ISLAMABAD: The Competition Commission of Pakistan (CCP) has imposed penalties on three Karachi-based dairy associations for colluding to manipulate fresh milk prices against the provisions of the Competition Act 2010.
The CCP imposed a Rs1 million fine on the Dairy and Cattle Farmers Association (DCFA) and Rs500,000 each on the Dairy Farmer Association Karachi (DFAK) and the Karachi Dairy Farmers Association (KDFA).
The CCP initiated an inquiry following multiple media reports and articles highlighting a significant hike in milk prices across Karachi, and it was revealed that the three associations operating at different levels of the fresh milk supply chain were directly responsible for the price surge in Karachi and its surrounding regions.
During the proceedings, the CCP officials noted that the price caps set by Karachi commissioner under the Sindh Essential Commodities Price Control and Prevention of Profiteering and Hoarding Act 2005 had not been revised for three years despite rising inflation.
At the same time, the CCP’s findings demonstrated that these associations exerted undue influence on the supply chain to manipulate milk prices.
The CCP order established that evidence, in the form of video recordings, confirmed that the price increases announced by the associations were effectively implemented across the supply chain.
The associations employed coercive
tactics to enforce compliance with their pricing mechanisms, threatening wholesalers and retailers with milk supply suspensions if they refused to adhere to the prescribed rates.
The CCP, in its order, noted that the associations had substantial influence over key pricing elements, including bandhi rates and mandi rates, which are the open market or the retail rates and wholesale market prices, respectively.
The CCP stated that these collusive activities resulted in significant price distortions in the fresh milk market.
The order further revealed that the associations created artificial milk shortages by hoarding it in ice factories, subsequently selling it in interior Sindh at inflated rates. These practices significantly disrupted the supply chain and imposed an undue financial burden on consumers.
Published in Dawn, December 22nd, 2024
