Tareen's JDW mill played a key role in creation of sugar 'cartel': CCP

The Competition Commission of Pakistan has found evidence that Jahangir Khan Tareen's JDW Sugar Mill played a key role in the creation of a 'cartel' that minted unjustified profits worth billions of rupees, The News reported.

Show cause notice

Initiating proceedings under Section 30 of the Competition Act, 2010, on the recommendations of an inquiry into anti-competitive activities in the sugar industry, CPP has issued a show-cause notice to the Pakistan Sugar Mills Association (PSMA) and 84 member mills on multiple instances of prima facie cartelization in violation of Section 4 of the Competition Act 2010. According to the CCP, the association and its members seem to have violated the law by collectively deciding to export sugar, thereby 'fixing' the quantity of sugar to be sold in Pakistan. The mills allegedly reduced the sugar stockpile through exports, thereby collectively raising and maintaining the sugar price in the country. The sugar mills allegedly acted collectively to decide to delay the crushing season in 2019-20, leading to decreased supply. In Punjab, 45 sugar mills allegedly used the PSMA platform to share sensitive information with each other. The association and mills also divided the quantity of sugar sought through Utility Store's tenders on various occasions. The CCP found that 19 mills in Punjab had violated the Act with reference to a 2019 tender, whereas 30 mills were issued a show-cause notice for an earlier tender. A 2009 inquiry report by the CCP had found that PSMA and its members engaged in price-fixing and colluding in sugarcane purchasing, production, sale, and trade of sugar.

Inquiry 

The inquiry had found multiple instances where the PSMA acted as a front for the cartel. The evidence, collected during search and inspections carried out on PSMA and JDW premises, suggests that the anti-competitive activities have been continuing since 2010. The data includes emails exchanged between the senior official of a member sugar mill and PSMA zone office bearers in Punjab regarding sensitive commercial information such as the mill and district-wise sugar stocks, the quantity of crushed cane, production levels, recovery percentage, carry forward of old/raw sugar, quantity sold and balance. An analysis of WhatsApp messages shared in a PSMA officials group chat revealed that the same senior official was in constant communication with regard to price and stock-related data of sugar mills. The data hints at the senior official's involvement in sharing and receiving sensitive information since 2012 when he was nominated by PSMA as a focal person to coordinate sugar stock positions. According to The News, the platform of PSMA was being used by member sugar mills to make collective decisions on matters such as a reduction in domestic stocks and supplies of sugar, which affected the commodity's market price for end-users.