Cement cartel for better or worse.

An inquiry report of the Competition Commission of Pakistan (CCP) has found massive profit-taking due to cartelization by the cement sector. The inquiry report was finalized for the cement units in the North Zone of All Pakistan Cement Manufacturers Association (APCMA) as the Sindh High Court had restrained the CCP from using material collected from the raids at offices of cement companies in South Zone (Sindh).

The inquiry report has inputs from the Federal Investigation Agency (FIA) regarding forensic audit of all the electronic evidence collected from the offices of cement companies and the APCMA head office, Lahore. The names of the owners of mobile phone numbers used in 'WhatsApp' discussions etc were obtained from the Pakistan Telecommunication Authority.

The CCP inquiry has suggested that there was evidence of cartelization among the APCMA members related to production quota distribution based on installed capacity from 2014 to 2020.

The inquiry highlighted that the cement manufacturers also maintained a dispatch/sale quota and the APCMA even posted designated staff at various cement units to ensure that the plants did not sell cement exceeding their allocated quota.

Based on the evidence available from the WhatsApp groups and other electronic communications obtained after the search of APCMA Head Office and offices of cement companies in the North Zone Punjab, the CCP inquiry revealed that there were territorial allocations and even price fixing among the members.

The inquiry report has mentioned that the data at the smartphone of Shoaib Ahmed of the Marketing Department, D.G. Khan Cement, highlighted the presence of a WhatsApp group named 'APCMA Marketing Officials' created on 15th November 2018.

The report has highlighted that this group was used as medium to communicate and decide to fix prices in the North Zone.

The APCMA even released maximum retail price for various cement plants and there was evidence that the Association used to make collective decision regarding passing on the impact of reduction in the input cost to the consumers.

According to a CCP official, based on the market demand it is estimated that the consumers had to pay around Rs40 billion additional amounts as the cement prices were increased up to Rs50 per bag in May, June and August 2020.

'The increase made in July 2019 was based on the grounds that the government has restricted axle load and it made the freight cost higher,' the official said, adding, 'But...