Competition Commission Establishes Cartel Charges Against Oil Tankers Association, Imposes Rs60 Million Penalty and Orders Immediate End to Quota System
ISLAMABAD: The Competition Commission of Pakistan (CCP) has imposed a hefty penalty of Rs60 million on the All Pakistan Edible Oil Tanker Owners Association after clearly establishing the existence of cartelization and collusion in the oil transportation industry.
The Competition Commission has established the charges for the formation of a cartel for the transportation of edible oil and ghee.The Competition Commission has completely established the charges for the formation of a cartel for the transportation of edible oil and ghee. Collective rate-setting and limiting business distribution among tanker operators has been identified by market intelligence reports.
Penalties and Six Year Rate Revisions
The CCP imposed double levies of Rs30 million each on the collective fixation of freight rates and on the division of business through ‘slip and turn’ (parchi and bari) systems.
Following the investigations, it was discovered that transport fares were collectively revised 89 times over a period of 6 years, including 52 increases in the fare and 37 decreases. The CCP pointed out collusive practices being followed by the association in hike of freight charges, which is 0.75 per cent for every rupee increase in diesel while reduction in charges is restricted to 0.5 per cent when diesel charge is reduced.
End to Restrictive Practices and Coercion
The Competition Commission has given very strong instructions to immediately stop the collective pricing arrangement and the old turn and turnabout system.
The investigation also revealed that owners of the tankers that provided reduced freight rates were blacklisted and mills that requested reduced freight rates were threatened with supply blockades. The CCP has warned the association of artificial inflation in transport charges directly affecting the prices of essential commodities such as ghee and edible oil, and directed it to ensure absolute compliance with the guidelines.