Supreme Court Upholds Rs30m PVMA Price-Fixing Penalty

The Supreme Court of Pakistan has upheld the Competition Commission of Pakistan’s (CCP) finding against the Pakistan Vanaspati Manufacturers Association (PVMA) for collectively determining prices of ghee and cooking oil, ruling that the association breached Section 4 of the Competition Act, 2010. The court has directed PVMA to pay a penalty of Rs30 million.

A two-member bench comprising Justice Jamal Khan Mandokhail and Justice Salahuddin Panhwar agreed with the conclusions reached by both the CCP and the Competition Appellate Tribunal (CAT), which had determined that PVMA’s conduct constituted prohibited price-fixing, according to a statement issued by the commission.

The dispute originated from discussions held between the federal government and PVMA during 2007-09. At the time, the government was seeking lower prices for ghee and cooking oil. PVMA took part in consultations with the government and later conveyed the agreed prices to its member companies.

In its original ruling, the CCP determined that PVMA had negotiated and established prices for its members in discussions with the government. The commission held that this conduct violated Section 4(1), read with Section 4(2)(a), of the Competition Act and initially imposed a Rs50 million penalty.

The Competition Appellate Tribunal subsequently upheld the finding that the association had violated competition law and maintained the penalty imposed by the CCP.

In the judgment authored by Justice Jamal Khan Mandokhail, the Supreme Court held that the federal government’s decision to consult PVMA over price reductions without involving the CCP, followed by the association’s collective setting of prices, amounted to a breach of the Competition Act.

The court stressed that businesses must establish their prices independently based on their own commercial interests and operating conditions. When competing companies collectively determine prices, either directly or through a trade association, the practice can eliminate independent competition between them.

The Supreme Court also rejected the argument that lower agreed prices could make the arrangement acceptable. While competition can naturally lead to lower prices and benefit consumers, the court said the legal violation arose from competing businesses collectively replacing independent pricing decisions with a common price.

The court further observed that an arrangement cannot escape competition-law restrictions simply because its stated purpose is in the public interest. According to the ruling, independent price competition remains important even where the collectively agreed price is below the prevailing market level.

The Supreme Court therefore upheld the CCP’s substantive finding that PVMA engaged in prohibited price-fixing and ordered the association to deposit a reduced penalty of Rs30 million.