Supreme Court Upholds CCP’s Price-Fixing Finding against PVMA; Directs Rs30 Million Penalty Deposit

NewsToday Report

The Supreme Court of Pakistan has upheld the Competition Commission of Pakistan’s (CCP) finding that the Pakistan Vanaspati Manufacturers Association (PVMA) violated Section 4 of the Competition Act, 2010 by collectively fixing prices of ghee and cooking oil, and directed the Association to deposit a penalty of Rs30 million.

A two-member bench comprising Justice Jamal Khan Mandokhail and Justice Salahuddin Panhwar affirmed the findings of both the CCP and the Competition Appellate Tribunal (CAT) that the Association’s conduct amounted to prohibited price-fixing.

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The case arose from consultations between the Federal Government and PVMA during 2007-09, when the Government sought a reduction in ghee and cooking oil prices. PVMA participated in the discussions and subsequently communicated the agreed prices to its members.

The CCP in its decision found that PVMA had “negotiated and fixed prices on behalf of its members with the Government,” in violation of Section 4(1), read with Section 4(2)(a), and imposed a penalty of Rs50 million. The CAT subsequently affirmed the CCP’s finding of violation and maintained the penalty.

The judgment, authored by Justice Jamal Khan Mandokhail, held that the Federal Government’s consultation with PVMA on price reductions, bypassing the CCP, followed by the Association’s collective determination of prices, constituted a violation of the Competition Act. The Court held that each undertaking must determine its prices independently according to its own commercial considerations, and that collective pricing by competing businesses, whether directly or through a trade association, restricts competition.

The Court made clear that the fact that prices were reduced did not make the collective arrangement permissible. It observed that lower prices ordinarily result from competition and may benefit consumers, but the violation in this case lay in “the collective determination of the price by an association representing competing undertakings,” which substituted a common price for independent pricing decisions.

The Court further held that even if the objective was public good, impairment of independent price rivalry could not be disregarded merely because the agreed price was lower than the prevailing price. Affirming the Section 4 violation and CCP’s substantive finding of price-fixing, the Supreme Court directed PVMA to deposit a penalty of Rs30 million.