Cartelisation of Sugar and flour industries

Cartelisation of Sugar and flour industries

The Competition Commission of Pakistan (CCP) found out that both the sugar and flour mills have formed the cartels to manipulate the market and to fix the prices. The CCP has found out that both industries used collusive market practices to monopolise the market. Competition Commission of Pakistan (CCP) report on cartelisation showed that sugar and wheat flour millers had formed cartels for dictating their terms to the market.

Sugar and wheat flour mills had sharply increased prices to extract additional billions of rupees from consumers. They earn profits of billions of rupees at the expense of poor consumers. The CCP started its investigation into the sharp increase in the prices. The CCP found that they had formed cartels and increased product prices to exploit the consumers.

The Competition Commission of Pakistan (CCP) pointed out that sugar and flour mills increased the prices by 10% to 26%. The National Assembly Standing Committee on Finance has been informed of the ‘unjustified’ increases in the prices of the two commodities. But Economic Coordination Committee (ECC) of federal cabinet failed to take action. Instead- it was led by an allegedly misleading report presented to the ECC claiming that the prices of wheat and wheat flour had fallen by 0.03% and 0.69% respectively.

The report presented to ECC was in contrast to the report of CCP. Nobody knows who misled the ECC on this matter. No investigation was initiated to probe this matter. The CCP said the price of sugar has gone up by 25.8% amid a five-year high in inflation.

 The most shocking aspect of the sugar price rise is that there is currently an oversupply of the commodity as compared to its demand.

 The flour mills were allegedly involved in fixing prices of flour, sharing critical strategic data on flour prices apparently violating CCP laws. Here too, the CCP said the flour price had increased by 10% as compared to the reduction reported to the ECC.

The CCP declare the male practices used by the mill owners to manipulate the market as ‘cartelisation’. It means that both industries are not competing in the free market but helping each other to monoplise the market. They develop private monopoly in the market to exploit the customers. What is more worrying is that at least at some level, the government is being misled into a trap to release billions of rupees of subsidy for the products.

In a bid to bridge the gap between demand and supply of wheat and flour, the government had imposed a ban on the export of these products in July. Despite the restriction, the flour millers continued to increase prices in the domestic market.

The CCP should also look into the other industries to stop the cartelisation in the industries. This trend should be discouraged. The government must take action against those who formed cartels and fleece the public for their undue profits.

                                 The Editor