ISLAMABAD: The Fertilizer Manufacturers of Pakistan Advisory Council (FMPAC) and six other prominent fertiliser businesses have been served show-cause letters by the Competition Commission of Pakistan (CCP) for allegedly fixing urea pricing, a prima facie violation of Section 4 of the Competition Act 2010.
Prices of critical food goods are significantly influenced by urea prices. Farmers may incur increased costs as a result of any arbitrary price increases for urea by fertiliser corporations, which would ultimately raise consumer food prices.
The results of the CCP’s investigation established a prima facie violation of competition law by FMPAC and its six member companies, which include Engro Fertilisers Ltd, Fauji Fertiliser Company Ltd, Fatima Fertiliser Company Ltd, Fauji Fertiliser Bin Qasim Ltd, Agritech Ltd, and Fatima Fertiliser Ltd.
The investigation began when FMPAC announced a “Maximum Retail Price of Urea at Rs1,768 per 50kg bag” in November 2021, in the midst of increasing costs and rumored shortages.
The Fertilizer Policy of 2001 resulted in the deregulation of urea pricing, as the inquiry processes disclosed. Section 4(2)(a) of the statute was broken because the contents of the advertisement were interpreted as an association’s decision about the urea sale rate.
The investigation also discovered a pattern of price parallelism and uniformity among urea companies, which may indicate collusive behavior.
The government provides subsidized feedstock gas, which varies depending on the facility, however these companies’ rates occasionally shown regularity. This calls into question the subsidies they received and their cost structures.
