SC upholds CCP penalty on PVMA

ISLAMABAD: The Supreme Court upheld the Competition Commission of Pakistan’s (CCP) decision to impose a Rs50 million penalty on the Pakistan Vanaspati Manufacturers Association (PVMA) for violating Section 4 of the Competition Act, 2010. A two-member bench comprising Justice Jamal Khan Mandokhail and Justice Salahuddin Panhwar observed that although the appellant had acted at the instance of the federal government, the Rs50 million penalty was excessive in view of the circumstances. Between 2007 and 2009, against a backdrop of inflationary pressure and consumer concern over the price of essential commodities, the federal government, through the Ministry of Industries and Production and the Ministry of Interior, urged the ghee and cooking oil industry to pass on to consumers the benefit of falling international palm oil prices. A series of communications took place between the PVMA, a representative trade association of manufacturers engaged in the production and sale of ghee and cooking oil in Pakistan, and the government, following which the prices of ghee and cooking oil were reduced by the manufacturers. The Commission on 30-06-2011 imposed a Rs 50 million penalty on the appellant (PVMA) for violating section 4(1) read with section 4(2)(a) of the Competition Act, 2010. Aggrieved by the said order, the appellant preferred an appeal before the Competition Appellate Tribunal, Islamabad, which on 24. 04. 2025 affirmed the finding of the Commission. Hence the appeal before the Supreme Court. The judgment, authored by Justice Jamal, noted that the consultation of the federal government with the appellant (PVMA) for reduction of prices, bypassing the Commission, and the subsequent conduct of the appellant in collectively determining the prices, constitutes a violation of the Act. It said that irrespective of the fact that, as a result of consultation between the appellant and the government, the prices of commodities were reduced, in effect, the decision prevented, restricted and reduced competition within the relevant market, in violation of section 4 of the Act. The judgment said that it is the responsibility of the federal government to promote, enhance and maintain independence of the Commission. It noted that had the federal government wanted the undertakings to reduce the prices of the commodities, it was supposed to have taken up the issue with the Commission itself. Justice Jamal wrote that the Commission alone was competent to advise the undertakings individually to pass on to the consumers the benefit of the reduction in the price of raw materials, enabling each undertaking to independently determine the prices of its finished products in accordance with its own commercial considerations. The act of the government of directly approaching the association is an interference in the affairs of the statutory authority, which undermined the Commission’s independence. The vice in the present case lies in the collective determination of the price by an association representing competing undertakings, thereby substituting a common price for the independent pricing decisions which each undertaking was required to make. Even if the objective of the appellant was public good, the resulting impairment of independent price rivalry cannot be disregarded merely because the agreed price was lower than the prevailing price. The judgment said the Commission can bring positive behavioral changes in manufacturers, consumers or suppliers. However, where the Commission notices a practice or a proposed course of conduct which may subsequently raise concerns under the Act, it is empowered to bring those concerns first to the notice of the undertaking or the association of undertakings and, where appropriate, to advise it, that an action proposed to be taken by such undertaking is inconsistent with the provisions of the Act, rules or order made thereunder. It is preferable to prevent an undertaking or an association of undertakings from entering into an agreement or making a decision having the object or effect of preventing, restricting, or reducing competition within the relevant market. The Commission must therefore create awareness and exercise its advocacy role before a violation of the Act occurs. What the statutory scheme makes clear, however, is that enforcement is one part of the Commission’s mandate, not the whole of it, and it must be exercised regularly in a manner consistent with the broader object of promoting economic efficiency and preventing anticompetitive behaviour, rather than merely imposing penalties upon those who have departed from the statutory standards. The power to impose penalties is undoubtedly an important component of that mandate; however, it is a measure of last resort, to be invoked where the Commission’s efforts to promote a culture of competition and secure compliance with the Act have failed. Copyright Business Recorder, 2026

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