The Competition Commission of Pakistan (CCP) has issued a Policy Note to the federal government, all provincial governments, and the administration of the Islamabad Capital Territory (ICT), recommending that the present practice of price determination of fresh milk be reformed to address competition concerns. The Commission took cognizance of various news items reporting that the local authorities set the price of fresh milk after consulting dairy farmers’ associations. The CCP gathered relevant information, and found that the officers involved in the price control work, survey markets to ascertain milk prices. Afterwards, negotiations between members of the Price Control Committee/government’s price control staff and the respective stakeholders including associations take place and a price is agreed upon. In the prevailing practice, two issues are involved: firstly, consultation among members with their respective association to reach a common agreed price, and secondly, designating their association to negotiate with Price Control Committees to approve/consider their bench mark price – in fact by doing so the association becomes a forum for price-fixing. This practice is against Section 4 of the Competition Act, 2010. The Commission is of the view that entering into negotiation/agreement/arrangement to reach an accord to reconcile prices of their produce is beyond the role of an association and this may have negative repercussions for competition. The associations cannot negotiate selling price with Price Control Committees on behalf of its members/suppliers/sellers that are otherwise required to compete with each other. By engaging in negotiations with milk sellers’ associations & milk retailers’ association, the government itself becomes a party to a prohibited practice. Also, such agreements under the auspices of the Government promote practices that are a violation of the Competition Act, 2010. Therefore, the Commission believes that the Government at any level must not provide any patronage to anticompetitive practices that may encourage collusive behaviour. The Policy Note recommends that any members of associations, associations themselves or any stakeholders from the marketplace must not be invited to and must not participate in any formal or informal meeting in which the price of fresh milk is decided. The Commission further recommends that the price of fresh milk must be based on careful and independent analysis undertaken by respective government officers working as the members of the Price Review Committee.
The Competition Commission of Pakistan (CCP) has issued a Policy Note to the federal government, all provincial governments, and the administration of the Islamabad Capital Territory (ICT), recommending that the present practice of price determination of fresh milk be reformed to address competition concerns. The Commission took cognizance of various news items reporting that the local authorities set the price of fresh milk after consulting dairy farmers’ associations. The CCP gathered relevant information, and found that the officers involved in the price control work, survey markets to ascertain milk prices. Afterwards, negotiations between members of the Price Control Committee/government’s price control staff and the respective stakeholders including associations take place and a price is agreed upon.
In the prevailing practice, two issues are involved: firstly, consultation among members with their respective association to reach a common agreed price, and secondly, designating their association to negotiate with Price Control Committees to approve/consider their bench mark price – in fact by doing so the association becomes a forum for price-fixing. This practice is against Section 4 of the Competition Act, 2010. The Commission is of the view that entering into negotiation/agreement/arrangement to reach an accord to reconcile prices of their produce is beyond the role of an association and this may have negative repercussions for competition. The associations cannot negotiate selling price with Price Control Committees on behalf of its members/suppliers/sellers that are otherwise required to compete with each other.
By engaging in negotiations with milk sellers’ associations & milk retailers’ association, the government itself becomes a party to a prohibited practice. Also, such agreements under the auspices of the Government promote practices that are a violation of the Competition Act, 2010. Therefore, the Commission believes that the Government at any level must not provide any patronage to anticompetitive practices that may encourage collusive behaviour.
The Policy Note recommends that any members of associations, associations themselves or any stakeholders from the marketplace must not be invited to and must not participate in any formal or informal meeting in which the price of fresh milk is decided. The Commission further recommends that the price of fresh milk must be based on careful and independent analysis undertaken by respective government officers working as the members of the Price Review Committee.
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