Who will take on the powerful sugar cartel?
It is time to take stern action against sugar cartel
Cartelisation
of economy becomes a norm when government failed to regulate the market and to
stop the powerful elite to manipulate the production and supply to increase the
prices. The cartels enjoy freedom in Pakistan to manipulate the prices and
supply in the market to maximise the profits. These cartels collude to set prices by
supplying the market short. As the price goes up, the businesses make gains of billions
of rupees at the expense of consumers. The sugar mills forms the most powerful cartel
in Pakistan.
The
investigation report on sugar and wheat crisis has once again revealed this
fact. There exist cartels that control the economy. The members of a cartel
maintain their separate identities and financial independence but pursue common
policies, thus exercising monopoly power.
One of the most respected capitalist economist Adam Smith once wrote: “People of the
same trade seldom meet together, even for merriment and diversion, but the
conversation ends in a conspiracy against the public, or in some contrivance to
raise prices.”
Pakistan has
Competition Act, 2010 to safeguard the interests of consumers against cartelisation.
This law prohibits cartels. The Section 4 of the Competition Act,2010 states that undertakings
or associations are prohibited from entering into any agreement or making any
decision with regard to the production, supply, distribution, acquisition or
control of goods or the provision of services, which have the object or effect
of preventing, restricting, reducing, or distorting competition within the
relevant market.
So the
regulatory framework to promote competition is in place but it has not been
effective in curbing anti-competitive practices, particularly cartelisation. Since
the Competition Act 2010 in place-we have seen two sugar crises. First in 2010-it
was Pakistan’s worst sugar crisis in recent years
when all of a sudden sugar became a scarce commodity and at the end of the year
its price had shot up to Rs 125 per kilogram.
The Prime
Minister Imran Khan made the right decision to made two investigation reports
public. But the question remained that how this government will take action
against sugar cartel. Sugar is the country’s second largest agro-based industry
comprising about 87 sugar mills. This industry is closely linked with the most
powerful political families of Pakistan. The leadership of PML-N- PPP-PML-Q
owns sugar mills and some prominent leaders of PTI also have sugar mills. There
is strong link between the political leadership and sugar industry.
This report precisely
exposed this link and connection. The reports on wheat and sugar crisis has
revealed that the big names of ruling party and its allies are involved in the
manipulation of prices and taking advantage of the crisis.
The
Competition Commission of Pakistan (CCP) inquiry and report in 2010 exposed the
presence of cartel in sugar industry. In 2009, the CCP initiated an
investigation against allegations of cartelisation in the sugar industry and
submitted the order in the SHC in July 2010. The PSMA challenged the CCP’s
proceedings in court and obtained a stay order. The CCP then challenged the stay
order in the Supreme Court, which allowed the CCP to submit a report in the SHC
but restrained it from issuing a final order.
The CCP’s
investigation proves the presence of a strong sugar mafia in the country.
Despite ample availability of sugar, it is being sold at Rs 125 to 135 per
kilogramme against a production cost of less than Rs 55 per kg.
This was
again proved in the inquiry of CCP in 2019. Competition Commission of Pakistan
(CCP) in its report in 2019 revealed that sugar and wheat flour millers have
formed cartels for dictating their terms in the market.
Sugar and
wheat flour millers have sharply increased prices in a bid to extract
additional billions of rupees from consumers. Following the price hike, the
government sent their cases to the CCP for investigation.
The CCP
found that sugar and flour millers had formed cartels and increased product
prices to exploit the consumers. But no action was taken by the government.
Then the government formed FIA led inquiry committee and this committee headed
by FIA DG Wajid Zia found the same.
It has been
proved time and time again that cartels do exist. The real issue is to take action
to break these cartels. Now the
government of Prime Minister Imran Khan is going for forensic audit before
taking action. Why the government is not taking measures and formulating the
policy framework to break these cartels to safeguard the interests of consumers.
Sugar and floor is the basic commodity and every household used it in daily life.
The government should take immediate action against sugar and other cartels.
There is no
need of forensic audit. It is further wastage of time and sources. The previous
inquiry reports have already ascertain the undeniable facts in this regard. It
is time to take action.
The Editor
All details r available , just action
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