The Competition Commission of Pakistan (CCP) issued an Policy Note to the federal government recommending it to terminate the agreement between the All Pakistan Sugar Mills Association (APSMA) and the Ministry of Industries and Production, fixing the ex-mill rate of sugar in Sindh and Punjab. In the Policy Note, the CCP has urged the federal government to desist from entering into arrangements that have the affect of encouraging collusive behaviour on the part of economic agents in any sector saying that “Fixing of prices, output etc. are universally recognised as having the most detrimental effects on competition; eradicating or seriously reducing the benefits that competitive markets deliver for consumers.” The Policy Note further states that the Government must not provide any patronage to anticompetitive practices and measures that in effect promote and encourage collusive behaviour on the part of the sugar mills through the platform of APSMA. “It is really very difficult for CCP to condone the involvement of the Government in this Agreement. The implementation of such agreements under the auspices of the Government manifests legitimization of practices prohibited under law.” While the Commission has noted reports of alleged attempts to create artificial shortages of sugar, it is of the opinion that this stop gap measure of ‘fixing price’ can at best provide temporary relief to cap the excessive price increase. However, this measure fails to benefit the sector or the economy at large. The short term benefit of fixing prices (if any) does not justify the long term loss caused by such anti competitive policies, the Policy Note says. Since the Commission is entrusted with the mandate to provide for free competition in all spheres of commercial and economic activity to enhance economic efficiency and to protect consumers from anti competitive behaviour, the Commission feels obliged to raise its concern to the Government in relation to policies that impinge upon free competition and economic efficiency in any sector.
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