Supreme Court Upholds Penalty on Ghee, Cooking Oil Makers for Price Fixing

The Pakistan Vanaspati Manufacturers Association (PVMA) has been held responsible by the Supreme Court of Pakistan for fixing prices of ghee and cooking oil through collective agreements, in violation of competition laws. A two-member bench of the Supreme Court, consisting of Justice Jamal Khan Mandokhail and Justice Salahuddin Panhwar, upheld the Competition Commission of Pakistan's (CCP) decision and the findings of the Competition Appellate Tribunal (CAT).

The court ordered PVMA to pay a penalty of Rs. 30 million. The case stems from discussions between the federal government and PVMA between 2007-2009, during which the government sought lower prices for ghee and cooking oil. PVMA participated in these discussions and subsequently communicated the agreed prices to its member companies.

The CCP determined that PVMA had negotiated and fixed prices on behalf of its members with the government, thereby breaching Section 4 of the Competition Act, 2010. The court emphasized that competing businesses must independently determine their prices based on their own commercial decisions, rather than collectively setting prices.

The court rejected the argument that lower agreed prices made the arrangement acceptable, ruling that the key violation lay in competing businesses collectively determining prices rather than making independent pricing decisions. The court also stated that an arrangement cannot evade competition law simply because it aims to serve the public interest.

Consequently, the Supreme Court upheld the CCP's finding of price-fixing and PVMA's obligation to pay the Rs. 30 million penalty.