Regulator Warns of Anti-Competitive Behavior Amid Rising Prices and Limited Market Players
ISLAMABAD – The Competition Commission of Pakistan (CCP) has raised red flags over possible cartel-like conduct in the country’s fertilizer sector, pointing to alarming patterns of price alignment and restrictive trade practices among manufacturers.
A newly released draft report by the CCP—titled “Competition Assessment of the Fertilizer Industry in Pakistan”—sheds light on systemic issues within the industry, including oligopolistic control, uniform pricing trends, and supply restrictions that may violate national competition laws.
Few Players, Big Influence
The fertilizer market in Pakistan is dominated by a small number of manufacturers producing largely interchangeable products such as urea and DAP (Di-Ammonium Phosphate). According to the CCP, this setup—few players, similar products—creates a fertile ground for cartelization, where companies may implicitly or explicitly coordinate to fix prices or limit production.
The report suggests that persistent “price parallelism” among major fertilizer brands—despite different input costs such as varying gas tariffs—indicates potential coordination rather than natural market behavior.
Dealer Tied Selling Raises Alarm
Another major concern highlighted is the restrictive dealership agreements enforced by manufacturers. Dealers are reportedly required to purchase slow-moving or less popular products like micronutrients as a condition for accessing in-demand products such as urea or DAP.
This bundling tactic, according to the CCP, could be considered an abuse of dominant market position under Section 3(2)(e) of the Competition Act, 2010. The Commission recommends tighter surveillance of such practices, suggesting they undermine fair competition and put undue pressure on dealers.
Regulatory Oversight to Be Stepped Up
Given these findings, the CCP is advocating for stronger regulatory action, particularly through monitoring under Sections 3 and 4 of the Competition Act. These sections pertain to abuse of dominance and anti-competitive agreements such as price-fixing or market sharing.
Additionally, the report calls for the Securities and Exchange Commission of Pakistan (SECP) to revive mandatory cost audits in the fertilizer sector. This measure, previously recommended by the CCP in 2020, would help expose discrepancies in pricing and production costs, enabling authorities to detect anti-competitive patterns more effectively.
A Sector Under Watch
The fertilizer industry plays a vital role in Pakistan’s agricultural economy, making fair competition essential for both farmers and national food security. With the CCP now placing the sector under closer scrutiny, stakeholders may soon face tighter compliance standards and deeper investigations.
The report underscores that unchecked collusion can distort market dynamics, hurt consumers, and stifle innovation—outcomes that the CCP is determined to prevent as it moves to clamp down on cartel behavior across key sectors of the economy.
