Pakistan has long grappled with the pervasive influence of monopolies, cartels, mafias, and vested interests across its economy. From industry and trade to services, powerful groups have consistently stifled competition, undermining economic fairness and efficiency.
Pakistan has long grappled with the pervasive influence of monopolies, cartels, mafias, and vested interests across its economy. From industry and trade to services, powerful groups have consistently stifled competition, undermining economic fairness and efficiency.
These monopolistic practices span production, sales, supply chains, distribution networks, transportation, banking, aviation, and even healthcare. Key sectors such as cement, sugar, pharmaceuticals, wheat flour, automotive, fertilisers, oil and gas, power, and poultry are dominated by influential associations. These entities frequently manipulate prices, employ deceptive marketing tactics, and violate competition laws to enrich themselves at the expense of consumers and the broader economy.
To address these issues, the Competition Commission of Pakistan (CCP) was established in 2007 under the Competition Ordinance, later enacted as the Competition Act 2010. The CCP’s mandate includes promoting fair competition, curbing cartelisation, and regulating anti-competitive practices. Between 2007 and 2023, the CCP imposed penalties totalling Rs74 billion across various sectors for violations of the Competition Act.
However, only a meagre two per cent of this amount has been recovered, with substantial sums tied up in lengthy court proceedings. Despite its efforts, cartelisation persists in major sectors, including sugar, cement, fertiliser, telecoms, automotive, oil and gas, and essential commodities like poultry, dairy, wheat, and edible oil. Service sectors, including healthcare, banking, and shipping, as well as the power sector, are similarly dominated by politically connected groups, creating significant barriers to reform and enforcement.
The sugar and cement industries exemplify entrenched cartel behaviour. Allegations of price-fixing and artificial shortages have persisted for years, with a few powerful players controlling supply chains from production to distribution. Investigations have revealed coordinated pricing among producers, leading to inflated costs for consumers and disrupting economic activity. While the CCP has intervened on multiple occasions, industry players have effectively used legal stay orders to block penalties and regulatory measures.
In 2008, the CCP issued show-cause notices to the All Pakistan Cement Manufacturers Association (APCMA) and its 22 member companies for alleged price-fixing and production quotas. Penalties amounting to Rs6352 million were imposed on 20 cement producers and Rs50 million on APCMA in 2009. However, these penalties were contested in court, where stay orders shielded the companies from enforcement. A similar case in 2012 also resulted in significant penalties, but legal challenges neutralised the CCP’s efforts. Renewed action in 2020 led to raids on APCMA offices and two cement companies, uncovering evidence of cartel behaviour. Despite these efforts, meaningful enforcement remains elusive.
While the Competition Commission of Pakistan (CCP) has made notable strides in tackling anti-competitive practices, its impact remains constrained by legal, political, and resource-related hurdles. The persistence of cartelisation in Pakistan’s economy underscores the urgent need for reforms. Strengthening the CCP is essential for fostering a fair and competitive economic landscape
The sugar industry presents a parallel scenario. In 2013, the CCP exposed extensive price manipulation by leading producers. However, penalties were delayed through prolonged legal appeals. By 2020, another CCP inquiry confirmed that cartel behaviour persisted, with sugar mills engaging in practices like price hikes, supply shortages, coordinated suspension of crushing activities, and collusion on export quantities. In August 2021, the CCP imposed penalties totalling Rs44 billion on 81 sugar mills and Rs300 million on the Pakistan Sugar Mills Association (PSMA).
Yet, as of 2024, these penalties remain largely unrecovered, with 127 petitions pending in courts. Meanwhile, sugar shortages and price hikes continue to burden consumers, reflecting the CCP’s limited capacity to deter anti-competitive behaviour effectively. Other industries also illustrate the CCP’s struggles. In 2019, the Pakistan Flour Mills Association (PFMA) was fined Rs75 million for price-fixing, while similar allegations have been levelled against the Pakistan Automotive Manufacturers Association (PAMA).
The fertiliser sector faced scrutiny in 2024 when the CCP issued show-cause notices to six leading companies for allegedly fixing urea prices. Despite these efforts, legal challenges and resource constraints hinder the CCP’s effectiveness. The power sector, particularly independent power producers (IPPs), also underscore the CCP’s broader limitations. Exclusive power purchase agreements and guaranteed high returns for the IPPs stifle competition and inflate tariffs, straining consumers and the economy. The CCP has struggled to assert authority in this sector, leaving monopolistic practices unchecked.
Structural and operational challenges compound the CCP’s difficulties. Dominant players wield significant political and economic influence, undermining regulatory oversight. Although the CCP is mandated to operate independently, external pressures often compromise its efforts. Additionally, the CCP’s limited resources — both financial and human — hamper its ability to conduct thorough investigations, particularly in industries with complex supply chains.
Legal challenges further complicate enforcement. Powerful entities frequently appeal CCP decisions, securing stay orders that delay or nullify penalties. This undermines the commission’s authority and weakens the deterrent effect of its actions. The cement and sugar industries, in particular, have exploited these legal loopholes, highlighting systemic weaknesses in the CCP’s framework. Addressing these challenges requires comprehensive reforms to empower the CCP.
Legislative changes must enable swift enforcement of penalties and limit delays caused by stay orders. Enhancing the CCP’s budget would improve its investigative capacity and allow for the recruitment of specialised personnel. Transforming an efficient appellate process within the CCP could expedite case resolutions. Transparency reforms in sectors like sugar, cement, textiles, and power are also critical to fostering a competitive market environment.
Thus, while the CCP has made notable strides in tackling anti-competitive practices, its impact remains constrained by legal, political, and resource-related hurdles. The persistence of cartelisation in Pakistan’s economy underscores the urgent need for reforms. Strengthening the CCP is essential for fostering a fair and competitive economic landscape that benefits businesses, consumers, and the broader economy.
The writer is a retired chairman of the State Engineering Corporation and former member (PT) of the Pakistan Nuclear Regulatory Authority.
