Business

PSMA to Challenge CCP’s Rs. 44 Billion Penalty in High Court

The Pakistan Sugar Mills Association plans to challenge the fine of Rs. 44 billion imposed on it by the Competition Commission of Pakistan in court.

The association and its 81 member sugar mills are yet to deposit the penalty money that the commission demanded, according to Business Recorder.

According to the report, the Spokesman for the Pakistan Sugar Mills Association (PSMA) said, “We are going to challenge the CCP order in the high court within 60 days from the date of the issuance of this biased order”.

The Competition Act, 2010, states that the PSMA can challenge the Competition Commission of Pakistan’s (CCP) decision within 60 days in the Competition Appellate Tribunal (CAT).

However, the tribunal is currently not operational because its bench is incomplete. A bid to appoint a technical member for the CAT had been sent to the federal Cabinet in August but the agenda item had been set aside. Sources disclosed that this means that the PSMA will not be able to file an appeal in the CAT, which is why it is considering approaching the high court with a writ petition.

After months of legal back-and-forth, the CCP found the PSMA and its member mills guilty of a number of anti-competitive activities in August. The activities include fixing export quantities and making collective decisions on sales and production numbers, which allowed the industry to artificially control domestic stock and quantity.

The CCP’s verdict is premised on the PSMA and its mills’ actions being anti-competitive by object. This means that as long as they had intended for their activities to restrict competition, they are guilty of anti-competitive behavior. It is not necessary to prove that their actions did, in fact, restrict competition.

The decision is also based on the allegation that the PSMA and its mills had illegally shared commercially sensitive stock information on a fortnightly basis. This may lead to distortions in the market and artificially influenced sugar prices as the perceptions of resource stockpiles and fears of a shortage can dramatically alter price trends.

The CCP concluded the legal battle by pressing its highest penalty on record on the PSMA and its mills. This decision was not a unanimous one, and was the commission’s first split verdict. Two of the CCP’s members had initially voted against the penalty, causing the chairperson to call for a second vote to push through the decision.

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