SC Upholds CCP Price-Fixing Finding Against PVMA, Orders Rs30m Penalty Deposit

ISLAMABAD, Aug 26 (APP): The Supreme Court of Pakistan has upheld the Competition Commission of Pakistan’s (CCP) finding that the Pakistan Vanaspati Manufacturers Association (PVMA) violated competition law by collectively determining prices of ghee and cooking oil, directing the association to pay a penalty of Rs30 million.

A two-member bench comprising Justice Jamal Khan Mandokhail and Justice Salahuddin Panhwar affirmed the findings of the CCP and the Competition Appellate Tribunal (CAT), holding that the association’s conduct amounted to prohibited price-fixing under Section 4 of the Competition Act, 2010.

The case stemmed from consultations held between the Federal Government and PVMA during 2007-09, when the government was seeking a reduction in the prices of ghee and cooking oil. PVMA participated in the discussions and subsequently communicated the agreed prices to its member companies.

The CCP had found that PVMA had negotiated and fixed prices on behalf of its members with the government, constituting a violation of Section 4(1), read with Section 4(2)(a), of the Competition Act. It had imposed a penalty of Rs50 million on the association, a decision that was subsequently upheld by the CAT.

In its judgment, authored by Justice Jamal Khan Mandokhail, the Supreme Court held that the government’s consultations with PVMA on price reductions, conducted without involving the CCP, followed by the association’s collective determination of prices, constituted a violation of the competition law.

The court observed that competing businesses are required to determine their prices independently on the basis of their own commercial considerations. Collective price determination, whether undertaken directly by competitors or through a trade association, undermines competition by replacing independent pricing decisions with a common price.

The court also clarified that the fact that the agreed prices were lower than prevailing market prices did not make the arrangement lawful. It noted that lower prices are ordinarily a result of competition and may benefit consumers, but the violation in the case arose from the collective determination of prices by an association representing competing undertakings.

The judgment further held that even where an arrangement is intended to serve the public interest, interference with independent price competition cannot be overlooked merely because the agreed price is lower than the existing market price.

While upholding the CCP’s substantive finding that PVMA had engaged in prohibited price-fixing, the Supreme Court reduced the penalty from Rs50 million to Rs30 million and directed the association to deposit the revised amount.