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LAHORE: A special team of the Competition Commission of Pakistan (CCP) on Monday inspected premises of All Pakistan Cement Manufacturers Association (APCMA) and Kohat Cement under Section 34 of the Competition Act, 2010 to impound proofs of suspected cartelisation in cement sector.
The team took the action after being tipped of that the association's secretary was allegedly involved in making correspondence with the cement manufacturers to control and monitor supply of cement in open market to avoid competition.
The contents of the correspondent (e-mails) provided by the informant to the CCP revealed that the cement manufactures had prima facie collectively devised a vigilance plan by which the cement dispatches at one cement production unit were used to be monitored by a team of another unit and vice versa, says a press release.
It said that the CCP through its written order of August 27, 2009 had declared such arrangement as violation of Section 4 of the Competition Act, 2010 and imposed a penalty of Rs6.3 billion on APCMA and its member manufacturers.
The team when arrived at the APCMA premises found that the APCMA secretary was not present in the office and all the record was locked.
However, the office assistant present in the APCMA office allowed access to the data.
The team after finding some relevant record was of the view that manufacturers had again formed a collusive arrangement to ensure compliance the monitoring function being performed by cement manufacturers on their own under the auspices of APCMA.
Based on the documentary proofs including emails, the team had reached to the facts that the association's secretary appeared to be coordinating the activities under the arrangement and the association's chairman was responsible for rotating the monitoring teams.
The press release said that cement manufacturers had continued to increase the prices despite the reduction in sales tax and Federal Excise Duty (FED) by one per cent and Rs200 per ton respectively along with removal of 2.5 per cent Special Excise Duty (SED) as announced in the Federal Budget 2011-12.
This has rendered into savings of Rs22 to 23 per bag which had been completely absorbed by the producers depriving the end users of the taxation benefit announced by the government.
By eating the FED benefit, the manufacturers had raised the prices without any fear by Rs35 per 50 kg bag after budget 2011-12 announcement.
The release further said that the coal prices in the international market had been on the rise since April 2009 when they stood at $68 per ton and then gradually peaked at $142 per ton in January 2011.
But currently market sources constantly complained that there was no justification of raising the prices of cement when the global coal price (which is used to heat clinker) had dechned to $130 per ton from $150 per ton in the few months, it said.
