Background of the case:

The Commission took notice of the news items published in daily Dawn suggesting an unusual price hike in the prices of ‘wheat flour’ or ‘wheat atta’ across Pakistan. After an initial probe, search and inspection of the premises of PFMA, due research on the wheat flour milling industry and meetings with representatives of PFMA, an enquiry committee was constituted to investigate.

The enquiry report concluded that the recommendations of PFMA were tantamount to a decision by an association of undertaking and were in violation of section 4 of the Competition Act, 2010. It was further elaborated that this was not a one-time occurrence rather the association through its actions had contravened the provisions of the Act on multiple occasions.

Issues:

i) Whether the Enquiry is conducted in violation of principles of natural justice or in particular Article 10-A of the Constitution of Islamic Republic of Pakistan, 1973?

ii) Whether PFMA is an association of undertakings in terms of Section 2(1) (q) of the Act?

iii) Whether PFMA has violated the provisions of Section 4 of the Act?

Foreign Judgment:

1. United States vs. Socony-Vacuum Oil Co., 310 U.S. 150 (1940)

2. Catalano, 446 U.S. at 648, Cement Inst., 333 U.S. 683, Sugar Inst., vs United States 297 U.S. 533 (1936), and Plymouth Dealers Ass’n ., 279 F.2d at 132 and Arizona vs. Maricopa Cty . Med . Soc’y 457 U.S. 332 (1982)

3. Rees and others [1994] 1 All E.R. 833

4. Regina Vs. Saskatchewan College of Physicians and Surgeons [1996] 58 D.L.R (2nd) 622.52

5. Pary Jones Vs. Law Society and others [1969] 1 Ch Division 1

6. U.S. Georator Corp Vs. Equal Employment Opportunity Commission, 590 F. 2d (4th Cir. 1979)]

7. U.S. Tolbert Vs. McGriff, 434 F. Supp. 682 (M.D. Ala. 1976)

8. London Ruber Co. Ltd., vs. Durex Products Limited, AIR 1963 SC 1881

9. East and West Steamship Co. v. Queensland Insurance Co.

10. Imperial Chemical Industries plc (ICI) vs. Commission for European Communities Joined Cases C-238/99 P, C-244/99 P, C-247/99 P, C-250/99 P to C252/99 P and C-254/99 P

11. Osterreichische Volksbanken v Commission for European Communities Joined Cases C-125/07 P, C-133/07 P, C-135/07 P and C-137/07 P

12. Coop de France Betail et Viande (formerly Federation Nationale de la Cooperation Betail et Viande (FNCBV) v Commission of the European Communities (C-101/07 P) [2008] E.C.R. I-10193 (ECJ (3rd Chamber)).

13. Case 38549 Architects Belges (the Belgian Architects case)

14. Case AT. 39398 – Visa MIF

15. United States vs. Socony – Vacuum Oil Co., 310 U.S. 150 (1940)

16. Catalano, 446 U.S. at 648 (1980)

17. Cement Inst., 333 U.S. 683 (1948)

18. Plymouth Dealers Ass’n. vs. US, 279 F.2d at 132 – US Court of Appeals Ninth Circuit

19. Arizona vs. Maricopa Cty. Med. Soc’y 457 U.S. 332 (1982)

Order:

The Commission held that the enquiry committee during the enquiry proceedings, and the bench of the Commission, during the proceedings under Section 30 of the Act, had fulfilled the requirements of due process and natural justice, and noted that it was on record that the representatives of the PFMA met with the enquiry committee and various documents were provided by them, which were considered and have been brought on record by the enquiry committee.

PFMA was also given sufficient opportunity to present their view point and place documents on record during the proceedings before the Commission.

The Commission further held that PFMA is an association of Flour Millers, who are undertakings engaged in production and supply of Wheat Flour and all other products which are extracted from the grinding of wheat, and therefore PFMA is an ‘association of undertakings’ and is consequently an undertaking in terms of Section 2(1)(q) of the Competition Act.

The Commission in its Order imposed a penalty of Rs. 75 Million on PFMA for taking decisions with respect to fixing the price of wheat flour and the quantities of production of wheat flour by its member mills. Furthermore, the Commission issued directions to PFMA informing them that discussions, deliberations and decisions regarding current and future pricing, production and marketing are anticompetitive and should be avoided at all costs by the association.

Current Status:

In the instant matter the Respondent filed a writ petition before the Honorable Islamabad High Court and obtained stay order in respect to the aforementioned order.