy penalties on PSMA and its members noted that sugar was an integral part of the quality of life for the general public, and its availability at an affordable price comes under the guaranteed right to life under Article 9 of the Constitution.

It was noted that there were 53 essential commodities in the Hoarding Act of the country, and sugar was among the top ten. Sugar is not only consumed as a sweeter but is an important ingredient for bottled beverages, confectionaries, the pharma sector and many food processing industries. Thus, the CCP order noted that any change in sugar price will also have a spillover effect over many products.

On the other hand, the different opinions of two members highlighted that the enquiry committee had developed the ‘theory of competitive harm’ as it solely rests on a key assumption that the sugar stock position was a highly sensitive commercial information that allowed sugar mills to formulate pricing strategies and control the supply of sugar in the market.

Incidentally, section 55 of the CCP order has referred that the Sugar Advisory Board (SAB) meeting held in October 2019 discussed the issue of high prices. The chairman PSMA said in the meeting that ex-mill price of sugar have come down from Rs69 in September to Rs65 per kg in October, 2019. Yet, the meeting noted that the wholesale and retail prices did not decrease.

After consulting all the stakeholders, it was concluded unanimously by SAB that to reduce the gap between ex-mill price and retail price, the secretary of industries and production will approach the provincial governments to regulate differentials. The intent was to bring the margin to a reasonable level to manage the recent price hike in wholesale and retail markets.

Incidentally, the CCP order failed to note that the retail price of refined sugar had a direct link with the wholesale markets, and large stocks were purchased by the traders based in these wholesale trading hubs.

Talking to Dawn, a senior Punjab-based PSMA member said that the whole process focused only on the performance of the sugar mills while discussing the retail price of the commodity, whereas there were at least two more stakeholders involved before sugar reached the individual consumer level. “This enquiry was designed to pressurise those who had developed differences with the prime minister of that time,” he said.

Whereas, Iskander Khan, four times PSMA chairman, responding to the query, added that cartelisation was never proven in the CCP inquiry, while the decisions to export or import sugar are made by the government.

“How can CCP or any entity accuse sugar mills of conspiring to export or import sugar mills do so without naming the prime minister, minister for food security, minister for industries, and the commerce minister?” Mr Khan said. He added that blaming some sectors has become a popular fashion in the country without a thorough study of ground realities.

Published in Dawn, The Business and Finance Weekly, July 14th, 2025